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Sino-Russia trade plunges, but prospects remain
(Xinhua)
Updated: 2009-03-19 14:39

SUIFENHE, Heilongjiang -- Zhou Deshun looked disheartened at his store in Suifenhe, a small city near the Chinese-Russian border, as there was not even a single customer for almost a whole day.

"Business is hard hit this year as there are much fewer Russian customers because of the deepening financial crisis," said Zhou, who engaged in border trade in the northeastern province of Heilongjiang.

Zhou was not alone in the slumping border business. Many other venders nearby were playing cards together to kill the time.

A Russian businessman, who only gave his first name Alexander and was on a purchasing tour to Harbin, acknowledged that he faced more funding  pressure this year.

"I only purchased half of the amount compared with a year ago. Worse still, the profit margin is much lower," the Russian said.

The hard times came following sharp declines in the trade between China and Russia since late last year as the worsening economic conditions took a toll on the export sectors.

Chinese Premier Wen Jiabao (2nd L) and Russian Prime Minister Vladimir Putin (2nd R) sign a joint communique on the 13th regular meeting between Chinese and Russian prime ministers in Moscow, capital of Russia, October 28, 2008. [Xinhua] 

In January, Russia's import from and export to China plunged 51 percent and 27 percent, respectively, year-on-year, the first declines in 10 years, said Sergey Tsyplakov, Russian trade representative in China.

The monthly data contrasted starkly to the full-year 2008 figures. The two-way trade stood at US$56.8 billion last year, an increase of 18 percent over 2007, according to the Chinese General Administration of Customs. The growth rate, however, was lower than the 44.3 percent in 2007.

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Yang Chuang, a professor at the China Foreign Affairs University, said the global financial crisis weakened the Russian economy where income and demand were falling.

The sluggish domestic demand, worsened by the devaluation of Russian ruble, led to a decline in imports from China, while sharp declines in the prices of energy and raw materials hurt Russia's exports, he said.

Bilateral trade faces severe challenges in the first half of 2009, but conditions are expected to improve as early as in the second half, according to Tsyplakov.

In 2008, China remained Russia's second largest trading partner only after the European Union, while Russia ranked as China's ninth largest, compared to the seventh in 2007, according the Chinese Ministry of Commerce.

Despite the current difficulties, the global financial crisis would not change the long-term growth prospect for the China-Russia trade, Yang acknowledged.

The professor noted that the crisis has not affected the Sino-Russian strategic partnership of cooperation, a driving force for the bilateral economic and trade cooperation.

"From a long-term perspective, there is huge growth potential for the bilateral trade and economic cooperation," he said.

China and Russia had effective long-term cooperation in a number of large projects from sectors such as oil, nuclear power, aviation and space, Yang added.

Last month, the two nations signed a oil-for-loan deal, under which China offered Russia US$25 billion of long-term loan and Russia would supply 300 million tonnes of oil through pipelines to China from 2011 to 2030.

The two sides had also agreed on the construction of a pipeline from Russia's Skovorodino in its far-eastern Amur region to China's northeastern city of Daqing.

During a visit to Russia last October, Chinese Premier Wen Jiabao and his Russian counterpart Vladimir Putin expressed satisfaction over the bilateral cooperation and agreed to optimize trade structure, stimulate two-way investment and regulate trade order.

The bilateral economic and trade cooperation was still in an initial stage, acknowledged Artem Semenov, chairman of the Association of National Companies Promoting the Development of Trade and Economic Relationship with China.

The two nations should make more efforts to push forward the bilateral trade cooperation to meet the annual two-way trade target of US$60 billion to US$80 billion in 2010, Semenov said.

 

 

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