“Beijing has its own interest in our country, which is not limited to oil and gas supplies”
“Last year our trade turnover exceeded $240 billion, an increase of almost 2.7 times compared to ten years ago,” said Chinese President Xi Jinping following Vladimir Putin’s visit to his country. Progress is enormous, but there is no limit to perfection — this is the essence of what was said further by the Chinese leader, who hinted at problems a couple of times in his speech. Such as the refusal of large Chinese banks to accept payments in yuan from Russia due to the risks of secondary sanctions. We talked about the achievements and rough edges in the strategic partnership between Beijing and Moscow with Doctor of Historical Sciences, Director of the Institute of Asian and African Countries at Moscow State University named after M.V. Lomonosov Alexey Maslov.
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— This is true. According to official Beijing, annual bilateral trade turnover today is above $240 billion, we are talking about $220 billion. In any case, this is very serious. Moreover, Russia has also risen in the Chinese ranking: if five to seven years ago it occupied less than one and a half percent of China’s total trade turnover, today it is 4%. The indicator seems modest, but there is more than a twofold increase. Unfortunately, the volume of investments is insufficient and is hardly growing. Historically, both Russia and China have emphasized trade cooperation rather than investment cooperation. The problem is also this: the basic range of goods has not changed for decades — today it is almost the same as in 1995 or 2000. We supply them with oil, gas and timber, and they supply us with technological equipment. Accordingly, the task is not just to increase trade, but to diversify it. The process is partly underway, for example, China has become the largest buyer of Russian agricultural products — grain, rapeseed, corn, flour, soybeans. Although in previous years he himself supplied all this to Russia.
We are also trying to increase cooperation in the field of high technology: we conduct joint research and create scientific laboratories. All this should also generate income. But here things are not going as well as we would like. Russia is still far from the United States, which interacts very well with China in the field of engineering equipment and joint development.
— The roots of the problem go back to the past. China is extremely selective and scrupulous when it comes to investments: it invests money quite consistently in only a few areas, acting this way throughout the world. Firstly, these are energy resources, and here the largest capital investments in Russia on his part are associated with the Yamal LNG and Arctic LNG-2 projects. Secondly, China invests in large, internationally promoted brands, for example, it bought Volvo and IBM. Russia has nothing to boast about here, since we have practically no national brands of comparable scale. Third, China is investing in transport infrastructure, such as railways. But on the condition that he controls them himself. We are not going to do this. Another serious problem: Russian investment projects are very poorly “packaged” in the eyes of China, that is, they have a weak economic justification and unclear prospects in terms of the final return. Chinese investors do not take them seriously and do not want to take risks.
— Today in Russia they clearly take China more seriously. Until this country became our number one partner, no one really tried to understand how it works, how its people live, or how to communicate with them. Today the picture is different. It is significant that dozens of Russian corporations are retraining their personnel specifically on the topic of cultural communications with China. In addition, at the everyday level, Russians perceive their large eastern neighbor as an ally. According to a poll conducted in 2023, 75% of respondents see China as a political ally and reliable partner of the Russian Federation. Less than 5% speak in the same spirit about the West. Plus, interest in Chinese culture and history has grown, and in studying in the PRC, where streams of Russian students are now coming. The return will definitely happen, although not immediately.
At the same time, in our mentality there is also a certain “Chinese alarmism” — distrust of an irrational nature. That's all I don't trust. This can be clearly seen from statements on the Internet, absolutely unsubstantiated, such as “China wants to seize the Russian Far East.” Another very remarkable, but not harmless circumstance is due to the natural reaction of the Russian market to the rapid increase in the status of bilateral relations. Entire institutions and centers are being created, consisting of random people, without practical experience. These “specialists” have never worked with China before (at best, with Europe), and now they are trying to give economic advice to others in an aggressive infogypsy style.
— Empathy, empathy — this is how one can characterize their attitude towards our country. This is manifested at various levels — both in publications on social networks and in official negotiations. Public opinion in China today is generally pro-Russian. The Chinese absolutely sincerely believe that Russia is offended and not valued, and that, having started the SVO, it took a forced step. Sometimes the thought is heard: while Russia defends itself with arms in hand, China suffers insults from the United States.
But there are also things that frankly upset them. For example, it seems to them that we do not know how to manage our economy, to competently manage resources — financial, natural, human. You can often hear from Chinese representatives: let us come, build roads, houses, enterprises, and establish governance. That is, they don’t understand some of our subtleties. In any case, interest in Russia has increased noticeably, and the number of schools teaching Russian has increased in China.
— Some slowdown is indeed taking place, although in general the economy is doing well, showing +5.4% in the first quarter. A lot of phenomena are associated with growth problems: since in previous years the economy of the Middle Kingdom grew very quickly, many people got used to getting rich. So the current situation is fraught not so much with purely economic negativity, but with social tension. In addition, the Chinese retail market is taking a long and difficult time to recover: since people are very frightened by the coronavirus, they are keeping a lot of money in banks rather than investing in purchases. It is also true that the real estate market collapsed: developers’ expectations that the population would actively buy housing were not met. All these are signs not of a crisis, but of imbalances in the economy. The government is now trying to eliminate them by creating new incentives for development, for example, reducing taxes.
A number of other constraining factors are associated with the departure of many American investment companies from the country (mainly moving to India and Vietnam) and the reduction of Chinese exports to the United States and Europe. American entrepreneurs have been influenced by anti-Chinese rhetoric in the West: in particular, they are afraid that tomorrow or the day after tomorrow Beijing will clash with Taiwan, and their business in China will go to waste. Serious damage to the Chinese economy is caused by the protective duties that Washington continues to impose on Chinese exports. Overlaying them on the supply of electric vehicles, lithium batteries, solar panels, semiconductors, steel, aluminum, rare earth elements. And at the same time, remaining Beijing’s largest trading partner. Plus, in China there is a serious aging of the population, a reduction in its size. Individually, none of these circumstances is critical, but together they create a certain dangerous mass.
— A separate story is raw material exports. Russia hopes that the Power of Siberia-2 gas project will start operating within a few years, although the parties clearly have different views on its prospects. You need to understand: if a decision is made to launch, the participants will not receive the return immediately, but in three to four years at best. Still, the gas pipeline still needs to be built. Things are much better with the supply of Russian agro-industrial products to China — not only grains, but also chilled meat, and indeed all edibles. This area has enormous growth potential. We supply organically pure products, including bottled Baikal water. Russian natural cosmetics from the “clean line” series and pharmaceutical industry products are very well received in the Chinese market.
— Last year, Russia purchased 900 thousand cars from China. The task now is to create joint ventures, localize the production of these models at home, in order to produce them ourselves based on Chinese experience. Further, investments are needed in joint agricultural complexes on the territory of the Russian Federation, whose products go to China. Another point is related to the Russian surplus in bilateral trade (we sell more to China than we buy), as a result of which we accumulate a huge amount of yuan. Accordingly, it becomes possible not just to buy Chinese products, but to enter its markets ourselves and work there, inside. As several Russian investment companies did, partially replacing American investors. This simply never happened before.
In general, there is potential, but its implementation requires a completely different level of knowledge. Trade is basically a simple operation; investment cooperation is fraught with much greater complexity. There are few specialists here on our side, and our Chinese partners do not know the Russian market so well.
— The explanation is simple: Chinese banks are very afraid of secondary sanctions, and this is a systemic phenomenon. Payments that go through the country's five largest credit institutions amount to hundreds of billions of dollars annually. If at least one of the banks falls under sanctions, especially if it is disconnected from SWIFT, the Chinese economy will suffer colossal damage. Of course, China does not want the collapse of its trade with America, which Russia is not able to replace due to its different scales. The Chinese side diplomatically suggests that we use their second- and third-tier banks for settlements, but this is a temporary solution to the problem. To solve it radically, we need to wait until the end of the hot phase of the NWO, when both Beijing and Washington will look at the situation differently. Plus, our financial regulators — the Bank of Russia and the People's Bank of China — need to create a closed payment system: technically both parties are ready for this, it’s a matter of political decision.
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— There will be no dependence on the yuan, but it is quite possible on the Chinese economy on which it rests. If in the next five to seven years Russia does not resolve the issue of reindustrialization and improving production technology, then it will have to constantly purchase equipment from China. This will not happen if some areas related to technology are successfully replaced by the auto industry.
— I partially agree: China is an extremely difficult partner; it looks at things as pragmatically as possible. But he has this approach to everyone, not just Russia. The problem is that we are used to dealing with Western states. And when assurances of “friendship without borders” are heard from the lips of Chinese representatives, and then this rhetoric is replaced by tough pragmatism in business, Russian businessmen and politicians begin to feel that they have been deceived somewhere. But any specialist will remind you: the Chinese always say beautiful words, as is customary in the East. There is a Chinese proverb that says a person without a smile should not open a shop. So we are talking exclusively about healthy trade mercantilism.
China, after all, has its own interest in Russia, which is not limited to oil and gas supplies. We support almost all of his political initiatives, and if for some reason we do not do this, our partner will find himself alone with the “collective West.” And to put it mildly, they don’t like him there. I assess the prospects for bilateral relations positively, the main thing is not to create illusions, look at things, and not always believe words and beautiful formulations. In the next 10-15 years (it’s difficult to look further), China will undoubtedly remain a key trading partner and political ally for Russia.