Chinese flood: can a wave of goods from China overwhelm Russia
China has become the main target of the import duties policy of the US administration led by Donald Trump, which has already imposed tariffs on China twice in addition to those that existed under the previous government. Although this has greatly puzzled Beijing, the strongest effect may be felt by third countries, especially developing countries, where Chinese goods will flow. Some of them have already been forced to cut hundreds of thousands of jobs. Whether this threat will affect Russia, which has been expanding trade with China in recent years, is discussed in the Izvestia article.
Collateral damage
China began to increase its exports to the largest developing countries (which also have a powerful industrial sector) in previous years, against the background of cooling relations with its main market, the United States. According to Bloomberg, Brazil's share of Chinese exports from 2017 to 2024 increased from 1.2% to 2%, India — from 2.9% to 3.4%, Indonesia — from 1.4% to 2.1%, and Vietnam — from 2.4% to 4.5%. In general, the share of these countries increased by one and a half times, from 8% to 12%.
And in absolute terms, this growth is even more impressive. For example, shipments to Vietnam jumped from $58 billion to $111 billion. The fact is that China has relied on export growth amid the crisis in the national real estate market. Economic growth is spurred by a steady increase in supplies abroad. It's not just about the sale of expensive durable goods like electric cars and solar panels, but also about clothing, electronics, cables and other items that these countries largely produce themselves and export abroad.
Most of the world's largest economies have increased imports from China (the only exceptions are the United States, Japan, and France), but imports in general, excluding China, have declined in many countries (including the United States, Great Britain, Australia, and Indonesia).
The result was the loss of many jobs. For example, in Indonesia's light industry, it amounted to 250 thousand. The flow of Chinese goods against the background of US duties could destroy another half a million jobs, a quarter of their total number. Some of these countries have already imposed or are about to impose their own import duties on China. Others prefer indirect taxation. For example, Malaysia has introduced a 10% VAT on online purchases of cheap goods, referring specifically to shipments from China.
Although Chinese businesses (like any other) periodically use dumping schemes to conquer foreign markets, this is rather an exception to the rule. China's main advantages are economies of scale and deep expertise in manufacturing and logistics. In China, production is easier to concentrate, and supply chains have been polished for decades. It is difficult to fight against China's completely legal superiority, even for countries that have their advantages, for example, cheaper labor.
A threat to import substitution?
Russia is not the last country on the list of China's trading partners. The trade turnover grew rapidly year after year in the 2010s, and has recently accelerated further. If in 2019, Russia's imports from China amounted to about $50 billion, then in 2024 it reached $116 billion — and this is excluding trade through third countries. Could it happen that Chinese goods will flood the Russian market, threatening import substitution?
Raisa Donskaya, head of the International Trade and Foreign Economic Activity group at the Sikurs Team, notes that the Chinese do not need to expand their presence here much.
— Chinese businessmen do not consider the Russian market to be as promising as it was once seen by Western countries that built automobile plants in our country, for example. We expected that the Chinese would also start building factories, but this did not happen. From the point of view of the long—term perspective — 10-20 years - Russia is not a strategic market that is developing so much that it is interesting. Therefore, now the Chinese are most likely satisfied with the current situation.
According to Alexander Silakov, director of S+Consulting, the duties were introduced relatively recently and it is too early to draw conclusions. It will not be easy for China to redirect a large volume of goods to other markets, as the capacity of these markets has not increased.
— It is unlikely that anyone will buy a second and even more so a third smartphone just because it appeared on the store counter. This is also true of Russia — you should not expect an excessive flow of cheap goods. For such a scenario, there should first of all be a flow of goods from Russia to China (as part of a trade exchange) and a corresponding market capacity in Russia. Of course, there may be some increase in supplies, but it is unlikely that it will be significant, the expert believes.
According to him, if the duties are long-term, it will most likely lead to the migration of industry from China, but South-East Asia, which has a good demographic potential, is out of competition here. One should not discount some reindustrialization of the United States, the source noted. For Russia, such a long-term cooling in relations between the United States and China provides a chance for its reindustrialization and the purchase of decent equipment that was used in China, but is clearly redundant when the American market falls out, Silakov added.
"The size of the discounts that Chinese manufacturers will be able to provide should not be overestimated: as a rule, in such cases we are talking about discounts of the order of one percent, in rare cases 10% or more," says Dmitry Kuznetsov, senior researcher at the International Laboratory for Foreign Trade Research at the Presidential Academy.
He noted that over the past three years, the Russian economy has faced much larger changes in trade costs, both due to changes in the exchange rate and due to increased logistics and payments, followed by a partial rollback after adjusting to sanctions.
Kuznetsov believes that in this regard, one should not expect a massive flood of the Russian market with goods from China, since the room for maneuver for Chinese manufacturers is well within the limits of changes to which Russian consumers and manufacturers have already largely adapted.
According to Olga Belenkaya, head of the Macroeconomic analysis department at Finam, Russia will now be less affected by the expansion of Chinese goods.
— The fact is that its peak has already occurred in 2023-2024, when, due to geopolitical and sanctions reasons, Chinese products most actively replaced the departed Western brands. For example, in 2024, imports of Chinese passenger cars to Russia increased by 30.5%," the analyst cited the data.
Deflation versus inflation
In theory, if the expansion of supplies from China to Russia increases, the effect may even be positive. Unlike in South and Southeast Asia, Russian industry is much less export-oriented and less likely to occupy the same niches as Chinese industry. On the contrary, the main problem in Russia now is the shortage of workers and inflation. China, on the contrary, is on the verge of deflation (and this greatly worries the authorities in Beijing). Is there a chance that China will export its deflation to us, which could lead to a cooling of price growth in Russia at the moment?
Alexander Silakov believes that there is no reason to expect any deflationary impact on Russia.:
— There is a good example: the Chinese car industry has overstocked the Russian market, but dealers are in no hurry to sell car stock for a song.
According to Dmitry Kuznetsov, given the restrictions faced by Russian imports, the reduced ability of Chinese manufacturers to sell their products in the United States plays into the hands of Russian importers.
Increasing supplies to a certain market is inevitably associated with the need to reduce selling prices. This need will be partially restrained by the strengthening of the ruble, which in itself increases import demand, as well as a noticeable decrease in freight transportation rates from China.
— However, on the other hand, the current high key rate limits consumer demand, so even greater price concessions may be required from Chinese manufacturers. Judging by the fact that, according to the latest data from China's customs statistics, Russia's share in Chinese exports has decreased to 2.7% (at least since November 2022), the effect of reducing consumer demand looks more powerful, says the source.
However, according to Kuznetsov, these factors will somehow reduce inflationary pressure in the Russian economy.
Olga Belenkaya, in turn, notes that imports in value terms in January–February decreased by about 5% compared to the same period last year. According to Autostat, in the first two months of 2025, new Chinese passenger cars were sold in Russia by 17% less than in the same period last year.
— Saturation of the market, overestimation of prices due to recycling and reduction of consumer lending due to prohibitively high loan rates are affecting. There is more and more information in the media about the growth of stocks of cars, electronics and clothing," she concluded.
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