Sosnina played down growing fears of an economic slowdown in China and a stagnating economy in Russia, saying her company would continue to tap into the Chinese market.
“There will be a slowdown but there is such a huge potential in the Chinese market and the Chinese economy, which is definitely long-term, so I don’t think two or three years of slowdown will change the strategic horizon,” she said.
“It will take some time for China to adjust to the new situation. The Chinese market will take some adjustment but the growth in domestic consumption will compensate,” she said.
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Ilim, currently the largest investor in Russia’s forestry industry, is seeking to expand its production in Russia’s far east, a move which Sosnina said could facilitate the company’s trade with Asian partners, particularly China.
The company has plans to increase production, particularly at its mills in southeastern Siberia, where Ilim is investing in a new pulp and paperboard mill at Ust-Ilimsk, expected to be completed in late 2021.
Ilim has also spent another US$260 million upgrading its logistical network in the region, which could help increase its annual exports to China to 2.4 million tonnes of pulp and other paper-related products.
Sosnina expects big business for Ilim for its high-end and recyclable products as a result of Beijing’s environmental crackdown, which began last year with a tightening of pollutant rules, including a ban on waste imports such as scrap paper, plastics and metals for recycling and reuse.
Her vision for Ilim’s growth in its business with China coincides with a growing closeness between Beijing and Moscow in response to pressure on both countries from the US. Top of the agenda has been a deepening of trade links, especially in non-energy sectors.
According to official figures, trade between China and Russia grew almost 25 per cent last year to US$108 billion, passing the US$100 billion milestone, but still far behind the goal of US$200 billion by 2020 set by their leaders in 2011.
As Russian companies like Ilim work to extend their reach into China, President Vladimir Putin and his Chinese counterpart Xi Jinping are also working to strengthen the links between their two countries.
Earlier this month, Xi made a three-day state visit to Russia in which he described the relationship as a “comprehensive strategic partnership of coordination for a new era” that would reach the “highest level in history”.
In a show of solidarity with China, Putin said that aggressive U.S. tactics such as the campaign against Chinese telecoms firm Huawei would lead to trade wars - and possibly real wars.
Putin accused Washington of “unbridled economic egoism”. He singled out U.S. efforts to thwart a Russian gas pipeline to Europe and a U.S. campaign to persuade countries to bar Huawei, the world’s biggest telecoms equipment maker, from supplying network gear.
“States which previously promoted free trade with honest and open competition have started speaking the language of trade wars and sanctions, of open economic raiding using arm-twisting and scare tactics, of eliminating competitors using so-called non-market methods,” said Putin.
“Look for example at the situation around Huawei which they are trying not to just squeeze out, but to unceremoniously push out of the global market. It’s already being called the first technological war of the emerging digital era in some circles.”
Jus days after the Xi’s state visitat the Shanghai Cooperation Organisation leaders’ summit in Dushanbe, capital of Tajikistan, Putin surprised Xi with a birthday gift of Russian ice cream – a move which has been interpreted as part of an effort to promote Russian products to Chinese consumers.
Additional reporting by Reuters
This article appeared in the South China Morning Post print edition as: trade war ‘has World economy shifting’
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