Due to the increasing economic potential of the Asia-Pacific region Russia reorients the export flows of energy to the East. After that, it is likely to come to a possible partnership in the segments of high-tech industries.
Text: Semyon Galyasin
Due to the transition to a multipolar system of international relations, the export map of the world has been changing rapidly in recent years. The imposition of sanctions against Russia has only accelerated this process extremely.
Partners' Offsets
Denis Manturov, the Russian Minister of Industry and Trade noted during a recent visit to Bahrain that the actions of the USA and the EU are going to help Russia's rapprochement with the partners from the Persian Gulf.
“No intrigues of the European and American politicians will interfere with Russia developing a Eurasian integration and communication with partners around the world”, stated Sergei Naryshkin, the Chairman of the State Duma.
Russian Prime Minister Dmitry Medvedev:
Rapprochement between Russia and Asia due to geographical and other reasons is a totally objective process. We had begun to implement policies aimed at strengthening our presence in the Asia-Pacific region long before the deterioration of relations with Europe.
But China is named more often than others among the prospective partners in the international economic projects. In particular, the Xinhua News Agency pointed out a giant leap in the development of energy export and import cooperation took place last year.
First of all, we should mention the agreement reached on the construction of the gas pipeline “Power of Siberia”. Meanwhile, the Chinese capital and technology are helping develop the Russian mining sector and are, for instance, already involved in the field development projects in the Pechora Sea and the Vankor Field in Siberia. In turn, Russia has begun construction of several power plants whose electric power will be supplied to China.
“Strengthening the investment cooperation and trade and economic cooperation between the two countries is a mutually beneficial cooperation, it will benefit both Russia and China”, said Zhang Zhiming, CEO of mining company China Shenhua Overseas.
Good Intentions
During the XIII Investment Forum Sochi-2014, Alexei Ulyukayev, the Russian Minister of Economic Development noted that the volume of Russia's trade with the countries of the European Community exceeds USD 400 bln. At the same time, Russia's trade with China, Japan, Korea and 10 more ASEAN countries, the world's fastest growing and most dynamic region, is only USD 170 bln.
“We certainly do not want to reduce the trade with Europe, we want it to grow”, the Minister stipulated. “But the trade with Asia should cover the imbalance”.
Accordingly, one of Russia's export challenges today is to increase the volume of trade with China to USD 100 bln in 2015 and USD 200 bln by 2020.
Minister of Foreign Affairs of the People's Republic of China Wang Yi:
Moscow has the ability and wisdom to overcome the current difficulties in the economic situation.
And the yuan-ruble swap trade effected from December 29, 2014 in the framework of the agreement signed by the Bank of Russia and the People's Bank of China will certainly help the volume growth.
“Currency swap between central banks is a tool that allows each party to gain access to liquidity in the currency of another country, bypassing the need to purchase it on the currency markets”, explain the Central Bank of the Russian Federation representatives. “The amount of a swap line is CNY 150 bln”.
Surmountable Obstacles?
However, there are some bumps in the road.
The volume of Chinese loans in Russia is USD 32 bln, but these are loans rather than investments. Moreover, the process of obtaining new loans cannot be called easy.
As German Gref, the Head of Sberbank, noted in December, Russia has faced the challenge of raising funds not only in the Western financial markets, but also in the east. German Gref together with Kirill Dmitriev, the Head of the Russian Direct Investment Fund, had a number of business visits to the Eastern Pacific region countries. “There are no volunteers to stand in line and provide loans for our country. It's us who are standing in line for money”, stated the Head of Sberbank.
The investment situation is even more uncertain. As estimated by experts of the Eurasian Development Bank, China's accumulated direct investment in Russia does not exceed USD 2 bln. In comparison, China has invested USD 22 bln in Kazakhstan alone.
In the past year, the flow of Chinese investment did not grow, but declined. “No one is giving any money until we learn to structure projects”, said German Gref.
Thus, cooperation with China may be limited to the energy component. A number of strategic projects will not be implemented.
For example, before the New Year holidays Der Spiegel magazine published an article with the eloquent title “Russia and China are Forming a New Space Alliance”.
The article said that the new space alliance could become a counterweight to the projects of Western countries – NASA and the European Space Agency.
It will be a shame, if this project remains on paper, in the pages of the German magazine.
Press Service of the Bank of Russia
The conclusion of agreement on the swap in national currencies between the Bank of Russia and the People's Bank of China will promote the development of bilateral economic relations by expanding the opportunities for funding the trade and direct investments, as well as the wider use of Russian ruble and Chinese yuan in the international trade and investment.
