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Russia–China

September 07, 14:39 UTC+3
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Key conclusions

Cooperation between China and Russia is on the rise

“Our cooperation is definitely developing. It is built on the foundation of our friendship because this is a vital condition for developing business,” said Yury Trutnev, Deputy Prime Minister and Presidential Plenipotentiary Envoy to the Far Eastern Federal District of the Russian Federation.

“What we have now is absolutely the best time for Russia-China relations. This is connected with the fact that the leaders of Russia and China are looking at things in very much the same way. Using Internet terminology, it can be said that what we have now is Russia-China Relations 3.0 <...> Deals with Russia are being supported by the leadership of China.  And, indeed, a golden age of Russian-Chinese investment has arrived,” explained Kirill Dmitriev, Chief Executive Officer of JSC Managing Company Russian Direct Investment.

“Today relations between Russia and China are going through a totally new phase,” said Grigory Berezkin, Chairman of the Board of Directors of ESN Group.

Challenges

Lack of required trust between Chinese and Russian entrepreneurs

“One level of Russian-Chinese relations is the partnership of small and medium-sized businesses, particularly those not involved in the energy sector. 

And here I would like to note that the level of mutual understanding between Russian companies and Chinese companies in no way matches the opportunities that our political leaders have provided us or the relations between the countries.  The non-energy sector, specifically small and medium-sized business, is catastrophically behind the opportunities that exist <...> We have yet to return to a level of personal trust so that both Russia for China and China for Russia can become interesting objects for mutual investment,” explained Victor Vekselberg, Chairman of the Board of Directors of Renova Group and President of Skolkovo.

“The reason for many problems could be the specifics of mentality, specifics of doing business in China <...> In China, if we are talking about medium-sized business, everything operates on the level of horizontal connections,” explained Leonid Petukhov, General Director of the Far East Investment and Export Agency.

Slow work on the part of state bodies

“There are still a lot of barriers when it comes to our mutual trade <...> Our governmental bodies are very slow when it comes to making decisions <...> For example, restrictions on supplying meat (to China) have been in effect since 2005.  12 years.  And we still can't solve this problem. There is also a quota on grain, among other things,” said Vladimir Padalko, Vice President of the Chamber of Commerce and Industry of the Russian Federation.

Solutions

Further development of logistics corridors

“We think it's the right thing to do to move to the next stages of cooperation.  What's of fundamental importance to us is working together to develop logistics corridors.  It is absolutely clear that logistics corridors often require money outside of investment projects.  These are big investments and, more than that, what's most important for these transportation corridors to be effective, for them to pay off, is the necessity of potential cargo flow and for certain guarantees to by made by both countries,” Yury Trutnev indicated.

Cooperation across borders must be expanded

“If we talk about cooperation between the Far East and neighboring Chinese provinces, we see a new model.  This cross-border cooperation model is now being developed.  What exactly are we talking about?  We're talking about joint production of different products for export, like petrochemicals. For example, my colleagues and I are creating a cross-border cluster where we do methanol processing in Russia, then in China. Part of the product is returned and again we process the petrochemicals. We are no longer competitors. We don't have just trade relations anymore. Instead, together we are looking to supply a final product to markets all over Asia,” Grigory Berezkin pointed out.

Transportation corridors in Russia need to pass through regions with technological and economic development

“In order to develop the regions of Russia's Far East, transportation corridors are very important.  And I also think that you need to create regions for technical and economic development,” said Chen Zhong, General Director of China Communications Construction Company Limited International.

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