Chinese exports to Russia have been buffeted as the rouble swings in value, clear evidence of a ripple effect that Western sanctions over Russia’s invasion of Ukraine are having in China, even as it sticks by its neighbour diplomatically.
Chinese multinationals have stayed in Russia while their Western rivals flee but it is smaller Chinese companies that are more vulnerable to exchange rate losses, with several telling Reuters that much of their Russian business is on hold as both sides wait out the volatility.
“The products I was supposed to send to Russia are sitting in my warehouse,” said Deng Jinling, whose factory in eastern China makes vacuum flasks.
Last year, about 30% of her 40 million yuan ($6.29 million) revenue came from Russia.
“Our clients are all waiting to see if the exchange rate can improve a bit. Their costs are too high with the exchange rate at the moment,” she said.
Another Chinese trader, who only gave her surname Guo, said her firm acted as a middleman between Russian and Chinese clients but the volume of products such as bed sheets and kitchen equipment they usually handle had dropped by a third.
China is Russia’s biggest source of imports and sold $12.6 billion of goods to Russia just in January and February – mostly computers, cars, shoes and toys, according to customs data.
Both Russian importers and Chinese exporters are putting off business on fears of being caught out by the roller-coaster rouble.
“The depreciation of the rouble means that you lose money every time there’s a sale,” said Shen Muhui, who heads a trade group representing more than 20,000 small Chinese exporters to Russia.