BOFIT Viikkokatsaus / BOFIT Weekly 2018/24

President Putin met with Chinese president Xi and attended the Shanghai Cooperation Organisation summit last week. As usual, during the presidents' meeting was signed a raft of various cooperation announcements and some business deals e.g. on nuclear power.

Russia-China economic cooperation has increased gradually in recent years, but nowhere near the most optimistic hopes in Russia. Last year, bilateral trade returned to brisk growth after weaker development. Russian goods exports to China in 2017 were worth about $40 billion and imports from China nearly $50 billion. China was Russia's single most important trading partner, accounting for more than 10 % of Russian exports and 20 % of imports. Russia only accounted for about 2 % of China's total foreign goods trade. Russia exports to China mainly crude oil and imports consumer goods.

Services trade has a smaller role. While the value of bilateral services exports and imports was just over $2 billion last year, China was one of Russia's top trade partners in tourism.

Despite a few high-profile projects, investment between countries remains rather modest. The stock of recorded Chinese FDI in Russia last year was $4.5 billion, while the stock of Russian FDI in China was about $200 million. Determining country origins of FDI is, however, challenging particularly in the cases of Russia and China, where pass-through countries are often involved.