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"There is a chance, and it's not a big one ..."

Will Russia fit into China's projects?

A well-known regional economist, director of Far Eastern Center for Economic Development and Integration of Russia in the Asia-Pacific Region, professor of the Far Eastern Federal University Alexander Abramov leaves behind Russia the opportunity to successfully fit into the projects of China, which is superior in economic terms

"There is a chance, and it's not a big one ..."

Alexander Abramov

Director of the Far Eastern Center for Economic Development and Integration of Russia in the Asia-Pacific Region, Professor of FEFU

Russia is open to different alliances 

The geographical position and history of Russia predetermine the involvement of our country in the creation of qualitatively new alliances in the Asia-Pacific region (APR), both political and economic, cultural, etc. In the context of the emerging large geopolitical and geoeconomic reversal, the growing need for multipolarity for the solution of world Problems, in the direction of Eurasia, the development pole and the search for new partnerships are shifting.

Probably, one should not abuse the word "U-turn" - Russia does not "turn away" from anyone. And even now, when our long-term relations with traditional partners in the West are being tested for strength, the economic results remain positive: despite the crisis and sanctions, foreign trade turnover with these countries remains significant, and in some cases it is growing, including with such an iconic opponent of Russia as the United States. So, the foreign trade turnover of Russia with the United States increased in 2014 by 5,6% and amounted to $ 29,2 billion.

It is another matter that the level of development of the countries of Asia and the Asia-Pacific region has reached the level of their integration into global economic processes such that it would be short-sighted not to notice it. An indicative fact - in 2013, China in terms of foreign trade, almost equaled the US ($ 4,16 trillion vs. $ 4,03 trillion, respectively), and despite the general slowdown in world trade continues to hold this position.


China: "locomotive", but not only ...

From the ideas of reintegrating the former Soviet republics into the Eurasian Economic Union (EAEU) and creating on the basis of it the Eurasian Union, which implies more extensive interaction of the participating countries, we come to the idea of ​​relations existing on the mainland in principle. The economic power and stability of China, which in many respects forms the general Asian impulse, is undoubtedly one of the most powerful locomotives, first of all, of the Eurasian economic integration.

China is, of course, a "locomotive". But with the clarification that there are no "single rails" in Asia, or even the width of the railway track varies in different countries. Western traditions of dividing the world into "senior" and "younger", "developed" and "developing" in this part of the world do not work well.

For example, at the end of 2015, the final legalization of the “ASEAN Common Market” was expected. Ten states of Southeast Asia - with a population of 625 million people (this is without China) or 9% of the total population of the planet with GDP (purchasing power parity) - $ 6,48 trillion (at the beginning of 2015), or about 6% of GDP of all countries of the world - unite their markets and remove customs barriers at their borders.

There is something similar to the European Union (what it was about 20 years ago). But only without the European bureaucracy and with the growth rate of the economy is 5-6 times higher than the European one. What will China have for them - a "locomotive" or a passenger who bought a ticket on time in a convenient place, time will tell.

 

"New Silk Road" - a project for Russia including

The concept of the "economic belt of the Silk Road" and the principle of "one belt-one way", outlined by the Chairman of the People's Republic of China Xi Jinping, are the basis of Eurasian integration in Chinese, which is the involvement of a number of countries in the process of inter-related development.

It is more appropriate to speak of “Eurasian integration” as an additional option of the “Silk Road Economic Belt” megaproject, but not as its goal.

In fact, China does what any diligent business executive who has saved up some savings would do: it is profitable to invest these savings.

Today, China's foreign exchange reserves amount to nearly $ 4.0 trillion, that is, twice as much as the combined reserves of the European Union and the United States combined ($ 1.805 trillion). Such money also requires adequate investment projects. These projects, in turn, need a comfortable investment environment - security, uniform legal procedures, transparent financial monitoring.

In this situation the partner countries on the "Economic belt of the Silk Road", which Russia can become, will get the same opportunities as advantages. But whether they manage to dispose of this - the issue is not to China, but to these countries, and Russia, in particular.

 

The auxiliary role of the Transsib

The Russian transportation system is becoming the backbone of integration, its energy resources ensure the stable development of the Chinese economy, and Chinese money comes to projects for modernization and development in Russia. The rest of the countries also receive concrete benefits in the form of military, financial and other assistance.

We pay tribute to the transport system of Russia and Transsib. But in the megaproject “The economic belt of the Silk Road” or in the transport system of China, providing the export-import part of Chinese trade, the transport system of Russia plays a supporting role.

The bulk of the Chinese trade turnover falls on maritime transport, and will remain so for the foreseeable future: from about 50 million containers carrying goods from all over the world, 30 million pass through the southeast coast of China. Sea way is cheaper, safer and easier to operate.

In addition, there is a "cargo imbalance problem": China, as a "world workshop", annually exports approximately 20 million containers with finished goods for export, and accepts for imports only 9 million containers, with semi-finished products and the small amount of goods that Still does not produce at home (this is data without taking into account the "American direction", on which there is no land alternative to sea transport).

 

Russia's risks and opportunities for integration

Our task is to identify not only the positive aspects of such a process, but also to test it for difficulties, to identify the real set of benefits and potential losses for the Russian Federation from entering into full-fledged relations with sovereign, powerful and development-oriented China. An important issue is also the interaction of the Silk Road and the EAEU.

The participation of Russia and the EEA in the project "Economic belt of the Silk Road" contains both risks and new opportunities.

Among the risks stand out the fears that:

1) Russia is not currently in the position of a strong partner, and this can not be taken advantage of by China to promote its model of a single economic space.

2) The logistics component of the project carries the risks of bypassing Russia along other transport routes. For example, taking into account the plans of the People's Republic of China to create a highway "China-Central Asia-West Asia", there is a threat of further outflow of Trans-Siberian transit to China.

To prevent the development of the situation under this scenario, care should be taken to ensure that the feasibility of implementing these plans was realized as insufficient by the Chinese leadership itself. On the one hand, the extremely unstable situation in West Asia (IGIL, the Taliban, their penetration into the countries of Central Asia) contributes to this. It is risky to create transport infrastructure in such conditions.

On the other hand, Russia should take more effective measures to increase transit capacity, simplify clearance procedures and reduce delivery times to the West.

Participation in the project "Economic belt of the Silk Road" also opens new opportunities for Russia as a whole and for the Russian Far East, in particular, for example:

1) Russia is among the countries with high sovereign yield of the national economy. Thus, public investment in our country, even from a monetary point of view, can bring significant benefits. At the same time, the return on investments is ensured both by the material growth of the Russian economy and by the factor of its inevitable revaluation into the "big party", the increase in the price of investments made in advance is predetermined.

2) The project "Economic belt of the Silk Road" has not yet reached its complete outlines. A new economic order may emerge in its zone, which is formulated by the BRICS countries, and can be supported by the EAEC. In the case of general agreement, this procedure can also be extended in the belt zone, but this requires considerable work to identify and "link" the interests of the parties involved.

In general, any large-scale project carries risks (and the proposal to export China's production capacities in 12 priority sectors of the economy is, of course, an offer from the megaproject of the Economic Belt of the Silk Road). Economic mechanisms are an effective counteraction to economic risks.

Do not overburden political institutions, or "people's diplomacy" economic work.

In the context of the megaproject "The Economic Belt of the Silk Road", Russia and, in particular, the monetary authorities of our country, it is necessary to do a lot of work: it is necessary to mobilize the appropriate tools for the stock market, the insurance services market, and mobilize the control functions of the Ministry of Regional Development of Russia and regional authorities.

The principle of "Money to money" will be fair here as never before - only the part of Chinese money that we will be able to usefully and carefully handle in Russian investment projects will work effectively. All that is over can become a debt burden of the country. 

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