Introduction

Immediately following the Russian invasion of Ukraine in February 2022, the United States and its allies (“the West”) imposed sanctions that effectively cut Russia off from Western markets, banks, and business. In response, Russia and the People’s Republic of China released competing statements and policy liberalisations intended to expand Sino-Russo trade free from “third-party” influences, currencies, and institutions.

Previously, trade between the two countries was broadly characterised by the exchange of Russian commoidites, energy, and military technology for Chinese electronics, machine parts, finished goods, and specialty chemicals. Given their relative marrket sizes, productive capabilities, and economic structures, it seems unlikely - if not impossible - for this exchange to change significantly. 

Without effective and affordable monitoring, nations become trapped in a negative feedback loop wherein poor enforcement capacity permits regulatory violations that further weaken the perceived power of the government.  This not only affects the economic vitality of tourism and agriculture, but also undermines the long-term autonomy and agency of African countries, their people, and their policy mandates.

Finally, the actual logistic networks between China and Russia are severely underdeveloped, and especially in Russia. At the time of writing, all cargo trains on the Trans-Siberian railroad have been fully booked until the end of October, with exporters paying twice as much as pre-war prices in order to secure long-term allocations. Despite the opening of a new rail border bridge in northeast China, sustainable trade will require an entire overhaul and expansion of the newtork running from Moscow to Beijing - no mean feat for Russia's struggling economy. 

Similarly, Russian grain and grain oils are generally not produced by large enough growers to meet Chinese logistics minimums. For example, most rapeseed oil refineries in Russia can supply between 500 and 1,500 metric tonnes of product per month - a more than suitable amount for Europe's smaller populations and higher prices - but nowhere suitable for China, where the river barges for food oil have cargo minimums of at least 5,000 metric tonnes. Although the total amount of goods produced is large, it is spread out among many smaller growers - and the vast majority are not licensed by the Chinese import authority. Although Beijing lifted grain prohibitions against product from certain Russian regions, this does not actually grant permission to those companies. 

Breaking the Cycle with Data

A major problem facing air pollution activists today is the lack of data required to inform people, advise decision-makers, and actually punish polluters.  

But with an affordable, durable, and automated pollution monitoring system, regulators can quickly overcome "human inefficiencies" in present systems. What's needed? Political desire, public activism, and basic funding. The goal? A sustainable pollution control system that rewards compliance and enhances business activity, rather than impedes it.

LOCAL INSIGHT

The ceiling for Sino-Russian trade is low and raising it will take years.

17 APRIL 2022

Two Lakes Commodities

The Two Lakes Group conducts a wide range of research, due diligence, assurance, and deal review services for commodity traders with a global outlook. Whether it's Tanzanian sesame seeds or Romanian food oils, our team has the experience and knowledge to provide detailed and timely advice. At the same time, we know our limitations and always look to learn new things from partners and friends. 
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