The bilateral trade volume between China and Russia has continued to rise in recent years. Against the backdrop of global trade tensions, especially with the intensification of trade frictions between China and the United States, the Russian market has become China's largest export market due to the deepening of friendly relations between China and Russia. As of November 2024, Russia's trade volume in the field of construction machinery is about 5.8 billion US dollars, accounting for 12.1% of the global market.
According to Chinese customs data, the trade volume between China and Russia in the first four months of 2024 was 76.581 billion US dollars, a year-on-year increase of 4.7%. In 2024, the bilateral trade volume grew by 4.1% against the trend, approaching 250 billion US dollars, demonstrating strong resilience and potential, laying a solid foundation for trade cooperation in 2025. The Russian Deputy Prime Minister predicts that the trade volume may reach 300 billion US dollars by 2030.
Ostapkovic, an expert from the Russian Higher School of Economics, stated that China has become an important non-competitive economic partner of Russia, with its share in Russia's foreign trade increasing from 15% to 35% and still growing. In the context of international sanctions, there is a broad prospect for cooperation between China and Russia. The direct settlement between the ruble and the Chinese yuan has promoted the development of the Russian market, and the settlement ratio between Chinese and Russian currencies has reached 92%.
Currently, the Russian market, with its environmentally friendly characteristics and enormous development potential, has successfully attracted over 150 Chinese engineering machinery and equipment brands. These Chinese brands continue to maintain a leading position in the Russian market.
The Russian market is full of vitality due to the huge construction demand, with key growth factors including record breaking residential construction plans and government support for housing renovation projects. In 2023, the residential construction area in Russia will reach 110.4 million square meters, and it is expected to add 120 million square meters annually by 2030. This provides broad development prospects for the building materials market, and government policies further stimulate market vitality. China is the main importer of building and decorative materials for Russia, with an annual import value of approximately 1.26 billion US dollars for stone, ceramics, and glass products, accounting for 29.2% of the total import value.
Moscow Major City Project
The big city project aims to balance the development of architecture, transportation, engineering, and social infrastructure. The project covers 7070 hectares in western Moscow, including 3224 hectares of planning review area, involving the reconstruction of industrial areas and the establishment of multifunctional public residential areas. Expected to be completed by 2035, divided into three phases, the goal is to modernize nearly a quarter of Moscow, increase real estate development by 5 million square meters, construct new highways and public spaces, and improve infrastructure. The project will promote modern living in Moscow, improve transportation connections, rebuild housing, and impact the development of surrounding areas.
Moscow Smart City 2030
Currently, Moscow and its surrounding satellite cities are implementing a large-scale transportation construction project. The main goal of this project is to achieve effective integration of suburban commuter trains in Moscow with the urban subway system through the construction of new subway lines, thereby reducing the scope of urban commuting and promoting economic development in the surrounding areas of Moscow.
Chinese brands urgently need to find market increment
In the past two years, the market structure in Russia has undergone significant changes. Despite the impact of sanctions, many European and American brands have withdrawn from the market, but Asian companies are gradually filling this gap. At present, the Russian market is gradually dominated by Asian brands, including some well-known and emerging brands in China, as well as equipment provided by manufacturers in Turkey and India.
In 2023, with the withdrawal of European and American brands, a large number of Chinese equipment will enter Russia, leading to a significant increase in Sino Russian trade. However, in the first three quarters of 2024, sales of road machinery in Russia generally declined, with a decrease ranging from 20% to 46%. The transaction volume in the rental market has also decreased, with Chinese brands dominating. Experts are pessimistic about the prospects of the Russian market, due to factors such as loan dependence, fluctuations in central bank interest rates, international payment difficulties, rising costs of waste equipment disposal, and currency depreciation. These factors have led to an increase in equipment prices and hindered market recovery. The founder of TEKHBAZA predicts that by 2025, the total demand for the Russian construction machinery market will further decrease, and the sales growth rate of new special equipment may be negative 5% to negative 15%. Some non-core participants may withdraw from the market.
Despite fierce market competition and declining demand, Chinese manufacturers still have growth potential. In Russia, small equipment is popular due to its wide applicability, prompting brands such as Liugong, Longgong, and Xiagong to improve their product lines and launch small loaders and compact wheel excavators to explore niche markets. At the same time, these manufacturers are investing to expande their maintenance network in Russia, such as establishing new service outlets in Moscow, to improve service efficiency and promote the development of after-sales business.
Chinese manufacturers are paying attention to changes in the Russian market, improving equipment quality, and expanding product lines to maintain market competitiveness by 2025.
It is expected that by 2025, the "new tariffs" policy implemented by the Trump administration may trigger a new round of conflict in the China US trade war. This will encourage Chinese companies to rely more on Russia's construction machinery market. However, with the intensification of competition in the Russian market and the complexity of the credit and financial environment, small brands may quickly exit the market, while competitive core brand market share will be further consolidated.