Trade Barriers Between Chinese Regions and Russia

Abstract

Official Chinese statistics data were applied to analyze the dynamics and structure of trade interactions between regions of China and Russia; the border effect on export and import flows was estimated. The analysis showed that import flows from Russia to China are distinguished by a significantly greater uneven distribution between Chinese regions as compared to export ones. Assessment of the gravity dependences indicated that, compared with other countries, the border effect on exports from Chinese regions to Russia was characterized by rather high values, and the barriers hindering access of Russian products to the markets of Chinese regions were higher in ad valorem equivalent than for other foreign countries. Based on the estimates obtained, it was revealed that in recent years, the import of Russian products to Chinese regions has faced large barriers compared to export of products from Chinese regions to the Russian market. It has been determined that with the leveling of barriers, the advantages of access to the Russian market will further strengthen the coastal Chinese regions, and exports to Russia may become even more uneven between Chinese regions. It is shown that with a significant reduction in barriers, imports from Russia to Chinese regions can increase due to an increase in the supply of Russian products to almost all Chinese regions. The estimates give grounds to state that Russian suppliers need to diversify the supply of goods between Chinese regions in order to bypass intermediaries and develop new regional sales markets in China.