During a State visit to Russia in early November, Chinese Premier Li Keqiang and Russian President Vladimir Putin vowed to strengthen economic cooperation between the two countries. Trade between China and Russia rebounded in 2016, but remains lukewarm at best. Chinese traders interviewed by the Global Times said trade with Russia is difficult and a lot of challenges remain. But experts noted that the future of Sino-Russian economic ties is a bright one, as the two countries need each other's markets and factors such as the yuan's internationalization facilitate economic interaction.
The economic ties between China and Russia are becoming closer, or at least look so, according to signals revealed during a recent series of high-level government meetings.
Chinese Premier Li Keqiang paid an official visit to China's northern neighbor from November 6 to 8. On November 7, Li said at a press conference that the two countries will "insist on" lowering trade barriers, the Xinhua News Agency reported on the same day.
On November 8, Li said that not only will the two countries promote cooperation on big projects, they will also tap the potential for cooperation between small and medium-sized businesses in the two countries, according to another Xinhua report.
Russian President Vladimir Putin also vowed on November 8 to broaden mutual investment and promote economic cooperation between Russia and China.
From January to October, China's trade with Russia rose by 0.5 percent year-on-year to $56.2 billion, data from the General Administration of Customs showed on November 8.
Meanwhile, China's exports to Russia rose 5.9 percent year-on-year to $30 billion, after they fell by 35.2 percent in 2015.
However, several small Chinese traders interviewed by the Global Times on Thursday said it's still difficult for them to profit off exports to Russia because of the declining spending power in the country due to the plunging ruble.
"Economic relations between China and Russia are going through a transition, but the future is bright," said Song Kui, president of the Contemporary Sino-Russia Regional Economy Research Institute in Northeast China's Heilongjiang Province.
Turning to imports
Fan Yefeng, CEO of Manzhouli Irito Logistics Ltd in Manzhouli, North China's Inner Mongolia Autonomous Region, has been trading with Russia for about 20 years. Currently, he exports mechanical equipment like pumping units to cities including Ufa and Moscow.
But Fan told the Global Times on Thursday that it's getting harder and harder for him to make money exporting to Russia.
"The Russian economy is in a recession. The ruble is depreciating fast, and the country's spending power has been hurt," he said.
Fan said that the dollar, the ruble, and the yuan are all used to settle transactions with Russia.
The yuan bought about 9.53 ruble ($0.14) at the beginning of 2015, but depreciated to 11.31 yuan by the end of the year. Against the US dollar, the ruble weakened by about 17 percent in 2015.
The depreciating ruble and slumping demand has also hurt the business of Jin Zhaohai, director of the trade department at HE Import and Export Corp in Suifenhe, a border city in -Heilongjiang.
Jin's employer used to export building materials and beer to Russia, but turned to importing Russian goods after the export business ran into problems.
According to Jin, Chinese consumers appreciate the Russian food he imports, such as flour and sausages. "We have customers as far away as Karamay, Northwest China's Xinjiang Uyghur Autonomous Region," he told the Global Times on Thursday.
Karamay is about 5,000 kilometers away from Suifenhe.
Imports from Russia fell by 5.2 percent year-on-year from January to October this year, though the decline was shallower than in 2015, when imports fell by 20 percent.
Jin acknowledged that competition has grown tougher as large Chinese companies muscle in on the Russian market. "I think bigger companies made more progress this year with trade with Russia," he said.
Challenges remain
Both Fan and Jin said that challenges remain in Sino-Russian trade, one of which is government restrictions.
"The Chinese government is -opening the door to Russian goods, but very cautiously. For example, it was only recently that the Chinese government allowed domestic companies to import wheat from Russia," Fan said.
"But the import quota for wheat is very tiny and State companies like COFCO Corp hold almost all of it," noted Fan.
According to Fan, large companies like COFCO have a lot of resources and might not urgently want to develop the business, but smaller companies that want to explore such a business have to pay a very high tax because they are very hard to get the import quota as large companies have hold almost all of it.
Logistics problems are another headache for traders.
Fan told the Global Times that there are still problems in the transportation network between China and Russia.
"For example, Russian wood is of excellent quality, but it can only be transported to China by rail, instead of larger load-bearing transportation like ships. This might have restricted the volume of trade between the two countries," he said.
Wang Haiyan, an associate research fellow at the Center for Russian Studies of Shanghai-based East China Normal University, said that on both sides, a prudent mood still prevails.
Some Chinese companies are cautiously holding back their business plans with Russia as they want to wait and see, Wang told the Global Times on Thursday.
Optimism holds out
Despite the challenges, experts still hold an optimistic view about the prospects for economic cooperation between the two countries.
Economic cooperation between Russia and China will change in the future, Song said.
"In the past, the structure of trade between the two countries was limited and more or less fixed. China exports everyday products and electromechanical equipment to Russia, and imports food in return," he told the Global Times on Thursday. "But in the future, high-tech products will also be traded between the two countries."
For example, Chinese hospitals have recently introduced a type of Russian-made, high-tech medical instrument, Song noted.
Song also said that the two countries can cooperate in areas like agriculture, 3D printing and space technology.
Wang also said that e-commerce is on the rise in Russia, which could offer many opportunities to Chinese companies.
Tmall, Alibaba's online platform, opened a "Russian pavilion" in September that specializes in Made-in-Russia products, the Xinhua News Agency reported on September 6.
But the sales figures related to the Russian pavilion haven't been released.
Song also said that the internationalization of the yuan has helped improve economic ties between the two countries.
