The head of the Russian government held extensive talks with the Chinese leadership, participated in the regular, 28th meeting of the Russian-Chinese intergovernmental commission. Mikhail Mishustin was also received by Chinese President Xi Jinping.
The visit was clearly successful. The main thing is that the Chinese side’s readiness to further strengthen the comprehensive partnership and strategic cooperation between Russia and China was demonstrated at the highest political level.
It is also important that some obstacles in the development of economic relations have been overcome. In particular, Russia and China have agreed to expand the supply of agricultural goods. Barriers related to veterinary and phytosanitary requirements have been removed. As a result, Russia will be able to diversify its exports and significantly increase supplies of rapeseed, oilseeds, grain, pork and other agricultural products to China. In addition, unnecessary restrictions on Russian grain supplies, which concerned certain regions, have been lifted. This is very important for the development of domestic agriculture, as it will provide new markets, entail new investments, involve new lands, and create new jobs.
«We discussed all the key topics of the economic, investment, energy and humanitarian agenda. We came to concrete decisions on further promotion of our practical cooperation, including the expansion of access to the Chinese market for Russian products, primarily agricultural ones. We agreed to work out new joint projects in energy, industry, transportation infrastructure and many other areas of joint interest», said Mikhail Mishustin during a meeting of the Russian government after his return to Russia.
The talks also discussed issues related to the construction of the Power of Siberia-2 gas pipeline, but this is a complex issue and its elaboration will continue.
«We will actively promote cooperation projects in the field of joint development of long-range wide-body passenger aircraft and heavy helicopters», reads the joint communiqué following Prime Minister Mishustin’s visit to China. This news is from the category of sensational, as it was believed that Russia had withdrawn from this project, and China had decided to make such an airliner on its own.
The visit took place against the background of reports that the bilateral trade turnover has surpassed the goal set by the leaders of the two countries for 2024–200 billion US dollars. Russia has become China’s largest trading partner among European countries, surpassing Germany.
During his talks with Xi Jinping, Mikhail Mishustin, summarizing the results of cooperation, used rubles and yuan: «Mutual trade turnover amounted to almost 18 trillion rubles or one and a half trillion Chinese yuan. It is important that we have completely switched to national currencies in mutual settlements — more than 90 percent of payments are made in rubles and yuan. Good results have been achieved in the investment sphere. There are 80 joint projects, totaling almost 20 trillion rubles and about 1 trillion 600 billion yuan in the works». The successes are evident. The volumes and prices of mutual supplies are growing. Imports of Chinese industrial products, including high-tech ones, are increasing in Russia, and Russian exports, mainly of raw materials, are growing.
And this somewhat reduces the pathos of the achieved results. Yes, the reorientation to the East has taken place. It is good that supplies of Russian agricultural products to China are increasing. But in general, this does not change the structure of Russian foreign trade that has developed over the past 30 years — raw materials (plus food products) in exchange for machine-building and high-tech products. Russia, which was the leader in industrial production 30 years ago, now risks becoming dependent on a new strategic partner for these commodities. This risk can be clearly seen in the example of the Russian automobile market, half of which is occupied by Chinese suppliers. Despite high customs duties when importing cars into Russia (up to 50%), as well as other fees that practically double the price of goods, Chinese automakers are in no hurry to localize their production in Russia. In general, Chinese direct investment in Russia’s industrial sector leaves much to be desired.
Steps are being taken to attract Chinese investors. In particular, the government commission on legislative activity has approved two draft laws defining the conditions for the creation and operation of international territories of advanced development in the Far East. At least one of these territories is to be established in Blagoveshchensk and the Chinese city of Heihe, bordering it across the Amur River. It is planned to create favorable tax and administrative regimes there in order to stimulate investor interest in creating production clusters.
The purpose of creating new territories is stated in the draft law as the realization of «joint investment projects with foreign partners». These territories may be created within the boundaries of one region that is part of the Far Eastern Federal District. It will have a supervisory board (its composition will be determined by the government) and a management company. The territory itself must be 100% owned by the Russian government, but the management functions may be assigned to its subsidiary, in which up to 49% may be owned by foreigners. It may be created by concluding an international treaty, according to the draft law.
It is planned to zero out profit tax in such territories and give foreign investors other preferences, including protection from international sanctions.
However, the main point is that Russia should develop its own high-tech and industrial sphere in those areas where we have a proven track record and historical advantages.
China is now self-sufficient, it is able to create and develop any industry, but sometimes the lack of technology and the high cost of projects is a problem. Here Russia could offer its own options for cooperation. In general, it is high time to realize the dream of getting off the oil needle and taking the path of high-tech development, which is followed by the leading countries of the world. Russia’s cooperation with China should also be seen from this point of view. Oil and gas are good, China is interested in them and receives them in growing volumes. But Russia’s interest lies in changing the structure of trade exchanges in favor of finished products, including industrial ones.