Will the creation of a new corridor strengthen the trade relations between Russia and China?
According to Webangah News quoted by Mehr’s reporter, Hossein Shirzad, an analyst of agricultural development, in a special note for Mehr, discussed the creation of new rail corridors in which the two largest countries of the world play a key role in its creation. In fact, this corridor has led to solving the concerns of Russia and China in providing grains and other basic goods to ensure the food security of some countries in the world.
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Although Russian grain exports to China have doubled in the past 5 years, the volume is relatively small. For example, in 2021, China imported about 540,000 tons of soybeans from Russia, which was less than one percent of the total soybean imports. Likewise, China buys large amounts of wheat from around the world, but Russia supplied just less than 5% of that amount in 2021. However, there are also significant gaps in the understanding between China and Russia on agricultural cooperation.
Consequences and future of the land corridor (NLGC)
Russia’s grain industry relies on the government and large corporations to open up the Chinese market. In contrast, China brings small and medium-sized enterprises with its equipment, seeds and workers to development projects abroad, and does not use the capacity of the Russian grain industry or destroy the spaces of the past. Other obstacles to China-Russia agricultural cooperation include Russia’s import and export tariff policies, market protection measures, infrastructural limitations, and inefficient customs processes. In addition, differences in inspection and quarantine standards between Russia and China, as well as logistics and transportation bottlenecks, have prevented grain from the Russian Far East from being exported to China on a large scale. To address these issues, the two countries should establish criteria to ensure the direct export process.
On the other hand, the NLGC corridor is not only about opening a gateway for Russia to export grain to China, but also for Russia and China to export grain to Southeast Asia, the Middle East And Central Asia opens a way. A similar situation can be seen in China and Kazakhstan.
In 2014, the two countries established the China-Kazakhstan Joint Logistics Center in Lianyungang . This logistics center has not only facilitated the export of Kazakh agricultural products to China, but also to Southeast Asian countries. In early March 2017, a ship carrying 720 tons of Kazakh wheat was shipped to Vietnam from Lianyungang port, and it was the first time that Kazakh wheat was sold to the Southeast Asian market. After establishing this route, Kazakhstan also started exporting wheat to Malaysia. Therefore, the NLGC strategic corridor will not only allow more Russian wheat and other agricultural products to enter China, but also allow products from other Asian markets to enter, thereby positioning other major agricultural exporters such as Australia, Canada, and the United States in the future. They lose.
Finally, as China begins to import more grain from Russia via land corridors and other routes, there will be less incentive to pressure Russia to Resumption of the Black Sea grain scheme or help to establish other grain contracts. This corridor provides opportunities for China to strengthen agricultural trade with another major food producer and exporter, protect food security and further diversify supply routes to reduce risks associated with global trade bottlenecks. For Russia, the NLGC offers significant trade and economic benefits, as well as expanding agricultural production and exports to China, which could support Russia’s efforts to capitalize on its agricultural potential while strengthening its economy. In this regard, geopolitical and geoeconomic concerns should also be considered.
Global competition for more market share
In the midst of the Russia-Ukraine war, the NLGC was another demonstration of China-Russia strategic alignment and their “no-holds-barred” friendship. Currently, NLGC may not be a major concern for western grain exporters. On the other hand, this could change in the future if China’s agricultural imports change global and regional trade flows. After all, President Xi’s focus on security and strategic concerns above economic concerns suggests that Beijing will look to Eastern and Central Europe as well as Central Asia for grain imports rather than Western countries; Because the NLGC can strengthen China’s role in trade and food security and change the regional and global flows of agricultural products in Beijing’s favor as a major food exporter.
In the medium and long term, the expected expansion of grain and fertilizer exports from Russia and the countries of Central Asia to China and other parts of the Indo-Pacific could undermine the long-term dominance of Australia and challenge the United States in regional markets; such as South Asia and Southeast Asia. Given the NLGC’s proven ability to increase Russian wheat exports, Moscow may seek to increase its exports of other grains such as barley and soybeans to China. However, strong trade relations, including agricultural trade and greater food security cooperation between major exporters and major importers in the region remain attractive and likely.
Given the growing grain market, partly due to increased demand for animal feed in sub-regions such as Southeast Asia and South Asia, there may still be room for Export of agricultural products from Australia and the United States, although limited.
