Ideal time to upgrade Sino-Russian economic bond
Let market rules guide cooperation
Feng Yujun, vice-dean of the Institute of International Studies and director of the Center for Russian and Central Asian Studies, Fudan University
Economic development is the first priority of any country, especially when global growth is lackluster and the specter of a trade war is looming over the world economy. As two major countries, China and Russia need to strengthen economic cooperation. Russia needs to deepen cooperation with China to attract investment and technologies, and increase its share of China's market to offset the loss caused by the Western sanctions. And China should take steps to ensure energy security and diversify its energy imports, by buying more oil and gas from Russia.
In the future, the two countries should more closely collaborate in the fields of energy and agriculture. And sitting on huge reserves of energy, Russia has every reason to deepen cooperation with China in energy and related fields.
Facing a trade war with the US, China would do good to develop a closer partnership with Russia. But that would take a long time because of the structural problem of demand and supply. For instance, China imported 36 million metric tons of soybean from the US last year while Russia's soybean exports to China was only 0.60 million tons, as Russia's annual soybean output is merely 3 million tons. Therefore, the two sides have to keep in mind both the cooperation potential and the practical difficulties.
A bright aspect of Sino-Russian economic cooperation is the rapid growth of China's investment in Russia. The Western sanctions have deprived Russia of enough investments and loans, but Chinese investments have alleviated Russia's need for capital.
While taking measures to deepen cooperation, China and Russia should also take measures to deepen mutual political trust. And Chinese enterprises and financial institutions should take into consideration various risks associated with investments in Russia, including the investment environment and the collateral risks due to the Western sanctions against Russia.