Chinese trade with Russia feels the sting of Ukraine war

  • Small Chinese exporters suspend deliveries due to ruble volatility
  • Major Chinese companies wary of sanctions risks
  • Long-term increase in Russian demand for Chinese products is expected

SHANGHAI/BEIJING, April 1 (Reuters) – Chinese exports to Russia have been affected by the ruble’s change in value, clear evidence of the domino effect that Western sanctions over Russia’s invasion of Ukraine are having on China, even when he stands by his neighbor. diplomatically.

Chinese multinationals have stayed in Russia as their Western rivals flee, but it is smaller Chinese companies that are most vulnerable to exchange rate losses, with several telling Reuters that much of their business in Russia is on hold. while both sides wait for the volatility to pass.

“The products I was supposed to ship to Russia are in my warehouse,” said Deng Jinling, whose factory in eastern China makes vacuum flasks.

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Last year, about 30% of its revenue of 40 million yuan ($6.29 million) came from Russia.

“All of our clients are waiting to see if the exchange rate can improve a bit. Their costs are too high with the exchange rate right now,” he said.

Another Chinese trader, who gave only his surname Guo, said his company acted as a middleman between Russian and Chinese customers, but the volume of products such as bed sheets and kitchen equipment they usually handle had dropped by a third.

China is Russia’s biggest source of imports and sold $12.6 billion worth of goods to Russia in January and February alone, mostly computers, cars, shoes and toys, according to customs data.

Both Russian importers and Chinese exporters are postponing deals for fear of being caught up in the ruble roller coaster.

“The depreciation of the ruble means you lose money every time there is a sale,” said Shen Muhui, who heads a trade group representing more than 20,000 small Chinese exporters to Russia.

He said a few more Russian customers were willing to use the Chinese yuan to pay for goods, but not enough to make much of a difference, and demand for his Russian warehousing services had plummeted by about a fifth since he started. the Ukrainian war and about 90%. of its members had been affected.

“You can’t raise prices because the Russians can’t afford it… So you have a loss when you convert your receipts into yuan,” Shen said.

“Exporting to Russia becomes impossible.”


The ruble has seen high volatility against the US dollar and the Chinese yuan since Russia launched what it calls a “special operation” in Ukraine on February 24.

The conflict caused a more than 40% drop in the value of the ruble against the yuan, although the Russian currency has recovered about 70% since the March 9 low.

Against the US dollar, the ruble fell as much as 44% in just seven trading days after the invasion, but is up nearly 90% since its March 7 low, trading at around 81 per dollar on the interbank market.

China has refused to condemn Russia’s action in Ukraine or call it an invasion and has repeatedly criticized what it calls illegal and unilateral sanctions.

Major Chinese companies like Xiaomi and Great Wall Motor (601633.SS) they have remained largely silent about their Russia plans.

But behind the scenes, China is wary of its companies breaking sanctions and is pressuring them to be careful about investments there, Reuters reported on March 25. Read more

State group Sinopec has called off talks over a major petrochemical investment and gas trading company in Russia, the sources said.

Winnie Wang, president of the Shenzhen Cross-Border E-Commerce Association, was optimistic about trade with Russia in the long term, saying she expected Chinese exports to increase in variety and volume, despite short-term challenges, including the currency volatility.

Wang said he hoped traders could move away from settlement in US dollars.

“The two countries should work together to design a new payment framework for trade,” he said.

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Reporting by Samuel Shen, Sophie Yu, and Brenda Goh; Edited by Robert Birsel and Raju Gopalakrishnan

Our standards: The Thomson Reuters Trust Principles.

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