THE DEVELOPMENT TREND AND COUNTERMEASURES OF AGRICULTURAL PRODUCTS TRADE BETWEEN CHINA AND RUSSIA

Abstract. The trade of agricultural products between China and Russia is equally important to the economic. Due to market access issues, trade barriers, and difficulties for SMEs to enter the market, the development of agricultural trade between the two countries has been restricted. This article analyzes the problems in the development of agricultural trade between China and Russia, analyzes the causes of the problems, proposes solutions and suggestions, improves agricultural production and trade regulations, and reduces trade standards through e-commerce, so that enterprises join agricultural trade while expanding the scope of agricultural trade.

Keywords: agricultural product trade, influencing factors, countermeasures.

Since the 1970s, China has made important decisions on reform and opening up, the rapid development of the socialist market economy, and the unprecedented level of development in the overall production of the agricultural sector. China's agricultural products market is no longer dominated by sellers. Due to resource constraints and market limitations, China's agricultural development lacks strong driving force, and along with the accelerating process of world economic integration, the Chinese economy is taking the lead in the development of the world economy with a brand-new attitude. This requires us to make full use of the international market and attach importance to agricultural economic and trade cooperation. The Russian Far East region, rich in arable land resources, is linked to the mountains and waters of the Northeast China. The Sino-Russian agricultural trade and economic cooperation has natural advantages.

In recent years, with the impact of the global economic crisis and European economic sanctions imposed on Russia, Russia has gradually shifted its economic and trade partners to China. As a large agricultural country and close to Russia, China's geographical advantage has gradually deepened the cooperation between China and Russia in agricultural products trade. The proposal of the “One Belt and One Road” policy promotes cooperation between the political, economic and cultural aspects of China and Russia. The 2015 “China-Mongolia-Russia Economic Corridor” strategy puts forward the prospect of future economic and trade cooperation between China and Russia. Therefore, China and Russia future trade cooperation in agricultural products will also be deepened [1].

The main purpose of this study is to understand the development trend of Sino-Russian agricultural product trade cooperation under the new environment, namely the China-Mongolia-Russia Economic Corridor strategy, and the problems existing in the development of China-Russia agricultural trade, and accordingly propose targeted suggestions for promoting the development of agricultural trade between the two countries.

As a neighboring country, China and Russia have a border of 4,374 kilometers, due to the long border lines between China and Russia, trade between the borders is very convenient. Because of geographical advantages, China and Russia have reduced a great deal of unnecessary losses in the trade and transportation of agricultural products and promoted the future agricultural trade cooperation between the two countries [2].

In 2015, after the “Belt and Road” strategy was put forward, in order to better implement this strategy, China, Mongolia, and Russia proposed and gradually implemented the “China-Mongolia-Russia Economic Corridor”. The proposal of the “China-Mongolia-Russia Economic Corridor” strategy will provide opportunities for China and Russia to stagnate agricultural trade cooperation. The northeastern region of China mainly uses Heilongjiang Province as the center for the construction of access roads in the northeastern region of China, forming the docking of the eastern and western channels of China and Russia, providing facilities for trade cooperation between China and Russia, and using the docking channel to carry out trade transport in various industries. Maximizing the use of resources fits the idea of the "China-Mongolia-Russia Economic Corridor" strategy [3].

US and European economic sanctions against Russia in September 2014 restricted the import of some Russian agricultural products, Russia's imports and exports of agricultural products to the European Union and the United States have been significantly reduced, gradually shifting their trade focus to Asia. As a country close to Russia and Asia, China's trade in agricultural products with Russia is gradually closer in the relevant international context. Therefore, the prospects for future cooperation in agricultural trade between China and Russia are promising.

Next, Status quo of sino-Russian agricultural trade cooperation.

In the past 10 years, as a big agricultural country, China and Russia have gradually deepened their trade in agricultural products. In severe European economic sanctions, Russia's agricultural exports have been severely hit, gradually shifting trade to Asia. In the context of the “China-Mongolia-Russia Economic Corridor” strategy proposed in 2015, the trade cooperation with China's agricultural products was quickly promoted, so that the trade volume of agricultural products between the two countries continued to grow. In 2005, China's exports to Russia and Russia to China's agricultural products were US$740 million and US$150 million, respectively. By 2013, China's total agricultural exports to Russia had risen to 2.22 billion U.S. dollars, while Russia's total Russian agricultural exports to China rose to 11.4. Billion US dollars, the average annual growth rate was 18.7% and 52.8%, respectively (Table 1). Although China's total exports of agricultural products to Russia fell slightly in 2014 and 2015, China's exports of agricultural products to Russia from 2005 to 2015 showed a general increase. In 2014, Russia's exports of agricultural products to China also experienced a slight decline, but in 2015, they also increased significantly. The average annual growth rate of Russian agricultural exports to China exceeds 50%, indicating that China has gradually become a major exporter of Russian agricultural products. The trade volume of agricultural products between the two countries has grown rapidly, and they has gradually become a important partner in the trade of  agricultural products.

Table 1.

Import and Export Amount of China-Russia Agricultural Trade

According to Table 1, the total amount of Chinese agricultural products imported from Russia  has shown an overall growth trend in the past 10 years. In 2005, the total amount of agricultural products imported by China from Russia was 1.346 billion U.S. dollars, and by 2015 it had grown to 1.715 billion U.S. dollars, an increase of more than 49%; In the past 10 years, Russia’s imports of agricultural products from China have also shown overall growth. The total imports in 2005 were US$615 million, and by 2015 it had grown to US$1.621 billion, a growth rate of 164%, far exceeding that of China. The increase in the total amount of Russian agricultural imports. Although due to the impact of the global economic crisis in 2008, the total imports of mutual agricultural product trade between China and Russia have been affected, resulting in a significant decline in 2009, but both countries have escaped the impact of the economic crisis after 2010, both sides of the agricultural trade The total amount of imports has also continued to rise, showing that China and Russia have ample room for trade cooperation in agricultural products.

From 2002 to 2013, the average annual growth rate of bilateral trade between China and Russia reached 56.66%, while the average annual growth rate of bilateral agricultural trade between China and Russia was only 28.61%. It is precisely because of this growth gap that China's bilateral trade in agricultural products is relatively slow compared to other product trades, so there is still great potential for development and cooperation. In 2011, the economic and trade cooperation between China and Russia developed rapidly and the bilateral trade volume reached a record high. The annual total was close to US$80 billion. China became Russia's largest trading partner for the second consecutive year. However, since 2004, Russia's share of China's total imports and exports of agricultural products has been low, with exports to Russia accounting for an average of 3.07% of China's total exports of agricultural products. Imports of agricultural products from Russia account for only 2.89% of China's total imports of agricultural products. The scale of China and Russia is inconsistent with the economic and trade relations between the two countries. After 2009, the increase in the total import and export volume of agricultural products trade between China and Russia has basically grown in the same direction. This shows that China and Russia have closer agricultural product trade cooperation.

Figure.1. Total import and export of agricultural products volume about China and Russia

Resource: according to the UNCOMTRADE data to calculate

From the above analysis, it can be concluded that there are problems in the agricultural trade between China and Russia.

1. Market access issues of agricultural products between China and Russia

Due to the different national conditions of the two countries, there are great differences in the access conditions of the two sides in their respective agricultural products markets. This will inevitably lead to the loss of one party's interests. The market access threshold for Chinese agricultural products is relatively low, which makes the prices and quality of Chinese agricultural products on the market relatively low. Russia's market access standards are relatively high, and quality requirements of agricultural products are relatively high. Due to the differences in product quality and prices, the trade barriers on agricultural products between China and Russia emerge. The emergence of trade barriers has seriously hampered the development of agricultural trade between the two countries [4].

2. Problems of Agricultural Products Trade between China and Russia

The problems of import and export tariffs and import and export quotas for agricultural products trade between China and Russia are also prominent. At present, the average tariff of China's agricultural products is 15.2%, while that of Russia's agricultural products is 10.5%. However, in the face of relatively sensitive and sensitive agricultural products, the two countries will set a higher tariff barrier to limit imports. Then China's agricultural exports were  subject to export licenses and export quotas. This is mainly to avoid export policies that limit China's domestic natural resources shortage or depletion. This largely limits the number of Chinese agricultural exports. Russia, on the other hand, has stricter restrictions on the number of import quotas. This is mainly to protect the development of its agricultural products industry.

3. Problems in the trade of traditional agricultural products

The traditional trade pattern of agricultural products is relatively simple. Buyers find businesses or companies to find export channels, place orders, produce, and ship. Such a model is undoubtedly beneficial to well-known big companies, but for many small enterprises in China, this model has become the biggest problem facing them before they go abroad. The Chinese government has not found a better balance in this regard. Although the Chinese government has come forward to promote the Chinese companies in recent years and has obtained a lot of orders for enterprises, most of the real benefits are state-owned enterprises. Many private SMEs are far behind [5].

In response to the problems in the agricultural trade between China and Russia, I propose several suggestion.

1. Determine the access standards for agricultural products

The two sides established a standard mutual recognition system and a third-party inspection mechanism to improve the entry of agricultural products and promote the development of agricultural trade. Based on the principle of equality and transparency, China and Russia determine an access standard for agricultural products. The current development of China-Russia agricultural trade can be described as imminent. With clear market access standards and fair and equitable market rules, companies that really want to have a great deal will naturally restrict their own production behavior, thereby improving product quality and strengthening market competitiveness. There is a unified standard for export agricultural products. Having guidelines for the customs office will reduce many human factors. Objectively, it will promote the rapid and healthy development of China-Russia agricultural trade.

2. Eliminating Tariff Barriers in Trade Barriers

Both China and Russia have joined the World Trade Organization now, so both countries have the obligation to reduce import tariffs under this framework. In addition, the complementary advantages of the agricultural products trade structure between the two countries are obvious. A looser trading environment coupled with lower tariffs and lower market access thresholds can allow more agricultural products and agricultural product manufacturers to enter the two markets.

At the same time, if China and Russia want to remove tariff barriers, the two sides should also actively explore the feasibility of establishing a free trade zone. The establishment of a Sino-Russian free trade zone is conducive to the promotion of the strategic upgrade of China-Russia agricultural trade, and it also eliminates the tariff barriers of Sino-Russian agricultural trade, allowing The trade of agricultural products between China and Russia has achieved leaps and bounds.

3. Eliminating non-tariff barriers in trade barriers

When China and Russia want to deal with non-tariff trade barriers, the key is  the quality of their own products. They should increase investment in science and technology, or introduce or create new agricultural production technologies. In the long run, advanced agricultural industrial production technologies can greatly reduce the production costs of agricultural products, increase production efficiency and economic efficiency. At the same time, develop standardized agriculture, adopt international standards, improve product quality. China and Russia's powerful agricultural production enterprises must also accelerate the pace of “going global” and actively establish transnational corporations, which can directly bypass various barriers, reduce transaction costs and enhance the competitiveness of their agricultural products in other countries.

4. Promoting the trade of agricultural products through cross-border e-commerce

In recent years, e-commerce in Russia has  an explosive growth. In 2013, the volume of Russian e-commerce transactions reached 17 billion U.S. dollars, an increase of 41.7% over the previous year. In 2013, the proportion of people using online shopping in Russia increased from 28% in 2012 to 43%. These gorgeous data have attracted the attention of many Chinese e-commerce companies. Alibaba, AliExpress, Jingdong and other Chinese e-commerce giants are scrambling to tap the Russian e-commerce market. Many domestic small and medium-sized sellers use AliExpress or the official website, or Third-party platforms enter Russia. On November 11th, 2014, China e-commerce launched a global online shopping boom. Russians are one of the most active overseas buyers in this rush. Alibaba's AliExpress has now grown to be the largest e-commerce website in Russia. Cross-border e-commerce gives more opportunities to small and medium-sized enterprises. As an important e-commerce market in Europe, coupled with the upgrading of political trust and strategic cooperation between China and Russia, the Russian people's interest in online shopping has provided opportunities for China's development of e-commerce in Russia. Entering relatively low trade conditions, more varieties of agricultural products have joined the ranks of China-Russia agricultural products trade, and the type of agricultural products trade has gradually expanded to more varieties from the previous ones with less demand on time, and the trade of fresh agricultural products has gradually developed. The international cross-border e-commerce platform has given more small and medium-sized agricultural products companies the opportunity to join the international trade competition, allowing more Chinese and Russian agricultural product SMEs to join the trade in agricultural products.

Summing up, through the foregoing analysis, it puts forward countermeasures and suggestions for developing China-Russia agricultural trade. In order to eliminate the influencing factors that affect the trade of agricultural products between the two countries, the author proposed suggestion to eliminate tariff barriers and non-tariff barriers. In the aspect of agricultural product safety, laws and regulations for the establishment of a sound agricultural product trade and strategies for establishing access standards for agricultural products have been proposed. In the aspect of the development of agricultural products enterprises, the strategy of developing agricultural products trade through e-commerce was proposed.

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