China-Russia economic and trade relations to explore new possibilities

Source:Global Times Published: 2019/6/6 14:40:28

China and Russia agreed on Wednesday to upgrade their relations to a comprehensive strategic partnership of coordination for a new era, according to the Xinhua News Agency. The decision was made at a meeting between visiting Chinese President Xi Jinping and Russian President Vladimir Putin.

President Xi is also scheduled to attend the 23rd St. Petersburg International Economic Forum, which will discuss the key topic of "Creating a Sustainable Development Agenda" this year. Generally speaking, it is the common wish of both China and Russia to pursue sustainable development. The Russian economy is facing the challenges of structural transformation, which requires the country to reduce dependence on its energy sector and to achieve a more sustainable development pattern. Meanwhile, China's ongoing economic restructuring will eliminate excessive production capacity in the domestic market, which will also contribute to global sustainable development. Moreover, China and Russia are both committed to upholding the multilateral trade system and opposing trade protectionism, also to the benefit of the sustainable growth of the world economy.

Of course, it is undeniable that the current economic and trade exchanges between China and Russia are still quite limited, underscoring the lack of understanding of each other's investment environment among both sides' business communities. On the Russian side, the country has always shown an inclination toward Europe, so for a long time, its companies have appeared more willing to make investment in Europe and have developed many reliable business partners in the region. Most of Russia's major trade partners are from Europe, and trade with European countries accounts for more than half of its total foreign trade. 

By comparison, Russia has limited economic cooperation with Asian countries, especially China. Although China has accumulated rich experience of cooperating with the Western business world in the process of reform and opening-up over past four decades, substantial economic cooperation between China and Russia only started in 2000 due to historical reasons. In addition, language is also a problem contributing to a lack of business understanding between the two sides. Chinese businessmen generally learn English. There are very few people who know Chinese in Russia, and very few in China who know Russian.

However, the China-Russia economic and trade cooperation has seen continuous breakthroughs in recent years. Last year saw bilateral trade between the two sides exceed $100 billion, the highest level in history. Official statistics showed that bilateral trade value reached $107.06 billion in 2018, an increase of 27.1 percent year-on-year. The trade growth rate ranked the highest among China's top 10 trading partners.

Against the background of the China-US trade war, there could be some trade transfers for China's imports from the US in grain, soybean and agricultural products. These are all promising aspects for China's trade cooperation with Russia. In the past, trade in agricultural products between China and Russia was quite limited, even though Russia has always been a major grain producer. But things have changed in recent years, especially since last year, when the two countries gradually liberalized their agricultural products trade. With Russia's increased planting efforts, the country's soybean exports to China has risen substantially in recent years. 

It can be expected that the two sides will further expand their cooperation in such aspects as agricultural products, dairy products and green agriculture. And there are various forms of such cooperation. For instance, Chinese companies could rent Russian farmland to grow agricultural products. Moreover, e-commerce is developing very fast in both countries, which could also be a new direction for enhanced cooperation. As to the traditional sectors, energy cooperation will be further strengthened. With Russia's eastern-route natural gas pipeline to China expected to be put into operation this year, the two countries are bound to see more bilateral economic and trade exchanges in terms of oil, natural gas, and other raw materials.

The article was compiled based on an interview with Li Xin, director of the Center for Russian & Central Asia Studies at the Shanghai Institutes of International Studies.

Posted in: INSIDER'S EYE

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