Core points:
The impact of the Russian Ukrainian war on the global economy has three transmission paths
The first is the path of confidence and emotion transmission. In addition to affecting the normal economic activities of the two countries, the Russian Ukrainian war will inevitably damage the trade and investment activities in the EU region because of investors' risk aversion.
The second is the financial transmission path. After the war, not only Europe but also the world's major stock markets fell sharply. On the one hand, they were worried that the rise in commodity and grain prices caused by the war would exacerbate the risk of future stagflation, on the other hand, they were worried that Russia would default on its debt due to sanctions.
The third is the trade transmission path. Because Russia and Ukraine are important energy and food exporting countries, the turmoil and sanctions of the war will inevitably lead to the imbalance between supply and demand in corresponding fields and the contraction of trade activities.
Overview of Russian import and export structure
Russia is a typical resource-based country. Energy, metals, grain and chemical fertilizer are the three major export categories. Russia's crude oil output and export volume are the second in the world, and its trade object is mainly the EU, providing about 27% of its total crude oil supply. In terms of metal exports, Russia is rich in nickel, palladium, aluminum and other resources. From the trend of commodity prices after the conflict between Russia and Ukraine, these metals increased the most. China, the United States and Europe are the main importers of Russian metals, among which China has a large demand for nickel, aluminum and lead; The United States has a large demand for nickel; Europe has a large demand for nickel and aluminum.
In addition, Russia is the world's largest exporter of wheat and chemical fertilizers. Grain exports mainly flow to China, Egypt and Turkey. The United States has a low dependence on Russia Shenzhen Agricultural Products Group Co.Ltd(000061) . Fertilizer exports mainly flow to China, Brazil and the United States.
Overall, Russia's economic development largely depends on import and export trade, of which nearly half of its exports are energy commodities, and half of its exports are crude oil and natural gas. Energy exports are mainly to European countries. With the continuous deepening of European and American sanctions against Russia, Russian exports will suffer from an increasingly serious negative impact, which will drag down Russia's economy.
The impact of the deterioration of Russian exports on China
By the end of 2021, China's imports and exports to Russia had reached US $16.444 billion, and China's total import and export trade in the same period had reached US $586534 billion, accounting for 2.8%.
We believe that Russia's negative transmission impact on China's import and export items is relatively limited. However, with the deepening of European and American sanctions against Russia, China Russia bilateral trade may further strengthen cooperation, among which China is most likely to increase the scale of imports to Russia in the fields of energy and coal. Among the 40 non hostile countries, China is undoubtedly the most ideal trading partner of Russia. As the world's largest single market, although China has the ability to undertake more imports to Russia, it also needs to seek its own appropriate strategic positioning under the framework of the big country game with a wise and long-term perspective, including balancing the risk of escalation of Sino US friction due to the strengthening of China Russia cooperation.
Deduce the impact of sanctions against Russia from the perspective of Iran
Iran has been sanctioned by western countries led by the United States because of the nuclear issue. The sanctions mainly focus on two areas: one is to block Iran's oil exports and weaken Iran's oil production and sales capacity to the greatest extent; The second is to cut off the link between Iran and the international financial system and isolate the Iranian economy from the world economy. The sanctions have had an immediate effect on the export of Iranian resource products. In the four years from 2011 to 2015 alone, Iran's oil export volume decreased by 57.48% and the export amount decreased by 76.22%.
In addition to the above explicit effects, sanctions may also have more far-reaching and implicit effects. The long-term impact of the embargo on the production and technology competitiveness of a country may lead to the lack of positive impact on the production and financing of a country.
Under the optimistic scenario, combined with the situation after Iran's sanctions, Russia's exports will be severely damaged in the short term, especially the export of energy such as crude oil and natural gas will be seriously blocked. However, if the war ends soon and the negotiations are relatively smooth, Russian exports may rebound in the later stage of 2022, showing a "V" trend.
Under the neutral assumption, because the sanctions against Russia are worse than the sanctions against Iraq, and the war is difficult to end in the short term, even if it is ended, the sanctions against Russia by Europe and the United States will last for a period of time or even a long time, which will affect Russia's main export commodities. It is expected that the export scale of US $100 billion in the future will be difficult to guarantee.
Under the pessimistic assumption, with the continuation and escalation of the war, more and more countries around the world participate in the ranks of sanctions, and the scope of sanctions extends from the financial field to other fields. Russia's main export commodities may face nowhere to sell, and the export collapse will also worsen Russia's and China's economy. At the same time, Russia will also introduce a series of retaliatory anti sanctions, which will lead to a more serious stagflation environment for the global economy. Under the resonance of the epidemic, global geopolitical security and economic development will face greater uncertainty.
Based on the current situation observation, we believe that the probability of optimistic scenario is low, and the probability of neutral and pessimistic scenario is higher.
Risk tips
The uncertainty of the war between Russia and Ukraine, the uncertainty of sanctions against Russia and the risk of soaring inflation.
