China is buying less coal from Russia than last year, data shows in the latest signal of trade cooling between the countries.
China's purchases of Russian coal fell by 21 percent year over year between January and the end of November-from $13.3 billion to $10.5 billion, the think tank Centre for Research on Energy and Clean Air (CREA) said.
"The Russian coal sector has taken a big hit in 2024," Vaibhav Raghunandan, an EU-Russia analyst and research writer at CREA, told Newsweek in a statement on Thursday. "Russia is incredibly dependent on sales to China, which-despite falling this year-still make up 45 percent of all Russia's coal export earnings."
The dip is part of an overall decrease in Russian coal exports to all countries, which have fallen by 23 percent in the 11 months of the year to November-from $30.3 billion to $23.3 billion.
Raghunandan said the Russian coal sector had faced rising costs of production paired with a fall in the price of coal. Logistics challenges, such as restricted access to rail capacity and unprofitable shipments via terminals, have contributed to a fall in profits.
"China's introduction of duties on Russian coal have made it less competitive, as other suppliers, such as Indonesia and Australia-who are part of the free trade zone with China-are not affected by these duties," the analyst added.
Raghunandan said China's total imports of seaborne coal rose 8.6 percent between January and the end of November, but the quantities purchased from Russia fell significantly.
"A drop in the investment in the Russian coal industry is expected to fall by around 30 percent in 2024, which shows a bleak outlook for the Russian coal industry," he added.
Newsweek has contacted Russia's Finance Ministry for comment via email.
Russian President Vladimir Putin has repeatedly boasted about his country's economic relationship with China after markets dried up following Western-led sanctions stemming from his invasion of Ukraine. But the drop in Chinese purchases of Russian coal adds to growing questions about the countries' "no limits" partnership following the record $240 billion trade in 2023.
Moscow is struggling to sell its natural gas to its neighbor, and Chinese banks are increasingly jittery about working with sanctioned financial institutions in Russia after the latest U.S. Treasury Department sanctions on more than 50 Russian credit institutions.
Russia has also imposed a 55.65 percent tariff on Chinese-made furniture parts following a decision by customs officials in the far-eastern city of Vladivostok. However, Vasily Astrov, an expert on the Russian economy from the Vienna Institute for International Economic Studies, said the suggestion of a trade war was "somewhat exaggerated."
"Russia will not want it in the first place because it will lose it without any doubt. China provides to Russia a lifeline on so many fronts that risking those ties will be suicidal for Russia," he told Newsweek.
He said that growing import barriers for Chinese cars in Russia would "be much more of importance than those in furniture trade."
Astrov continued, "Russia used to run for decades a very protectionist strategy with respect to car imports, so I wouldn't be surprised if this works with Chinese carmakers as well."
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This story was originally published December 12, 2024, 5:43 AM.