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Bright prospects for economic cooperation

By Sun Zhuangzhi | China Daily Global | Updated: 2019-06-03 09:00
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China and Russia should seize the opportunities in areas such as tourism, agriculture, hi-tech, information technology and e-commerce

China-Russia relations have undergone twists and turns over the past seven decades since 1949. It is hard for the two neighboring countries, both great powers in the world, to ignore each other, geographically, politically, economically or culturally, and they have unique relations.

During the past 70 years, the two countries have had the best relationship as well as the worst, from being close allies to having border conflicts, and finally to the normalization of bilateral relations. Now, the two have the best relations among the major countries.

By virtue of geographic proximity, when two neighboring major countries genuinely open the door to each other and establish friendly relations, it will bring great convenience to their political, economic and people-to-people exchanges, and China-Russia relations are rapidly strengthening on all fronts.

However, compared with the constantly improving political relationship, the bilateral economic cooperation and exchanges lag behind. Although they have scored some early and prominent achievements in this regard - the bilateral trade volume exceeded $100 billion last year and it is expected to reach $200 billion in 2024 - economic cooperation between the two countries still has great potential yet to be tapped.

Most importantly, the two countries are highly complementary in terms of their economic, industrial and resource structures. China is one of the world's largest energy importers while Russia is one of the largest exporters. Geographic proximity makes it quite convenient for Russia to sell its abundant natural resources, such as oil, natural gas, lumber and metals, to China.

However, Chinese investment in Russia has not witnessed rapid growth. Russia's largest economic partner is Europe. Despite the sanctions imposed by the European Union, the trade volume between Russia and the European Union is four times that of Russia's trade with China.

Direct investment from China to Russia has been concentrated in certain fields, and is mostly supported by government-backed loans instead of being dominated by businesses. This, as a matter of fact, has affected the level and depth of bilateral economic cooperation.

In my opinion, the role of market mechanisms in China-Russia trade and economic cooperation should be strengthened to fully exert the functions of market entities and unleash the vitality of businesses. Right now, bilateral economic cooperation is mostly advanced by government forces whereas the potential of businesses, especially small- and medium-sized businesses, is yet to be fully tapped. When promoting economic cooperation, we should respect market rules, with equality and mutual benefits as the underlying principles and take into account each other's requirements.

China and Russia could start with cooperation in priority industries.

The two countries have enormous potential for cooperation in key fields, such as natural gas pipelines, military cooperation and other industries with strategic significance.

In recent years, the two sides are exploring cooperation in the production of large aircraft and helicopters, some industrial parks have been set up in Russia, and the two countries plan on more regional cooperation.

Regional cooperation has yet to yield many concrete results. On the one hand, such cooperation requires certain conditions; on the other hand, we should follow market rules and principles.

With the Russian market developing in a sound manner and China having experienced 40 years of reform and opening-up, the opportunities for bilateral economic cooperation are many and the two countries should seize the opportunities in areas such as tourism, agriculture, hi-tech, information technology and e-commerce.

The United States' attacks on Chinese trade and companies have provided plenty of opportunities for agricultural cooperation between China and Russia.

Whole-industry-chain collaboration is crucial for closer China-Russia economic ties. Instead of only buying products, Chinese companies should also make investments and set up manufacturing bases in Russia.

Some Chinese companies have set a good example by doing so in Central Asian countries. For instance, China National Petroleum Corporation not only makes energy purchases in Kazakhstan, but it has also built a large number of gas stations in the country, serving high-quality petroleum. This shows that there's much room for energy cooperation besides the buyer-seller relationship.

Russia attaches great importance to economic restructuring and transformation. Chinese companies should carefully study relevant policies to seize the opportunities in the priority areas the Russian government is supporting.

For instance, the incumbent Russian Prime Minister Dmitry Medvedev pays high attention to the development of the digital economy, which presents cooperation opportunities to relevant Chinese companies.

China has been developing e-government and Internet Plus manufacturing and it has accumulated rich experience in this regard. Chinese companies can provide whole sets of software equipment and carry out experience exchanges with their Russian counterparts.

China-Russia political relations have already reached a very high level, and are expected to be further consolidated and strengthened. In a number of multilateral organizations, such as the G20, Shanghai Cooperation Organization and BRICS, China and Russia share common ground and interests.

The two countries have a stable, continuously improving relationship, and are aligning the Belt and Road Initiative and the Eurasian Economic Union. Against this backdrop, China-Russia economic cooperation has bright prospects.

The author is director of Institute of Russian, East European and Central Asian Studies at Chinese academy of social sciences. The author contributed this article to China Watch, a think tank powered by China Daily. The views do not necessarily reflect those of China Daily.

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