Mr Yaroslav Lissovolik, a chief economist with the Eurasia Development Bank joins the program.
Mr Lissovolik starts off by describing the importance of China for Russia as an export market. "China is obviously a power house globally, together with India, and jointly these two economies increasingly determine the level of demand in the global economy which is critical for the prices of commodities." Mr Lissovolik sees China becoming of greater and greater importance in terms of foreign investment into Russia. "This has been weak in the preceding decade, but in recent years we are starting to see that investment is becoming a more powerful channel for cooperation between Russia and China." On a country by country basis, China is definitely Russia's largest trading partner, Mr Lissovolik clarifies.
India is also, according to Mr Lissovolik, becoming increasingly important for the Russian economy, although Russia-India trade has always been significant. "We are starting to see new initiatives and projects between Russia and India. In terms of bilateral relations, whether you take the Soviet period or the post-Soviet period, they were always in good shape. There are plans to launch a free trade area between the Eurasian Economic Union and India, so I think we are going to see more intensive economic interaction between India and Russia."
Russia, it seems, does need to increase its exports. John Harrison asks: "The World Bank says in its latest report: ‘A Rebalancing China and Resurging India: How will the pendulum swing for Russia?' That Russia's Export to GDP ratio declined from 33% during 2005-7 to about 28% in 2013-15." Mr Lissovolik says that Russia needs to take advantage of the good relations between these three countries. "Clearly relations are in good shape, and there is the political foundation to take advantage of these opportunities. Obviously, these are some of the largest markets in the world, and they are growing markets as well, so I think it does depend to some degree on Russia herself to forge ties in ways that open markets; whether it is in free trade areas or investment alliances….The reduction is mainly due to the reduction in oil prices and Russia has been making advances in regard to the diversification of its exports… Fossil fuels exports constitute currently of about 50% of Russia's exports to China at the moment, but less in the case of India, which is considerably further away," Mr Lissovolik says. He sees one area of real growth as being agricultural exports.
There are a plethora of organizations that have been set up, such as the SCO (Shanghai Cooperation organization — a political, economic and military organisation: China, Kazakhstan, Kyrgyzstan, Russia, Tajikistan, and Uzbekistan), the EAEU (Eurasian Economic Union: Armenia, Belarus, Kazakhstan, Kyrgyzstan, Russia) and the SREB (which is part of the Chinese ‘One Belt One Road' strategy). To the question why are there so many different organizations, Mr Lissovolik says: "Obviously each of these projects has a role to play… Eurasia is tremendous in terms of its territory, in terms of the possibility to pursue economic integration, and it is only to be expected that Eurasia would have a myriad of integration projects that in turn need to relate to one another. So, if you are talking about the Eurasian Economic Union, this is a union that includes the hinterlands, the inner regions of Eurasia, it includes economies which are mostly landlocked. Then there are countries such as China for example, that is increasingly becoming one of the largest maritime economies of the world in terms of her ports and the importance of maritime transportation."
There seems to be a tension between an autarkic system whereby income is generated by trade and industry within existing countries, or a model whereby income is coming from external sources such as China. Mr Lissovolik says: "The long-term likelihood is the option which is referred to as Greater Eurasia which encompasses all of the geography of Eurasia, meaning Europe, Central Asia, and East Asia. Basically, the entire Eurasian continent. Obviously, this is a long-term transition, and there are a lot of connecting lanes that need to be filled, such as the liaison between the European Union and the Eurasian Union, there has yet to traction along these lines….I think the future of Eurasia is to promote models of different kinds of economic development while at the same time forging ahead with some kind of economic harmonization and coordination amongst the various regional economic integration projects."
As regards the viewpoint from China, Mr Lissovolik says: "China sees Eurasia as sets of possibilities to set up new alliances, for new markets to be opened up. I think China is positioning itself now to be the champion of economic liberalization, of openness….I think that for China, Eurasia is one of the areas where that kind of economic liberalization can be realized through regional projects such as the One Belt One Road project, by bilateral and strategic alliances with individual countries,…there are a multitude of instruments that China is starting to employ…"
China clearly has a global outlook not just limited to Eurasia. Eurasia is an important platform for China, or a stepping stone, in a new globalized world, but it would be a mistake to think that China is only interested in Eurasia, Mr Lissovolik says. "There are new models such as ‘Bricks Plus' which China could use to pursue productivity and continental connectivity throughout the world….We see that China is going to be in a leadership role in terms of driving and advancing these initiatives that essentially make economic integration more of a force in the global economy. In this context, China's example is important for Russia, regarding the mix of trade and external economic policy. China has more than 120 economic alliances forged across the world, Russia is only starting this process, the example of China and its success in the world economy will be very much a key example for Russia as it really starts to pursue a proper external trade policy. Recently, until 2012, Russia was not a member of the WTO, and only in recent years is Russia finally starting to look around and start to discover the tremendous possibilities for forging economic alliances….So I think really the theme of the next decade for Russia is going to be precisely this foreign trade policy associated with the creation of new economic alliances across the world."
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