…As Moscow deepens partnership with Beijing and wither sanctions
Reports say China’s trade balance with Russia did hit a new record in 2022, providing evidence that Moscow is deepening its partnership with Beijing, as EU and their US allies bite harder with sanctions
The Chinese General Administration of Customs Imports said in a report last Friday that exports to Russia reached 1.28 trillion yuan, or $190 billion last year. Trade with Russia also made up 3% of China’s total trade volume last year.
A Reuters analysis of industry data found that Russian rail exports of liquefied petroleum gas to China more than doubled in 2022, and Russian oil exports rose 10% in the first 11 months of 2022.
That’s largely the result of Russia leaning more on China as its trade volume gets battered by Western sanctions. Most recently, the EU banned seaborne imports of Russian oil and joined a G7 price cap of $60 per barrel.
Already, those sanctions are currently costing the Kremlin over $170 million a day, according to estimates from a Finland think tank, and losses could extend to $300 million a day in February when the EU bans Russian petroleum products.
But Russia-China trade slowed sharply in December. Chinese exports to Russia were up 8.3% from a year ago, down from November’s annual pace of 17.9%. And imports from Russia were up 8.3%, down from 28.5% in November.
Russia has struggled to replace all the exports it once sent to Europe with exports to China and India. While 90% of Russia’s crude oil has been redirected to Asia, it’s now being sold below the $60 price cap as countries demand bigger discounts, traders familiar with the matter told Reuters.
Russian President Vladimir Putin has been vocal about possibly retaliating against the oil price cap, such as by slashing Russia’s crude output to jack up oil prices for Western nations.
So far, Moscow has threatened to cut its oil production by 700,000 barrels a day, and is already estimated to be losing 1 million barrels a day due to the impact of the EU oil ban. Together, those factors could cause oil prices to soar past $100, UBS warned.