Russian economist: You cannot supply only raw materials to China
Russia needs to radically change the structure of trade with China and attract as much investment as possible from this country.
A leading expert at the Center for Political Technologies, economist Nikita Maslennikov, stated this in an interview with Moskovsky Komsomolets, a PolitNavigator correspondent reports.
The publication noted that at the end of 2022, bilateral trade between Russia and China increased by almost 30%, reaching a record $190,3 billion, and asked whether there had been a qualitative, and not just a quantitative, breakthrough.
“Indeed, this was a phase of extensive development. From now on, we need to focus on the structure of trade turnover, change its quality, and attract more investment. Which, by the way, are not directly included in foreign trade statistics. Russia is in dire need of Chinese investment, in particular in the Eastern Test Site, in various aspects related to oil and gas processing in the Far East,” Maslennikov said.
According to him, the issue of transit along the Northern Sea Route is also stuck, since the interests of Beijing and Moscow there do not coincide.
“For example, we want ships to sail exclusively under the Russian flag, the Chinese do not agree with this. The main problem now is the arrangement of investment sites. The quality of trade and its prospects depend on this. It is impossible to endlessly supply China with continuous raw materials - oil, gas, coal, marine biological resources.
In addition, the Eastern training ground is under-modernized, there is not enough capacity, and this is the main transport and logistics hub in the region. We transport mainly coal through it. When will other cargo arrive? Our oil comes to China mainly by sea, gas - through pipes. And while the Eastern training ground will remain a bottleneck, it is difficult to talk about any radical increase in trade turnover,” the expert believes.
At the same time, he noted that the share of the yuan and ruble in trade is clearly growing, and the dollar is gradually giving way to the Chinese currency.
“And this is absolutely normal, this is in the interests of companies operating in the markets of both countries. The national currency is always strictly tied to its market, this is its specificity. Of course, transaction costs in this case are higher than when working with the dollar, but something else is much more important: in the absence of investment imports from “unfriendly” countries, the national currency becomes a true salvation. For the same yuan you can buy a lot of things not only in China itself, but also in Asia and in the world in general,” the economist emphasized.
He calls the construction of the Power of Siberia-2 gas pipeline, designed to redirect Russian gas supplies from Europe to Asia, a “difficult subject” for China.
“The Chinese side continues to study the issue, calculate its financial component and the limits of recoupment. China itself has not fully determined what is preferable for it – pipeline gas or liquefied natural gas. The coming months will show whether the Power of Siberia-2 project will be agreed upon in all details and nuances. Or the Chinese will prefer to strengthen their presence in joint LNG projects in Yamal,” concluded Maslennikov.
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