SHANGHAI: Chinese exports to Russia are slowing as the rouble swings in value, evidence of a ripple effect that Western sanctions over Russia's invasion of Ukraine are having on China, even as it sticks by its neighbour diplomatically.
Chinese multinationals have stayed in Russia while their Western rivals flee, but it is smaller Chinese companies that are more vulnerable to exchange rate losses, with several telling Reuters that much of their Russian business is on hold as both sides wait out the volatility.
Deng Jinling, whose factory in eastern China makes vacuum flasks, said that the products I was supposed to send to Russia are sitting in my warehouse.
A year ago, about 30 per cent of her 40 million yuan US $6.29 million revenue came from Russia.
Our clients are waiting to see if the exchange rate can improve a bit. She said that their costs are too high with the exchange rate at the moment.
Another Chinese trader, who only gave her surname Guo, said her firm acted as a middleman between Russian and Chinese clients, but the volume of products such as bed sheets and kitchen equipment they usually handle had dropped by a third.
China is Russia's biggest source of imports and sold US $12.6 billion of goods to Russia in January and February - mostly computers, cars, shoes and toys, according to customs data.
Russian and Chinese importers are putting off business due to fears of being caught out by the roller-coaster rouble.
Shen Muhui, who leads a trade group representing more than 20,000 small Chinese exporters in Russia, said the depreciation of the rouble means that you lose money every time there's a sale.
He said a few Russian customers were willing to use Chinese yuan to pay for goods but not enough to make a difference, and demand for his warehousing services in Russia had slumped by about a fifth since the Ukraine war began and about 90 per cent of his members had been affected.
Shen said that you can't raise prices because the Russians can't afford it. You make a loss when converting receipts into yuan.