Sino Russian Trade Soars

Sino Russian Trade Soars

Sino Russian Trade Soars

by Dmitry Kosyrev
UPI Outside View Commentator
Moscow, Russia (UPI) Feb 19, 2006
A report about the record scale of Sino-Russian trade, which reached $29 billion in 2005 -- a 37.1 percent increase -- came out in December and was supplemented in the first two months of this year. Importantly, during this period bilateral trade has been scrutinized in the context of the upcoming visit of the Russian president to China.

The report's conclusion is that during Putin's presidency Sino-Russian trade has more than tripled. The point of departure is 2000, with the volume of trade amounting to $8.3 billion. The Russian economy has also grown, but not to such an extent. In other words, Sino-Russian commerce is surpassing Russia's economic growth as a whole.

China is not the only case in point. Trade with France has also almost tripled, reaching $9 billion a year.

But these rates have not turned France into Russia's second trade partner after Germany. This place is occupied by China. It is difficult to quote accurate data because Russia and China have always engaged in border trade, which is estimated at several billion dollars on top of the official figure and makes the statistics extremely confusing.

It is no surprise that Asia's importance for Russia is rapidly growing. Asia is attracting greater attention from the rest of the world as well.

The question of who it is better to trade with -- East or West -- does not depend on political preferences but is the choice of the market's invisible hand. Otherwise, why was there so much talk under former President Boris Yeltsin about the need to cross the $10 billion mark in Sino-Russian trade, a target which seemed unrealistic and was not achieved at that time?

After the year 2000, however, the situation underwent a dramatic change. Bilateral trade virtually doubled between 2003 and 2005, a rare case in world practice.

Nevertheless, although China has become Russia's second partner after Germany, the reverse is not true. Russia's share in China's entire trade is a little over 2 percent. In other words, Moscow depends more on Beijing than the other way round. It is not easy to level out this imbalance.

Mutual economic dependence is a coveted target in international relations because it makes them stable, peaceful and predictable. Sino-U.S. relations are one example. In theory, the two countries should be extremely tense as many Americans are horrified by the prospect of China replacing the United States as the world's economic leader within the next 25-45 years. But in reality, Beijing and Washington treat each other with care.

Out of China's 863 large commercial airplanes, 534 are Boeings, for which the United States received $40 billion. A considerable portion of Boeing spare parts found all over the world are assembled in China. Moreover, China has already credited the U.S. economy with $300 billion, having bought securities from the U.S. Treasury. Even if the two countries are strategic rivals, this does not prevent them from being locked in a strong economic embrace.

Despite its trade record with China, Russia is not as economically important for China as the U.S. But China certainly needs Russia.

The latest statistics of bilateral trade show the share of raw materials (oil, timber, fish, metals) in Russia's exports to China is on the upsurge. In 2005, this figure reached almost 90 percent of Russia's overall exports to China. As for oil deliveries, Russia is China's fifth-largest partner after Saudi Arabia, Iran, Oman and Angola.

But China cannot export raw materials because it has none. Instead, it has recently become the world's assembly shop. Both Moscow and Beijing are trying to find out a roundabout way of overcoming this unpleasant trend. Both sides want to make Russia's exports of raw materials more science-intensive.

Russian President Vladimir Putin and his Chinese counterpart Hu Jintao agreed to draft a program on bilateral trade and economic cooperation for 2006-2010. Today, the Russian Ministry of Economic Development and Trade and the Chinese Ministry of Trade are working on this program. The document will be practically completed by the time of Putin's forthcoming visit to China.

The main goals of the plan are to at least double bilateral trade again to reach $60 billion by 2010, and attract $12 billion worth of Chinese investment to the Russian economy. These objectives require a change in the entire pattern of bilateral trade.

Russia will not amend its intention to increase oil supplies to China. The amount, carried by trains alone, will be brought to 15 million tons. But apart from exporting oil, Russia is capable of offering energy generation technologies and these matters are now on the agenda.

The same applies to timber exports. Chinese investments in Eastern Siberia will make it possible to process timber on the spot into products required by China, such as cellulose for paper. For Russia's eastern region this is one step up on the technological ladder.

In short, Moscow wants to focus on science-intensive and technologically advanced projects in cooperation with China, even in the sphere of raw materials. The two countries will achieve the new record targets in trade only if they make technological upgrades, which in turn will promote their political rapport.

Dmitry Kosyrev is a political commentator for the RIA Novosti news agency. This article is reprinted by permission of RIA Novosti. United Press International's "Outside View" commentaries are written by outside contributors who specialize in a variety of important issues. The views expressed do not necessarily reflect those of United Press International. In the interests of creating an open forum, original submissions are invited.

Source: United Press International