Burgeoning Russia-China Trade ‘Shiny Spot Amid Gloom’ in Global Economy
16:43 GMT 18.10.2023 (Updated: 15:37 GMT 19.10.2023)
© Sputnik / Alexander Demianchuk
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Trade between China and Russia has expanded dramatically in recent years, growing even as other nations are struggling to maintain trade volumes. Both nations are members of numerous international groups aimed at developing new trade routes centered on their needs and not the West’s, creating great potential for development, an economist said.
As most of the world’s nations gathered in Beijing to celebrate the 10-year anniversary of the Belt and Road Initiative (BRI), an infrastructure megaproject initiated by China with projects in more than 150 countries, Russian President Vladimir Putin called attention to the special relationship burgeoning between Moscow and Beijing.
Speaking at the forum on Wednesday, Putin said that China and Russia, as well as the majority of the world's countries, "share the desire for equal and mutually beneficial cooperation aimed at achieving sustainable and long-term economic progress and social well-being, while respecting the diversity of civilizations and the right of each country to its own model of development."
He added that the BRI was in line with Russia’s “well-known proposal to form a large Eurasian space” for cooperation based on groups like the Shanghai Cooperation Organization (SCO), the Association of Southeast Asian Nations (ASEAN) and the Eurasian Economic Union.
Dr John Gong, professor of economics at the University of International Business and Economics in Beijing and a China Forum expert, told Sputnik that the China-Russia relationship, which has continued to expand even as the rest of the globe is struggling through economic malaise, can serve as the basis for a new way of doing things globally.
“I think from the Russian perspective [opening new trade corridors between Russia and China] represents a great opportunity against the backdrop of Russia's entire economy. Russia's foreign trade is undergoing a profound transformation, profound change in a way. In other words, I think that the Russian economy, Russian trade is geared towards the Orient. And for that to happen more smoothly and also in an inexpensive way, it needs a lot of infrastructure in the Far East. And I think this is something that the Russian government is definitely very interested in pushing,” Gong said.
“And from China's perspective, of course, this represents a great opportunity. And also, I think, from a long term perspective, the China-Russia trade and bilateral investment relationship also represent a great direction of future promise because there is a lot of potential for cooperation ahead. Let's just look at the trade figures on the individual countries basis. Russia's already becoming China's, I think, fourth- or fifth-largest trading partner and is rapidly increasing in volume as well. So, this is one strategic area that China is very interested in exploring and pushing as well.”
Gong noted that several months ago, Xi and Putin pledged to push the bilateral trade volume between their two countries above $200 billion this year. “It looks to me that this target is going to be grossly, grossly exceeded,” he said.
“I think it's more likely that it's going to be close to $250 billion, let alone if we talk about the growth rate, it's 30%, year-on-year basis. You know, 30% is a huge number against the backdrop of slowing global trade, of a slowing macro environment - on a global basis, actually, look at the major economies around the world. Economic growth is experiencing a lot of difficulties and challenges. Global trade in particular is greatly affected. And if you look at China's trade picture, with each major trading partner, practically everyone is decreasing, actually. Other than just Russia increasing by 30%. So, you know, this is a shiny spot amidst a sort of a gloomy picture, even though China's trade is coming back a little bit in September. But overall, it's very anemic, in my view. But except with Russia - it's a very robust growth.”
The economist noted that there is broad global interest in moving beyond a global system of trade based on the US dollar.
“I mean, it's a theme, pursued by a lot of countries, actually. You know, when the Brazilian president visited China two weeks ago, he was talking about de-dollarization for trade settlements. The Indonesian president and Malaysia president were both talking about more or less the same thing. And there are other world leaders that have been talking about this,” he explained.
“As a matter of fact, within the BRICS framework - now it's BRICS Plus, like the BRICS Plus framework - I know there's an active initiative to explore the practical issues of implementing an alternative currency, regardless of what that is, I mean, it could be a synthetic currency. But anyway, I know there's a working group set up within the BRICS to explore that option. Among the member countries of the BRICS Plus, trade can be potentially settled in things other than the US dollar.”
1 September 2023, 05:16 GMT
“It was actually discussed at the panel that I was on during the Valdai annual meeting in Sochi just a few weeks ago, when President Putin came and gave a talk as well. During that panel, the former vice president of the New World Bank, which is the BRICS bank, was talking about their initiative,” he noted. “There's a serious effort to explore and implement a trade settlement mechanism among the BRICS member countries, to settle trade in currencies other than the US dollar.”
Gong said that while the last 10 years of accomplishments by the Belt and Road project had been impressive, the BRI was only just getting going.
“It's pretty obvious that the fact that more than 150 countries' leaders, signatories, came to Beijing to attend this meeting, I mean, this is a strong statement in itself - it's a statement of endorsement, it's a statement of support. And moving forward, I think the Belt and Road Initiative is going to continue to evolve. We're talking about spending over $1 trillion, over 3,000 projects in so many countries, 150 countries. There's never been a time in human history that such a large scale set of hard infrastructures were built - actually built - within a short period of just ten years.”
“Look at the history of the World Bank, for example, or other regional or international institutions: I mean, they've been spending decades trying to do something like this. But look at what the Belt and Road Initiative has achieved just within a decade.”
“And so many loans are made. The most important thing, in my view, is that the money is spent on really building something. And, you know, don't underestimate and under-appreciate the challenges, the difficulties of putting things together for an infrastructure project. For a developing country that goes to the World Bank, for example, or let's say the African Development Bank, for an infrastructure project, it's a hard undertaking, you know, it takes a lot of effort. But in this case, I think, things are being done quite relatively fast and also relatively economical as well. So, at least I think China did something for the rest of the world.”
17 October 2023, 18:35 GMT
Gong said Putin’s visit to Beijing was “a very significant development in my view.”
“As far as I can recall, this is the first visit by President Putin out of Russia since the conflict in Ukraine erupted [in February 2022], and that happened in Beijing. So I think that underlies the relationship between the two countries. And I think the fact that President Putin was standing there among a very large crowd of world leaders, certainly mostly coming from the Global South, sends a strong signal to the West that the current global affairs is not just about the richest clubs of the world sort of preaching the rest of the world in a condescending manner. It's way beyond that stage, beyond that era.”
“And you mentioned the conflict in Israel, in the Gaza Strip. And I think here in Beijing, the world leaders are celebrating about building a lot of things while over there they're talking about bombing things. And I think this is a very large contrast in my view.”
