- Chinese exports to Russia have declined by 26% year-on-year in April, despite China’s Ministry of Commerce urging companies “not to submit to external coercion and make improper external statements”.
- The reduction is especially driven by companies that have a large global footprint and are fearful of being hit with secondary sanctions. For example, Chinese high-tech companies Lenovo and Xiaomi reportedly halted shipments to Russia and Huawei furloughed some staff in Russia. Geely, the automaker, has halted production in its Belarussian plant that exports to Russia.
- Only very few Chinese companies have completely withdrawn from the Russian market. This is partly because such a move can spark anger within the Chinese market: for example, nationalist consumers have already punished Didi, the ride-hailing company, for an early withdrawal announcement, that the company since has reversed.
- The few companies that have completely stopped their business in Russia are mostly banks, which would be unable to conduct international payments if they were to be cut off from SWIFT.
- Imports other than gas and oil have also decreased in March and the big increase in gas and oil imports can, to a large degree, be attributed to rising prices of these commodities.
- But Chinese SOEs (as India’s) have reportedly been in talks with Russian energy companies to increase shipments to China in the long-run. In April, seaborne shipments of crude oil from Russia already increased by 20% according to Bloomberg. China is however unlikely to offset Russia’s major losses if Europe actually puts an embargo on Russian oil.
Sinolytics is a European consulting and analysis company specializing in China. It advises European companies on their strategic orientation and concrete business activities in the People’s Republic.