Wednesday

16th Jan 2019

Focus

EU-Russia sanctions helping China to boost exports

  • Russia is turning to the east for economic partners and all the more so since EU sanctions kicked in (Photo: dolmansaxlil)

European exports are losing market share in Russia to China, with ongoing EU sanctions against Russia likely to be a contributing factor experts said on Tuesday (21 June).

"EU-Russia relations have been challenging since 2014 and ever since then China and Russia have increased their economic collaboration," Alicia Garcia-Herrero, an expert at the Bruegel Institute, a think tank in Brussels, said.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... or join as a group

The EU introduced economic sanctions against Russia in 2014 due to its role in the Ukraine conflict, with the measures shortly to be extended for another six months.

"As Europe became stricter with Russia, China liked it, to say the least, and the trend accelerated," Garcia-Herrero said.

"China and Russia are major trading partners. Europe is Russia's largest trading partner and China is a major competitor in terms of export capacity," she said.

She said Europe and China also compete with each other to get the best terms for Russian goods, such as nuclear energy reactors and machine components.

She added that increased cooperation between China and Russia would cause further losses for Europe.

Simulated scenario

In a simulated scenario, worked out by Bruegel, a 20 percent reduction in export tariffs between Russia and China as a result of a trade agreement would cause a 4 percent reduction in EU exports to both Russia and China, with EU exports to Russia the most severely affected.

"Since 2014 China's export share into Russia has increased more rapidly than before compared to Europe," Garcia-Herrero told EUobserver on the margins of Bruegel’s conference on Tuesday.

She said there is no definitive proof that the EU sanctions are the reason behind the market loss.

"It's hard to measure it properly. The increase in competition happened in the same time, but I can’t prove correlation with sanctions. If there is a correlation, more sanctions would mean more market share would be lost, but I have no proof of it," she said.

Sanctions should be world-wide

Alicia Garcia-Herrero added that in order to make a real impact on Russian foreign policy, the rest of the world would have to have followed the EU and the US in imposing restrictions.

Experts also said that Russia had, prior to the Ukraine conflict, in any case declared a pivot to the east that would have caused losses for Europe.

Chinese goods increased their share of Russia’s imports from 5 percent in 2000 to nearly 20 percent in 2015, the Bruegel study found.

It added that China has also increased its global market share at Europe’s expense.

Over the last decade, Europe’s share of Russia’s imports fell from 70 percent to 55 percent, the study said

Mingxi Sun, counsellor for economic affairs at the Chinese mission to the EU said he could not agree that China is the "biggest winner" of the Ukraine crisis, however.

"Our increased cooperation [with Russia] is in the interest of the two peoples," he said.

An EU official said that while the European Commission does impact assessments on the sanctions, their findings are classified. He added that the EU executive does not examine the knock-on effects of Russia’s trade relations with other countries, however.

The EU official said that market players have already factored in the six-month roll-over of the Russia sanctions and that the extension of measures will hardly impact the trend.

Experts at Tuesday’s event noted that Russia's economic weaknesses, linked primarily to the fall of oil and gas prices, also helped cheaper Chinese goods to increase their presence on the Russian market.

China, Russia and the EU's intermarium bloc

China's engagement with plans by some former Iron Curtain states to revive the 1920s-era "Intermarium" project has the power to hurt Russian geopolitical interests.

EU envisages China free-trade pact

In a new five-year strategy, the EU executive aims to attract Chinese investment to Europe and to agree a free-trade agreement under conditions.

Leaders shy away from China market status debate

Leaders are sitting down for the EU-China summit, but the crucial issue of China's market economy status will not be discussed officially. It still dominates industry's thinking on the relationship.

News in Brief

  1. British PM scrapes through no confidence vote
  2. Spanish PM calls for EU gender equality strategy
  3. Farage says bigger Brexit majority if second referendum
  4. Macron starts 'grand debate' tour after yellow vests protests
  5. Barnier: up to London to take Brexit forward
  6. Stimulus still needed, ECB's Draghi says in final report
  7. May's Brexit deal defeated by 230 votes
  8. German economy hit by global economic turbulence

Stakeholder

An open China brings opportunities to Europe

Some 60 years ago, the first major World Fair after World War II was held in Brussels. Sixty years on, China International Import Expo (CIIE), the first world expo dedicated to expanding imports, will open in Shanghai, China.

Supported by

Stakeholders' Highlights

  1. International Partnership For Human RightsKyrgyz authorities have to immediately release human rights defender Azimjon Askarov
  2. Nordic Council of MinistersSeminar on disability and user involvement
  3. Nordic Council of MinistersInternational appetite for Nordic food policies
  4. Nordic Council of MinistersNew Nordic Innovation House in Hong Kong
  5. Nordic Council of MinistersNordic Region has chance to become world leader when it comes to start-ups
  6. Nordic Council of MinistersTheresa May: “We will not be turning our backs on the Nordic region”
  7. International Partnership for Human RightsOpen letter to Emmanuel Macron ahead of Uzbek president's visit
  8. International Partnership for Human RightsRaising key human rights concerns during visit of Turkmenistan's foreign minister
  9. Nordic Council of MinistersState of the Nordic Region presented in Brussels
  10. Nordic Council of MinistersThe vital bioeconomy. New issue of “Sustainable Growth the Nordic Way” out now
  11. Nordic Council of MinistersThe Nordic gender effect goes international
  12. Nordic Council of MinistersPaula Lehtomaki from Finland elected as the Council's first female Secretary General

Latest News

  1. MEPs allow Draghi's membership of secretive bank group
  2. EU parliament backs Morocco deal despite row
  3. Barnier open to 'future relations' talks if UK red lines shift
  4. German spies to monitor far-right AfD party
  5. On Morocco, will the EU ignore its own court?
  6. UK parliament rejects May's Brexit deal in historic defeat
  7. EU suggests majority vote on digital tax by 2025
  8. MEPs redouble appeal on sexual harassment

Stakeholders' Highlights

  1. Nordic Council of MinistersNordic design sets the stage at COP24, running a competition for sustainable chairs
  2. Counter BalanceIn Kenya, a motorway funded by the European Investment Bank runs over roadside dwellers
  3. ACCACompany Law Package: Making the Best of Digital and Cross Border Mobility,
  4. International Partnership for Human RightsCivil Society Worried About Shortcomings in EU-Kyrgyzstan Human Rights Dialogue
  5. UNESDAThe European Soft Drinks Industry Supports over 1.7 Million Jobs
  6. Mission of China to the EUJointly Building Belt and Road Initiative Leads to a Better Future for All
  7. International Partnership for Human RightsCivil society asks PACE to appoint Rapporteur to probe issue of political prisoners in Azerbaijan
  8. ACCASocial Mobility – How Can We Increase Opportunities Through Training and Education?
  9. Nordic Council of MinistersEnergy Solutions for a Greener Tomorrow
  10. UNICEFWhat Kind of Europe Do Children Want? Unicef & Eurochild Launch Survey on the Europe Kids Want
  11. Nordic Council of MinistersNordic Countries Take a Stand for Climate-Smart Energy Solutions
  12. Mission of China to the EUChina: Work Together for a Better Globalisation

Join EUobserver

Support quality EU news

Join us