Economic results of Xi Jinping’s visit: trade with China has grown in quantity, but not in quality

The joint statement of Vladimir Putin and Xi Jinping fixed eight basic points of Russian-Chinese economic cooperation. The document is of a framework nature, therefore, specifics are needed for its implementation, coordination is needed at the level of relevant departments. In the meantime, we can say that in 2022 the development of trade relations between Moscow and Beijing was going on as rapidly as ever, the trade turnover exceeded $190 billion, and this is precisely what the parties recognized.

In the first place is the increase in the scale and optimization of the structure of trade through electronic and innovative tools, in the second place is the improvement of logistics, in the third place is financial cooperation (including through the use of national currencies in mutual settlements), in the fourth place is interaction in the energy sector, in the fifth is the supply of fertilizers and products of the chemical industry, the sixth is cooperation in the development of technologies and innovations, the seventh and eighth are joint projects in industry and agriculture, respectively.

The general meaning of the document is clear: Russia intends to increase energy supplies to China, and China will respond with technology, equipment, and, hopefully, investments. About how feasible these tasks are in reality, we talked with the leading expert of the Center for Political Technologies, economist Nikita Maslennikov.

– From the meeting between Putin and Xi Jinping, one should not expect much specifics. The negotiations of the first persons determine, rather, the political vector of bilateral cooperation, – the interlocutor of “MK” argues. – Let me remind you that the visit of the Chinese leader was preceded by a statement by the Ambassador of China to Russia Zhang Hanhui, who called for raising cooperation to a new level, primarily in the field of energy. It is clear that these are general words. Detailed study should be done by completely different, specially trained people. I think the heads of state will give the go-ahead to speed up the process of agreeing on all the points outlined in the joint draft.

– At the end of 2022, bilateral trade increased by almost 30% compared to the previous year and reached a record $190.3 billion. Of course, this is a success, but rather quantitative. Has there been a qualitative breakthrough?

– Indeed, it was a phase of extensive development. From now on, we need to focus on the structure of trade, 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, for the Eastern Range (railway network within the boundaries of the Krasnoyarsk, East Siberian, Trans-Baikal and Far Eastern railways, 17,000 kilometers long. – Auth.), on various aspects related to oil and gas processing in the Far East. The issue of transit along the Northern Sea Route also “hung up” for us, since the interests of the parties 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 supply continuous raw materials to China indefinitely – oil, gas, coal, sea bioresources. In addition, the Eastern test site is undermodernized, there is not enough capacity, and this is the main transport and logistics shoulder in the region. We transport mainly coal through it. When will the other shipments arrive? Our oil is supplied to China mainly by sea, gas – through pipes. And as long as the Eastern training ground will remain a bottleneck, it is difficult to talk about any radical increase in trade.

– Putin said that the practice of mutual settlements in national currencies should be encouraged. How are things going with this?

– The share of the yuan and the ruble in trade is clearly growing, the dollar is gradually giving way to the Chinese currency. And this is absolutely normal, it is in the interests of companies operating in the markets of both countries. The national currency is always rigidly 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 real salvation. For the same yuan, you can buy a lot of things not only in China itself, but also in Asia, and in general in the world.

– The British Financial Times wrote that Xi Jinping has so far made no promises regarding the construction of the Power of Siberia-2 gas pipeline with a capacity of 50 billion cubic meters, designed to redirect Russian gas supplies from Europe to Asia. Is there any ambiguity here?

– The plot for Beijing is really difficult: the Chinese side continues to study the issue, calculate its financial component and payback limits. China itself has not fully decided 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 choose to increase their presence in joint LNG projects in Yamal.