RUSSIA ACCOUNTS FOR ONLY TWO PERCENT OF CHINA’S TRADE TURNOVER

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Seeking a new model for Sino-Russian "strategic partnership"

Russia is interested in partnership with China, of course, and Russian companies are seeing and pursuing new opportunities in the Chinese market. But China, unlike Europe, is not perceived by the Russian business community as a strategically significant partner.


China’s position in international politics is becoming stronger; its role and activity level are growing. Beijing is developing some new geopolitical interests that go far beyond the framework of bilateral relations with Russia. Russian diplomacy isn’t entirely ready for this as yet. And China itself still isn’t sufficiently resolute and consistent in upholding its positions not only in its traditional “responsibility zones” of East and Central Asia, but also in new political arenas worldwide – from Latin America to Oceania. At the social psychology level, old traditions of regarding each other with caution, if not hostility, are still strong in both Russia and China. These perceptions are based on a lack of information.

In economic terms, despite rapid growth in trade (from $11 billion in 2001 to $30 billion in 2005), the two countries are still fairly critical of each other. Russia is interested in partnership with China, of course, and Russian companies are seeing and pursuing new opportunities in the Chinese market. But China, unlike Europe, is not perceived by the Russian business community as a strategically significant partner. The rapid grwoth in trade is due to the rapid growth of the Chinese economy as a whole, not to the quality of Russian-Chinese partnership. Trade with Russia still makes up no more than 2% of China’s foreign trade turnover. As an exception, China has a strategic interest in Russia’s oil and gas sector, bilateral military technology cooperation, and our science and technology research resources.

Neither does Russia consider China an economic priority. China accounts for less than 10% of Russia’s foreign trade turnover. For Russia, a Chinese “investment portfolio” is only starting to take shape. The structure of bilateral trade – with raw materials making up most of our exports to China, and finished products making up most of our imports – is not in Russia’s long-term interests. Counting semi-legal or illegal trade, Russia has a negative trade balance with China. The expansion of Chinese capital abroad that began in 2005 is creating new “fields of tension” in bilateral relations.

The exceptions are China’s markets for arms and military hardware, energy infrastructure (including nuclear energy), space launch services, and transport aviation. A partial exception is the controlled, quota-regulated use of Chinese labor power in Russia.

The current official visit to China, timed for the launch of Russia Year in China, is aimed at seeking a new model for Sino-Russian “strategic partnership.” Nevertheless, despite the visit’s success, the two countries have yet to develop a mechanism for clearly formulating their differences of opinion on global and regional issues and finding compromise solutions, as they have already done for issues in bilateral relations.

In economic terms, China will continue to seek access to Russian energy resources and military technology cooperation. For Russia, it is important to use China’s resources for developing Eastern Siberia and the Russian Far East. And that requires Russia and China to have a new strategic vision of each other as components of the integrating regional economy of North-East Asia, which also includes Japan and South Korea.

At the level of individual relations, the visa requirements problem remains unresolved: draconian rules for issuing visas and the excessive costs involved create an obstacle in contacts between individuals, and thus affect the entire spectrum of “strategic partnership” relations.

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