A Thought on Russia-PRC Relations

The subheadline on a Wall Street Journal article that was centered on falling exports from the People’s Republic of China says it all regarding the growing relationship of the PRC with Russia.

Slide in outbound shipments reflects fraying trade ties with the Western world, even as exports to Russia boom

But at what cost to Russia are those exports? Russia hasn’t much with which to pay for them. The nation is short of hard currency, and its own goods are famous for their shoddiness. Russia, though, does have things of particular importance to the PRC: vast Siberian resources of oil, natural gas, coal, timber, and a variety of rare earths and ores whose extracted metals are critical for making batteries. To that end, Russia and the PRC concluded, a few short years ago, a trade treaty that has the PRC developing those fields and mines, extracting that output for PRC use alongside Russian use and in some cases for primary PRC use, and with PRC workers and their families moving into Siberia to do the work of development and extraction.

That last reveals one more item that Russia has to exchange for the PRC’s exports to it, an item of critical importance to the PRC: all that Siberian land.

And this, which subtext emphasizes the PRC’s dependency on Russia’s imports:

For China, weakening exports signal more trouble for its domestic economy….

July’s 14.5% drop in Chinese outbound goods shipments was sharper than the 12.4% year-over-year decline in June and outpaced the 12% decline expected by economists polled by The Wall Street Journal.
Chinese goods shipments to the US fell 23% in July compared with a year earlier. Shipments to the European Union and to the Association of Southeast Asian Nations, a group of 10 countries that includes Singapore and Indonesia, each dropped by about 21%.
Chinese shipments to Russia, a country under Western sanctions over its invasion of Ukraine, rose 52% in July from a year earlier, helped by sales of high-value goods including automobiles. For the first seven months of this year, Chinese exports to Russia soared 73% from a year earlier, even as China’s total exports have fallen 5%, data from Chinese customs show.

Thus, the dependency goes both ways, even as the PRC increasingly dominates the codependent relationship. As the West pulls back from buying goods and services from the PRC, the PRC becomes ever more dependent on Russian goods and services, especially those basic commodity goods of oil, natural gas, coal, timber, and Russian rare earths and battery-centric ores.

That growing PRC dependency makes the PRC’s land acquisitiveness even more dangerous for Russia.

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