Several recent news articles have discussed Chinese investment in Russian farmland for the purpose of soybean production, and the resulting increase in Chinese imports of soybeans from these farms as a substitute for soybeans from America. This piece considers the geoeconomic implications of these developments, focusing on two main points: 1) What is the potential for the use of Russian farmland for the purpose of soybean production and trade, and what is the possible impact on Chinese trade with the United States and other countries? And 2) is Russia-China cooperation or conflict more likely here?

The Origins of Chinese Investment in Russian Farmland for Soybean Production and Trade

Both Russia and China have had recent economic confrontations with the West, causing each country to look for new markets for both importing and exporting. Not surprisingly, given their geographical location, they have looked to each other. As a recent Nikkei Asia article ("Russian food industry's pivot to China sows rewards and risks") put it, “[t]he [Russian Far East] shares a 4,000 km border with China and offers a favorable climate and soil for growing a wide range of crops -- including soybeans, corn, wheat, rice and barley.” And while China has a relatively high population density and limited farmland, Russia has “an abundance of” available land, including “2.5 million hectares of cultivated area and another 4 million hectares of pastures and hayfields.” Other sources have questioned the amount of land in the Russian Far East that would be able to grow soybeans productively, however.

According to a BBC article, Chinese companies first started operating in Russia's Far East region in the early 2000s, but interest picked up after the global financial crisis of 2008. The search intensified with the beginning of the U.S-China trade war during the Trump administration, which had led to Chinese tariffs being imposed on many U.S. products, including soybeans. China needed to find alternative sources for these products.

In June of 2019, during President Xi’s visit to Russia, the two countries signed the China-Russia Joint Statement on the Development of a Comprehensive Strategic and Cooperative Partnership in the New Era (中俄关于发展新时代全面战略协作伙伴关系的联合声明). Among other areas, the Joint Statement highlighted more cooperation in the supply chain of agricultural production, processing, logistics and trade, especially for Russia to expand exports of soybean and soybean products to China.  A Xinhua report noted that during the meeting, “Putin ... said Russia is ready to ... export more soybeans and other farm produce to China.”

Following up on this, China’s General Administration of Customs announced (link in Chinese) in July of 2019 that all soybeans grown in Russia can enter the Chinese market as long as they pass inspection and quarantine at Customs. Previously, only soybeans from certain areas of Russia could be imported to China, according to a 2016 Customs announcement (link in Chinese).

According to a Xinhua report (link in Chinese), China became the main importer of Russian soybeans in 2018, taking 93 percent of Russia’s soybean exports. One of the major Russian soybean exporters today is Rusagro. In July of 2019, Rusagro announced its first shipment of soybeans to China, noting that: “Considering changing of traditional trade flows, China may become an important export destination for Russian agricultural products.”

Along with trade, cross-border investment is expanding as well. Chinese companies are using Russian land to grow soybeans that are exported back to China. For example, Jiawo Beidahuang Agricultural Holdings Co., Ltd. (link in Chinese) and Dongjin Group (link in Chinese) have either bought (link in Chinese) or leased (link in Chinese) land in Russia for soybean planting. These two companies also have plans (link in Chinese) to build soybean processing plants in Russia.

According to the Nikkei Asia article, Russian authorities “have sought to entice Chinese investors to the Far East by offering them large plots of land on leases ranging from three to 49 years.” Chinese investors have the skills and knowledge to boost the efficiency of Russian farming (although Russian land is less productive for soybean production than the land of other major soybean producers, such as Brazil).

The Limits of Russia-China Soybean Trade

One local agribusiness executive has touted the potential for increased Russian soybean production and trade, stating that “with the proper investment the region could boost its soybean production to 15 million to 17 million tons per year, a quantity he claimed would be sufficient to completely squeeze U.S. soybeans out of the Chinese market.” But the reality is that production is likely to be more limited. Russia's current soybean production is small compared to leading producers such as Brazil or the United States. According to UN Comtrade data (see table below, figures in millions of USD), while there was a surge of Russian soybean imports into China from 2014 to 2015, and then another from 2017 to 2018, Russian soybeans have taken only a small amount of market share from Brazil and the United States over the past few years. The increase in Russian exports is substantial, but it comes from such a low base level that these exports are still far below the Brazilian and American figures. (The quick rebound of U.S. soybean imports in 2020 is likely the result of the U.S.-China Phase One trade agreement.) ​​

Chinese soybean imports by year, from selected countries (figures in millions of USD)




































And one study that looked at this issue expressed skepticism about the potential here, noting that: “The current Sino-Russian agricultural agreement has little chance of increasing soybean production because of tariffs, unstable regulatory policies, and restrictions on seeds and labor.”

Can Russia and China Maintain Good (Trade) Relations?

As much as businesses and some government leaders would like to deepen Russia-China economic relations here, the reality may be less promising.

At the end of 2020, Russia introduced a 30 percent tariff on soybean exports to secure domestic supplies and stabilize domestic prices. Chinese media reports noted (link in Chinese) that the export tariffs would not have much impact on the Chinese market because Russian soybeans still make up a small fraction (less than 1 percent, link in Chinese) of China's soybean imports. But where there is trade, trade tensions are always a possibility. (Perhaps looking to diversify further, in 2020 China signed an agreement with Tanzania to import soybeans, the first of its kind with an African country, although this agreement is unlikely to change the overall dynamic much because soybean production in Africa is low.)

More personal tensions are probably inevitable here as well. According to a BBC article, some Russians are unhappy with the influx of Chinese farmworkers, viewing China's Russia policy as “expansion” and feeling that China “threatened Russia's territorial integrity.” And a South China Morning Post article points to concerns regarding “the large influx of Chinese workers and a dissatisfaction with Chinese farming methods … like using too many pesticides and fertilisers.”


When both Russia and China are involved in something, there will be many people in the United States and other parts of the West who will immediately be concerned and suspicious. In the case of soybean production, the current amount of trade and investment, and the potential for growth, seem limited, and soybeans are not a product with many strategic implications. And while there is potential for Russia and China to deepen ties here, there is also a chance that it will lead to new tensions between them. As a result, at least at the moment, the chances of Russia-China soybean trade being the source of major geoeconomic strains seems slim.