Analyst Osadchy: “Our trade exchange with China is far from equal”
According to recent banking statistics, the yuan has replaced the euro in the preferences of compatriots, becoming the second most popular currency for savings. In large state-owned banks, the yuan has overtaken the euro in popularity, approaching the US dollar. Are Russians doing the right thing by increasing deposits in Chinese currency and what are the main risks of yuanization of deposits? Maxim Osadchiy, head of the analytical department of BKF Bank, told MK.
— To understand this, let's pay attention to the latest news regarding financial relations between Russia and China. Let me remind you that on February 7, information appeared that the main Chinese bank for Russian importers, Zhejiang Chouzhou Commercial, had stopped all settlements with the Russian Federation due to the threat of secondary sanctions. For the same reason, the largest banks in China — Bank of China, China Construction Bank and Industrial and Commercial — have tightened their compliance (this term refers to a list of requirements to prevent violations of laws and regulations of official documents, regulations of regulatory authorities and the internal code of ethics of the organization) in relation to Russian clients. Bank of China. Since the beginning of February, two Chinese payment systems PingPong and Xtransfer, through which payments were made to Hong Kong banks, have stopped accepting any payments from Russian banks. On February 8, Russian President Vladimir Putin had a telephone conversation with Chinese President Xi Jinping. Assistant to the President of the Russian Federation Yuri Ushakov said that in the conversation the leaders noted: “for the further progressive development of trade and investment ties, it is important to continue working together to build a financial infrastructure that ensures reliable payments.”
< p>— Indeed, China’s share in Russian exports in 2023 reached 30.6%, and in imports — 36.5%. However, China's main trading partner is the United States. In 2023, China's exports to the United States amounted to $427.2 billion, while to Russia — almost 4 times less — $111 billion. Therefore, China is forced to limit financial transactions with Russia and avoid obvious violation of anti-Russian sanctions.
In an interview with Tucker Carlson on February 9, Vladimir Putin said that with his “friend, Chairman Xi Jinping,” he set a joint goal that this year we “were supposed to reach $200 billion in trade turnover with China.” Both Russia and China have exceeded this level. According to the head of state, Russian trade turnover with the Celestial Empire is “already $230 billion, according to Chinese statistics — $240 billion.” The President emphasized a very important thing: we have a balanced trade turnover, and it “complements each other in the high-tech sector, in the energy sector, and in the field of scientific development.”
— Indeed, financially, Russian-Chinese trade is quite well balanced: in 2023, imports from China amounted to about $111 billion, exports to China — $129.1 billion. What cannot be said, for example, about the critically unbalanced Russian-Indian trade: in April -November 2023, Russia exported goods worth $40.5 billion to India, but imported goods worth only $2.7 billion from India.
However, in economic terms, Russian-Chinese trade is still very, very far from being balanced. Its main problem is that China, taking advantage of its dominant position in the Russian market, sells its goods in Russia at inflated prices, and buys Russian goods at reduced prices.
So, according to Bloomberg, in 2024 This year, the average price of Russian gas supplies to China is expected to be $271.6 per thousand cubic meters compared to the price for Europe of $481.7 per thousand cubic meters.
— Yes, let’s say a Haval Dargo car in its cheapest version costs 1.5 million rubles in China, and in Russia, and domestically assembled, it costs 3 million rubles. The reason for such a big difference, of course, is not the “greed” of the Chinese, but also taxes, excise taxes and duties, as well as transport costs.
In addition, China sells goods to Russia mainly with high added value, primarily cars and smartphones, and Russia sells goods to China mainly with low added value, primarily mineral fuels, ores and metals.
It turns out that China is developing high-tech production through exports to Russia, and Russia is investing in infrastructure designed to supply raw materials to China. Moreover, in the event of another reversal, China will redirect its commodity flows to other countries, but what do you order to do with the infrastructure intended for the supply of raw materials to China? Agree, such an exchange is far from equal.
“The main task for the government now is to minimize the impact of sanctions. All other reasons faded into the background. Due to anti-Russian sanctions, non-cash payments in dollars and euros became either inaccessible or extremely risky for Russian enterprises, so they had to switch from “toxic” to “friendly” currencies.
— The fact is that neither the yuan nor the Indian rupee are freely convertible currencies, these currencies are partially convertible, and they can be used primarily for settlements with the issuing countries of these currencies. Therefore, an attempt to use the yuan as a reserve currency is a necessary measure “not from a good life.” Meanwhile, the National Welfare Fund (NWF) placed all its foreign currency funds in a single currency — the yuan. As of January 1, 2024, the assets of the National Welfare Fund contained 227.5 billion yuan worth $31.9 billion. Of course, such “diversification” carries great risks, as was demonstrated by the incident with the suspension of Chinese banks’ settlements with Russia. Let's hope this problem will be fixed soon.
— It's unavoidable. The process of “detoxification”—dedollarization and de-euroization—is accompanied by the process of yuanization. In particular, yuan are replacing dollars and euros in the foreign exchange deposit market. If on April 1, 2022, the share of non-toxic currencies in the amount of foreign currency deposits of individuals was only 0.4%, then on January 1, 2024 it increased more than 50 times and reached 22.9%. The amount of deposits in non-toxic currencies (mainly in yuan) reached $9.6 billion as of January 1, 2024. Moreover, Russians were especially active in opening deposits in yuan in December: their amount increased by $2.3 billion or immediately by 32.1%, while for the whole of 2023 — by 49.3%. Russians are starting to get used to the yuan.
— The problem is that a “non-toxic” currency can easily become “toxic”. In any case, we must not forget about diversification. If faith in the dollar and euro is undermined, then “eternal values” remain — gold, platinum and other precious metals. In 2023, Russians “got rich”: they bought about 95 tons of gold bullion. It seems like a solid figure, but in reality it comes out to only 0.65 grams per capita.