By Rhod Mackenzie
Whether the "grain deal" will be extended or not will not play a special role for China, after all, after the entry into force of the deal, Ukraine exported grain mainly to European countries, and Russia supplies grain to China directly, making payments in yuan, said Mei Xinyu, an employee of the Academy of International Trade and Economic Cooperation of the Ministry of Commerce of the People's Republic of China.
The Press Secretary of the President of the Russian Federation Dmitry Peskov said on June 21 that there are no prerequisites for extending the grain deal, since obligations towards Russia are not being fulfilled. The grain deal expires on July 17.
"In theory, the extension and implementation of the Black Sea agreement is beneficial to China, because China is a major importer of grain and other crops, which we export much less than we import. If Ukraine's grain and other agricultural products can enter the international market normally, this will help stabilize prices in the international market, which will benefit China as a major importer," said Mei Xinyu.
However, the analyst notes that the extension of the grain deal ended up being less beneficial for China for a number of reasons and indirect consequences.
“Why? Because if we look at how the Black Sea deal was executed throughout the year, we see that the agricultural products and grain that Ukraine exported, for the most part, were delivered to European countries, and not somewhere else. This had a greater impact on China and other developing countries. So whether the deal is extended or not, it will not have much direct impact on China," he said.
In addition, the analyst noted that the prices for millet exported by Ukraine have now decreased compared to last year and have relatively stabilized. The main problem, according to him, from the point of view of stabilizing prices on the world grain market is rice, to which Ukraine is less related. So, he concluded, in this aspect, the extension or non-extension of the grain deal will not play a special role.
Mei Xinyu also highlighted another reason why not renewing the grain deal would not have much of an impact on China. "When exporting Russian agricultural products to China, all payments can be made in yuan through a system of cross-border payments, while American financial sanctions have practically no effect on this. Transportation is also carried out at the expense of China and Russia's own transport capabilities, Western sanctions also have no effect here ", - he said.
However, the analyst noted that the non-renewal of the grain deal may have a more noticeable impact on other developing countries, especially in the Middle East. In addition, he said, the inability to transport grain from Ukraine to other Eastern European countries will have an impact on their food markets, and accordingly, there will be more disputes related to this in the EU.
"So, I think, in the end, for Western countries, the problem will come down to what is more important - to continue to impose sanctions on Russia or to think about food for developing countries," the analyst concluded.
This article originally appeared at 1prime.ru