Dynamics of economic relations between Russia and China

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Dynamics of economic relations between Russia and China

Karelina Е.А.,

Candidate of Economic Sciences Moscow State University of Technology «STANKIN» Russia, Moscow

Abstract

The article analyzes Russian-Chinese economic relations. The main directions of the strategy of trade and economic interaction between the two countries are defined. Priority joint projects are outlined.

Key words: Trade and economic relations, regional development program, Russian-Chinese border relations.

In 2008, there was a tendency to a certain slowdown in the development of trade and economic relations between the regions of Russia and China. According to the results of the year, the volume of Chinese trade with Russia increased by 7.6% compared with 31.6% in 2007, amounting to $19.08 bn. As a result, the share of these Chinese regions in the total volume of Russian-Chinese trade decreased to 33.6% against 36.8% in 2007 [1].

Most notably, Russian imports from Heilongjiang province dropped to 40%, and this province is traditionally the leader in terms of trade turnover with Russia among Chinese regions. In other provinces and autonomous regions, both exports and imports continued to grow steadily. This situation was caused by the dynamics of world prices, primarily in the second and third quarters of 2008, as well as by the demand constraints that arose, which became apparent in the fourth quarter of 2008.

The largest items in the Russian-Chinese cross-border trade turnover in 2008 were:

• 15.69 million cubic meters of softwood round timber; total shipments - $2,139.42 million, or 83.5% of all value shipments of softwood from Russia;

• potassium chloride - 1.51 million tons or 64.26% of all Russian exports to China, worth $871.15 million;

• crude oil - 809.89 thousand tons, or 6.9% of all Russian exports, worth $699.44 million;

• sawn timber - 1.69 million cubic meters, or 86.5% of all Russian exports of sawn timber, worth $326.54 million.;

* iron ore -737,47 thousand tons, or 14.6% of all Russian ore exports, worth $101.31 million.

The results of the monitoring, based on data from the administrations of a number of subjects of the Russian Federation, indicate that trade and economic ties of Russian enterprises with China are still most important for the subjects of the Far Eastern Federal District [2]. According to the government of Khabarovsk Krai, the annual export of the Krai to China is more than 600 milli on dollars, the import amounts to more than 500 million dollars, and the total foreign trade turnover of the Krai with the PRC is more than $1 billion. The main export items to China are petroleum products (43.5% of the total value of petroleum product exports); unprocessed wood (87.5% of the total value of unprocessed wood exports); fish and seafood (50.3% of the total value of fish and seafood exports); services (11% of the total value of services exports), sawn wood (83.9% of the total value of sawn wood exports).

The most stably operating enterprises with Chinese capital are: "Shuan Yin" LLC (since 1997) - construction and finishing works, "Dongfang Xiaolin" LLC (since 2000) - construction and installation works, "Yuanbaoshan" LLC (since 2000) - production of chopsticks, "Mylos" LLC (since 2003) - production of PVC profile.

According to the information of Primorsky Krai administration, China accounts for 40% of foreign trade turnover of the region and is ahead of other foreign countries by this indicator.

Among the major projects with the participation of Chinese capital are the following: the construction of the industrial park "Far East" in Mikhailovsky district, a trade and production complex in the village of Pogranichny, areas of trade and economic cooperation "Kangji" in Ussuriisk; a Russian-Chinese park of information technology in Vladivostok and an experimental innovation site "Technograd" in Partizansk.

All these areas of development of foreign economic relations, together with a number of specific investment projects are reflected in the activities of the Program of Cooperation between the regions of the Russian Far East and Eastern Siberia and the Northeast of the PRC (2009-2018) [3].

There is a steady upward trend in imports from China. More than 4% of imports from China are in the "machinery and equipment" group (mainly cars, trucks, agricultural machinery, woodworking machines, medical equipment, household appliances) [4].

Imports are represented mainly by heavy equipment, machines and units for metal processing, engines, generators and cargo vehicles.

In the first half of 2009 the export of wood and wood products decreased by another 13% compared to the same period of the previous year and amounted to $9891,4 thousand (20,6% of all wood exported from the Tomsk region). Export of chemical products in January-June 2009 amounted to 154% compared to the previous period in 2008, or $59,772.5 thousand (almost a third of all exports of chemical products in this period). Exports of machinery, equipment and vehicles increased in 2008, but they still account for a rather small portion of total exports (3%).

The main import item in 2008 and in the first six months of 2009 was machinery, equipment and transport vehicles ($11,448 and $1,313.5 thousand in (^f] value terms respectively), but in the second half of 2009 compared to the same period of the previous year it decreased by almost 50%. In addition, Russia imports food products and agricultural raw materials, as well as chemical products from China. As of October 2008 the volume of accumulated Chinese investments in Tomsk region amounted to $12 million 777 thousand. The bulk of companies with Chinese capital are small companies engaged in trade and export of timber. The volume of accumulated investments of China in Tomsk region at the beginning of 2009 amounted to $12 769.9 thousand. During the first quarter of 2009, another $19,817.4 thousand was received. According to the results of the first quarter of 2009, China ranked first in the volume of foreign direct investment from abroad. Investments came to Teguldetsky district in the form of equipment as part of the project to create an integrated timber enterprise in Tomsk region (together with Shandong province).

A number of enterprises with Chinese investment are currently registered in the Tomsk region. Basically, they all have the status of small businesses (small share capital, small number of employees, average turnover). The sphere of activity of these enterprises is timber trade and export. At the regional level, Tomsk region actively cooperates with Liaoning and Shandong provinces, with which there are agreements of friendship and cooperation. Twinning relations have also been established with Liaoning Province. It should be noted that the Tomsk Region currently considers cooperation with the People's Republic of China not only as one of the priority areas of foreign relations, but also as a strategic one [5].

This is due to the fact that there are significant prospects for the economy of the Tomsk region, which lie in the development of cooperation in education, science and technology, timber processing, energy construction and other areas.

These areas of investment articles of imports and exports are the result of the flexible transformation of the main directions of China's economic development in the XX century [6].

In October 2008, the 7th meeting of the Permanent Working Group on interregional and cross-border trade and economic cooperation was held in Beijing. There, the relevant section in the plan of joint actions to implement the provisions of the Russian-Chinese Treaty of Good Neighborhood, Friendship and Cooperation in 2009-2012 was agreed on [7].

In October 2008, during the 13th regular meeting of the heads of the governments of Russia and China, an intergovernmental agreement was signed on the construction of the border railway bridge Nizhneleninskoye-Tungjiang.

In April 2008, the largest exhibition event of the year was held in China - the International Import-Export Fair in Guangzhou, where the first unified Russian exposition (200 sq.m.) had been organized.

The organizers were the Ministry of Economic Development of Russia and the Russian-Chinese Chamber for Promotion of Trade in Machinery and Innovation Products. The following Russian companies and departments were represented at separate stands: from Khabarovsk Krai - JSC "Far East Power Machine Building Plant", LLC "Zavod Amurlitmash", LLC "Lesnie produkti" and LLC "Optim Trade DV"; from Volgograd region - JSC "Metallurgical Plant "Krasny Oktyabr", JSC Metallurgical Plant “Barrikady”, JSC Construction company “Vodostroy”, JSC “Kaustik”; JSC Ivanovo Heavy Machine Building Plant, including “TD IZTS”, and Mechanical Assembly Plant “IZTS”; JSC Taganrog factory “Priboy”; Ministry of Economic Dev elopment of Russia; Trade Representation of the Russian Federation in the People's Republic of China; Russian-Chinese Chamber for Promotion of Machinery and Innovation Products Trade; the Russian cable TV channel "China”.

At present, the problems and constraints in the development of bilateral relations between Russia and China have been practically solved [8].

Digitalization of practically all spheres of society makes it possible to create optimal models of interaction, including international interaction [9].

Based on the prospects for modernization of the Russian economy under the

sanctions regime, the comprehensive development of Russian-Chinese trade and economic relations is a systemic component of the sustainable development of the Russian economy [10].

Conclusions

economic relations russian chinese

Despite the stages of decline in trade and economic interaction between China and Russia, the relationship between the two countries has a steady tendency to increase the volume of import-export partnership.

At the present stage, in addition to other benefits of interaction, it is necessary to note the positive impact of expanding trade and economic relations between Russia and China on the internal economic and social processes of the countries as well as their position in world economic relations.

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