China and Russia: Roscongress Report On Cooperation Development
Relations between China and Russia are currently determining the economic, political and trade and investment sectors of the two countries, as well as impacting the entire Eurasian continent. Of concern to the West is that this current cooperation model has no peers in world practice. Cooperation is carried out according to the model of relations of the great powers of a new type, while simultaneously meeting their contemporary international realities.
At the same time, China and Russia are strengthening their positions on the world stage, promoting influence at the global and regional level. The geopolitical interests of the two countries coincide, which contributes to mutually beneficial cooperation in many areas of international relations. Partnership with China enables Russia to pursue a diversified foreign policy. China, in turn, enjoys the support of Russia in the development of mutually beneficial trade and scientific and technical cooperation in the Asia-Pacific region.
The countries are pursuing an independent economic policy, while cooperation in the energy sector is also actively developing. That has lead to today’s relations being at the highest level, reflecting the attitude of their partnership and strategic interaction of a new era. As a result, there is an expansion and deepening of their mutual communications in science and technology, where decisions are made at the interstate level. For example, Chinese President Xi Jinping and Russian President Vladimir Putin launched the construction of power units at two Chinese nuclear power plants Tianwanskaya and Xudapu.
These two Presidents express mutual interest in the further development of trade, economic and business relations. The main directions and landmarks of relations are outlined: energy, finance, and the transport logistics industry, much of which is contained within BRI projects that have largely gone under the radar.
According to Alexander Shokhin, the President of the Russian Union of Industrialists and Entrepreneurs, the main thread of relations with China is an attempt to replace the departed Western partners. In order to increase trade turnover, there are opportunities to supply Russian hydrocarbons and foodstuffs to China. Along the way, industrial cooperation is being established in the automotive industry.
It is worth noting that Shokhin argues that Russian companies prioritize not just imports, but industrial cooperation in many areas of activity, including manufacturing, research, and development. There is a need for joint research and development with subsequent commercialisation in Russia.
Chinese companies fear secondary sanctions and are cautious about cooperating with Russian organisations. In the future, this can lead to financial losses and a decrease in business reputation. At the same time, Russian exports to China should carry a greater share of added value – Russian businesses have often been lazy and exported just raw materials for Chinese companies to then process and book the value added.
More than half the global trade turnover is concentrated in Russian Railways and Chinese Railways. Sergey Pavlov, the Deputy General Director of JSC Russian Railways, notes that in 2021 the volume of cargo transportation between the two reached 100 million tonnes. For this growth of traffic to continue, it is necessary to improve the transport and logistics chain. It is necessary to further develop the international transport corridor of the Trans-Siberian Railway and BAM, as well as the development of border crossings.
In the long term, the possibilities of digitalisation, namely the reduction of processing time, will reduce the delivery time, as will implementing the transition to electronic commodity exchange and document management.
Recently, there has been an increased demand for the products of the industrial sector in China. By many criteria, including technological ones, Chinese products are not inferior to Western ones. Russia will be a beneficiary here as it is barred from obtaining these products from the West.
Meanwhile, the establishment of trade relations between Russia and China is contributing to the growth of both countries exports and imports. Alexey Dakhnovsky, the Russian Trade Representative in China, notes the need to strengthen support for small and medium-sized businesses involved in export-import relations. It is necessary to create aggregators to promote trade and develop human resources to ensure foreign economic activity. These issues were discussed by President Putin in his recent address to the nation and can be read in our report here.
Back in June 2018, Chinese President Xi Jinping announced at the 18th meeting of the Council of Heads of Government of the Shanghai Cooperation Organisation (SCO) “The Chinese government supports the construction of the China-SCO Pilot Zone for Regional Trade and Economic Cooperation in Qingdao.” That is now operational and represents an additional opportunity for the development of Russian enterprises on the basis of the SCO in Qingdao.
In addition, the leaders of the two countries talk about the desire to deepen partnership and strategic interaction in all areas. There is coordination in this approach. China is focused on innovation and the creation of platforms for the development of foreign trade, as well as the development of cross-border cooperation, and is Russia’s main strategic partner. With already well-established infrastructure, 78 projects between Russia and China worth US$160 billion are being implemented. In the future, new projects are planned in various areas. Both countries expect accelerated industrial cooperation in the future.
For this reason, the main strategic direction of cooperation between Russia and China is the development of trade and economic relations and industrial cooperation. How this manifests itself, and what should be the institutional and technological environment for creating mutually beneficial financial partnerships and joint investment projects was an issue raised during the Russia and China session of the 25th St. Petersburg International Economic Forum in June last year. Discussions are proceeding on the details concerning this.
Despite the economic downturn, China and maintain and build relations on their mutually beneficial cooperation. For the past 12 years, China has been Russia’s largest trading partner. In the first five months of 2022, trade between the countries amounted to US$65.8 billion. Active cooperation is observed in the field of electric power, nuclear power and aircraft manufacturing. The goal for 2022 was to achieve a trade turnover of US$200 billion and this happened. Talk is now of increasing this to US$400 billion by 2030.
Thus, thanks to the scientific and technical cooperation between Russia and China, 5G technologies, biomedicine, low-carbon projects, and the digital economy are developing. Automobile crossings, infrastructure are being developed, issues on mutual settlements have been resolved. The number of Russian companies that want to cooperate with Chinese is growing.