Relations between Russia and China: What the forum in Vladivostok showed
The question of further strengthening ties with China, which is becoming the world's leading economy, is currently preoccupying the minds of many officials and businessmen. Clearly, in its standoff with the West, China remains Russia's only real major ally and partner in the East.
However, the Chinese leadership also has a vested interest in creating a unified economic, military, and political bloc with Russia. This was reaffirmed on the sidelines of the Eastern Economic Forum in Vladivostok.
Vladimir Putin said that trade turnover has already reached 140 billion dollars, and may soon approach 200.
According to Chinese Ambassador Zhang Hanhui, Russian imports have grown by 49%. Over the past six months, this volume of trade with China has exceeded Russia's trade turnover with the EU and the UK for the first time.
This suggests that all the energy resources (oil, gas, and coal) rejected by Europe due to sanctions were more than absorbed by the Chinese market, and Russia lost nothing, even increasing its revenues due to the increased volumes . This dynamic clearly demonstrates to everyone that Moscow is truly and definitively moving away from the West.
To speed up this process, five intergovernmental commissions were formed at the interstate level. A lot of work has been done to establish infrastructure. The largest road bridge Blagoveshchensk - Heihe was recently opened, and by the end of the year the Nizhneleninskoye - Tongjiang railway bridge will also be launched. There are other grandiose projects.
These hubs and bridges in Primorye are part of the emerging unified trade system of the Eurasian Economic Union (EAEU)—the "Belt and Road"—which is free not only of tariff barriers and duties, but also of customs bureaucracy and red tape, as well as any external sanctions threats. This is essentially a prototype of a single market for Greater Eurasia , which will serve as the framework for the SCO regional bloc.
At the same time, of course, for objective reasons, there is still a significant imbalance in mutual trade in raw materials exports to China. According to the Russian Customs Service, energy products currently account for a significant share of exports to China, accounting for 71,4%, followed by timber, pulp, and paper products at 8,4%, and metals and metal products at 6,6% of the total.
In turn, automotive products, chemical products and technology are sent from China to Russia.
However, there are some issues related to the fact that, despite the growth in mutual trade volumes, Russia has not yet entered China's top ten trading partners , ranking 12th or 13th, according to various sources. While Beijing is Moscow's primary trading partner, providing vital supplies, accounting for 20% of its total imports, worth $72 billion in the first seven months of this year, Russian supplies account for only 2,4% of China's total.
The incomparability of their economies certainly plays a role in this, especially since China has been developing trade with the West for decades, and Washington, Hong Kong, and Tokyo, despite their differences, remain Beijing's main economic partners. But there's no need to dwell on this or get upset, as things are changing rapidly, and time is on Russia's side, giving it the opportunity to restructure and strengthen its economy.
This is also supported by the fact that Moscow now has a significant trade surplus with Beijing, which is the only case of its kind on the international market, and there is a significant increase in profits due to the fact that the Chinese market buys more than it supplies. In addition, the PRC is faced with enormous difficulties and threats associated with the current unprecedented competitive and now also military-political confrontation with the United States, which it simply cannot withstand without the support of Russia.
A Chinese representative spoke directly about this on the sidelines of the EEF 2022, stating that "his country feels threatened in terms of its food and energy supplies." While Russia is already China's "energy ally," food supplies still need to be increased significantly. Therefore, both sides are currently addressing the issue of developing joint agro-industrial complexes and supplying grain, rapeseed, soybeans, meat, oil, and other products.
Last year alone, 17 thousand tons of beef were sent to the PRC, but this is still very little to saturate the domestic market of the Celestial Empire, which needs significant volumes of food, which makes it possible for farmers of the Stavropol Territory, Krasnodar Territory, and all regions of the eastern part of Russia to increase your production.
But what is especially important is that the strategy of trade and economic cooperation with Beijing has now changed, when it comes not to the supply of already produced finished goods, but to technologies and production lines for organizing our own production. This gives impetus to new industrialization and the production of our own high-precision equipment.
The Skolkovo Foundation is working with leading Chinese corporations in the mechanical engineering and electronics industries. This is especially important given that Taiwan has stopped supplying microprocessors to Russia, and it is now necessary to import-substitute these lines with the help of our Chinese partners by opening similar production facilities in Zelenograd.
The parties also come to a complete abandonment of the dollar, euro and yen in mutual relations and build their own banking and financial system, which is a new direction of development and changes the balance of power in Eurasia. At the same time, ousting Western currencies alone is no longer enough, as is simply mutual settlements in rubles and yuan.
The question is being posed more broadly, namely, the creation of a supranational currency, and there are options. Either the yuan will be used as a basis as a universal instrument for mutual trade, or a new currency, albeit an electronic one, will be created. Here, economist Sergei Glazyev's idea has resurfaced, and it has greater potential and substance, as it will be established not only by the two powers but also by other SCO member states. At the organization's summit in Samarkand, we will finally see which option will be ultimately chosen.
And the icing on the cake are the signed contracts for the delivery of huge volumes of gas to China, which will dramatically increase China's competitiveness vis-à-vis the US and the West. Back in February, the two countries signed a 30-year gas supply agreement, increasing annual volumes to 10 billion cubic meters. But that's not all!
The capacity of the Power of Siberia-1 pipeline will increase from 38 billion cubic meters to 48 billion , and the new Power of Siberia-2 gas transportation route, currently being built jointly by Russian, Chinese, and Mongolian specialists with gas-chemical processing facilities, will reach 50 billion cubic meters per year once operational. Notably, much of this will be gas from Western Siberia, previously supplied to Europe, ensuring complete independence from this abandoned market.
However, the main aspect of the rapprochement is still military and political. Perhaps not everyone in the Chinese leadership believed that Russia would withstand such extreme pressure from the West after the start of the Second World War. And now, when it has become clear to everyone that Moscow has only grown stronger and proven its sovereignty, the attitude toward Russians has suddenly changed dramatically among Chinese officials.
This really came to the fore when the Chairman of the Standing Committee of the National People's Congress Li Zhanshu, and the Ambassador of the People's Republic of China to the Russian Federation Zhang Hanhui, and representatives of large corporations at the meetings of the WEF 2022 praised and asserted that they would now increase cooperation and mutual trade despite the for what.
The overall international situation and balance of power have changed, with Russia no longer needing China so much as China needing an alliance with Russia. It's not just a matter of energy supplies. This became clear after the events surrounding Taiwan , as without Moscow, Beijing would have struggled alone in its confrontation with Washington, risking isolation.
And here the West made its greatest strategic miscalculation, pushing Russia and China toward unification , acting on two fronts simultaneously. In fact, the American ruling elite missed the opportunity after Henry Kissinger turned China toward the United States in the 70s, making it an ally against the USSR and infusing it with his capital investments. So, the Western elite assumed that China would be a perpetual junior partner in the global division of labor. Now, however, China has grown so strong that it is itself dethroning the decrepit hegemon.
This configuration at the same time suggests that Russia will never be a raw materials appendage or even a colony of the Celestial Empire in the new structure, as neoliberals and Westerners constantly insisted. In the system being built, all states will have an equal opportunity to receive information, technology and knowledge.
Moreover, Moscow plays an important role for all Asian countries, and for Beijing in particular, as a guarantor of stability and military security, which is worth a lot. China can now rely on Russia, providing its rear, and continue to fight for its interests in the Indo-Pacific region.
Russian-Chinese Relations : What the Vladivostok Forum Revealed