RUSSIA-CHINA: MILITARY TECHNOLOGICAL COOPERATION ENCOUNTERS OBSTACLES

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The year of Russia continues in China. Visit of Sergei Sobyanin, Director of Putin’s Administration, to Beijing ended in the framework of this program on September 29. Meeting with General Secretary of the State Council of China Hua Jianmin the Russian official announced that “relations between China and Russia are on the highest level in all previous years due to more active contacts on the supreme level and due to the signed agreements that have started working. Probably no one doubts now that the ambitious plans to increase trading turnover to $60 billion will be fulfilled in the near future.”

The declared figures are very big. For example, in 2005, turnover of Russian-Chinese trade reached $29.1 billion (growth of 37.1% in comparison to 2004). This is not very much. In 2005, the aggregate turnover of trade between China and European Union and the US exceeded $200 billion.

Meanwhile, it is no secret that growth of turnover in trade between Russia and China is conditioned mostly by sale of natural resources by Russia and export of cheap consumer goods and some kinds of machine building products from China. China mass media points out that clothes, footwear and other consumer goods still dominate in the export from China to Russia but export of electromechanical products and hi-tech products is growing rapidly. For example, in 2005, export of electromechanical products to Russia grew 70% and export of hi-tech products grew 58% reaching 24% and 7% in the aggregate volume of export from China to Russia correspondingly.

However, Russia still exports raw materials to China. Between January and June of 2006, the share of timber export from Russia to China amounted to 38.3% of the overall volume of transportation and the share of paper amounted to 2.2%. The rest were petroleum products, fuel and lubricants and only an insignificant part of military products.

In September it became known that China was concerned about absence of progress in fulfillment of the contract for supply of 38 IL-76 and IL-78 airplanes worth $1.5 billion to China signed a year ago. The Tashkent aviation association named after Chkalov (TAPOiCH) has become the main contractor of the contract and majority of components are supplied by Russian enterprises.

Kommersant writes that “supplies of IL-76 airplanes to China were not started yet, although China expected to receive the first airplanes.” The newspaper reported that in June TAPOiCH was “inspected” by Li Changchun, member of the permanent committee of the political bureau of the central committee of the Chinese communist party. According to a source of Kommersant, “after that visit Beijing started regularly reminding about a need for observance of the contractual terms and in September, it informed Moscow that meetings of the commission for the military technological commission would not take place as long as this problem was not solved.”

Meanwhile, there is no official information now about the way in which this problem is being solved. There are statements of some officials of Russia about making a decision on relocation of production of IL-76 airplanes from Uzbekistan to China. The Chinese are not very happy with this because the process of arrangement of the final assembling of airplanes on a new site will take time.

Kommersant points out that “postponement of the meeting of the Russian-Chinese commission for military technological commission may postpone signing of some new contracts for armament and combat hardware supplies to China.” The newspaper added that in the framework of the commission it was planned to discuss the latest details of the contract for sale of four landing hovercraft Zubr worth about $210 million, to coordinate terms for supply of more than 15 anti-submarine amphibian airplanes Be-200 with the modular homing and search system Sea Snake worth $400 million and amphibian airplanes Be-103. It was also expected that at the meeting of the commission Rosoboroneksport and Defense Ministry of China would sign contracts on supply of almost 40 landing and cargo helicopters Ka-29 and more than 20 radar picket helicopters Ka-31 worth about $200 million.

The newspaper draws a conclusion that “henceforth coordination of contracts worth more than $800 million is postponed indefinitely.”

A sum of $800 million is one-thirtieth of the aggregate turnover of trade between Russia and China in 2005. This is not much and even this figure is not fully achieved due to the fault of the Russian party. No comments are needed.

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