Turn East: a long game

Foreign analysts point out that the Kremlin has made quite a few statements about a "turn to the east." But words are words, but it does not seem that Moscow’s aspirations to strengthen ties with China are realized. China's stock markets are falling, China's economic growth is slowing, and the trade turnover between the two countries does not give cause for optimism. Or is it not so bad as it seems?

Ian Ivory, partner at Berwin Leighton Paisner, an international law firm, believes that after a long rhetoric that accompanied Russia's “turn” to the east, I have to admit: 2016 began with bad News for Moscow and its aspirations to strengthen cooperation with China. Chinese stock markets are shaking, the Middle Kingdom’s economic growth is slowing, and the volume of trade between Russia and China gives little reason for optimism. Or is it really not so bad?

This analyst reasons on the site CNBC International.

Russia has led to an Asian reversal of "deep strategic causes," the author believes. Asia today is one of the most dynamically developing regions of the world. Given the geographical location of Russia, the analyst notes that cooperation with the PRC is strategically important and beneficial for Moscow, which also cares about preserving sovereignty over its own territory - the Far East.

Nevertheless, questions remain about the meaning of this “turn” and its “viability,” the expert writes further. The Russian economy has been cornered by Western sanctions, and some analysts view the turn to Asia as an “act of despair” by the former world superpower.

The Russian economy has suffered greatly not only from Western sanctions, but also from falling oil prices. Therefore, it needs urgent replacement of lost sources of income and financing. Growing markets in Asia, especially in China, offer an obvious alternative to the West.

Meanwhile, skeptics doubt the effectiveness of Russian-Chinese cooperation. Not everyone believes that Russia will receive the level of financing and trade that was intended. The volume of bilateral trade (between Russia and China) has already fallen by a third last year; at the same time, energy prices collapsed. In addition, economic slowdown began in China.

Several high-profile projects of the PRC and the Russian Federation “stalled”. Some experts believe that the likelihood of replacing Western capital with Asian investments is a “big myth.”

Interferes with the effectiveness of Asian investment and uncertainty in Asia itself. Based on recent market “crashes” and crises (2015), many economists see ahead the “big slump” in China.

And yet we must remember: China and Russia are playing a “long game.” Yes, Russia was forced to turn from west to east, having experienced disappointment with the decision of its former partners, but Moscow expects to cooperate with China for a long time.

True, there are obstacles that can prevent the dragon and the bear from coming closer.

In the past, Russia and China have been arguing over borders, and today Chinese influence is growing in the Russian Far East. Skeptics could say here that Russia has begun to keep its enemies closer, the analyst notes.

Russia, on the contrary, is weakening: the federal budget is being reduced in the country, the “outdated infrastructure” is still involved. Also, Russia is characterized by “long distances”, many time zones and a bad climate.

Meanwhile, let us add on our own, it cannot be said that the cooperation of the Russian Federation and the People's Republic of China in 2016 is “stalling”.

The other day, Vladimir Putin signed the law on ratification of the agreement with China on the avoidance of double taxation and on the prevention of tax evasion with respect to taxes on income, as well as a protocol on amending the agreement. It is about creating conditions under which citizens and enterprises of the two countries will not be subject to double taxation, notes "Russian newspaper".

The agreement will enter into force in January 2017. The law will allow domestic borrowers to reduce the cost of attracting and servicing loans from Chinese banks.

IA "Cupid Info"referring to the Chinese agency Xinhua, summed up the results of cooperation between Russia and China last year.

Collaboration in major projects between the Chinese province of Heilongjiang and the Far East last year, the portal said, has developed well: local authorities have promoted the implementation of one hundred cooperation projects with Russia in the agricultural, forestry, mining, energy and other industries.

Here are some facts.

Heilongjiang Province launched 48 agricultural projects in the Russian Far East, created new agricultural areas with an area of ​​about 533 thousand hectares. Also launched 9 new forest projects with investment volumes 810 million.

Approved three projects of cooperation in the mining field (cost 9,3 billion dollars).

In addition, the Chinese and Russians have implemented three energy projects, the total investment in which amounted to one billion dollars. A power station in the Chelyabinsk region, which was built with the help of the Heilongjiang TianLansin company, was put into trial operation. The cycle of preparatory work for the construction of a complex for processing, preserving and transporting petroleum products in the Amur-Heihe area has been completed. The construction of the Chinese section of the Chinese-Russian gas pipeline was launched on the territory of the city of Heihe. Known and other implemented projects.

Therefore, it would be premature to declare that Sino-Russian cooperation was a big question because of the devaluation of the ruble and the fall in oil prices. Russia's turn to the east is indeed a long-term strategy, and no conclusions can be drawn in terms of the 2014-2015 time interval. In addition, the Western "partners" of Russia do not intend to lift sanctions or even soften them. Consequently, international factors for the “turnout” of Russia from Asia simply do not exist. "Long Game" continues.

Observed and commented on Oleg Chuvakin
- especially for topwar.ru

Comments

[base66]

we all turn east or west, is it not time for the people to turn around and tackle the problems of their country. any war needs a strong rear.

[Wheel]

Quote: basy66

Isn’t it time for the people to turn around and tackle the problems of their country.

"And Vaska listens and eats ..." (C)

[captain]

We have a joke about a monkey. When the lion poked animals at smart and beautiful, he said: smart to the left, beautiful to the right. Everyone dispersed, one monkey rushing about in the middle. Leo her question: what are you rushing about? And she answers him: I'm smart and beautiful, what should I do?

[Talgat]

The author picked up a photo very unsuccessful with Nursultan Abishevich.

Of course, there are many questions to our government, but on the whole it is a legally elected president and a symbol of the state - moreover, a friendly and allied Russia

opponents usually post such photos

[sgazeev]

Again, British scientists, polyglot political scientists have unearthed something in the form of a horror story. China "fell" from 7% to 3-4 %%, we would have such a GDP growth.

[Mangel olys]

Given the geographical location of Russia, the analyst notes that cooperation with China is strategically important and beneficial for Moscow, which also cares about maintaining sovereignty over its own territory - the Far East.

Strengthening ties with China leads to the fact that the Chinese will build factories in Russia to knock out our manufacturers from our own markets. Instead of import substitution, China began substitution. In this regard, China is much more dangerous than the West, it will bring assembly plants of cheap products and cheap labor to the country and will push all our manufacturers out of the market to the last.

[Volzhanin]

What a stupid thing. Who will give them? If only the authorities are bought up again, then it is possible.

[Hon]

Quote: Volzhanin

What a stupid thing. Who will give them? If only the authorities are bought up again, then it is possible.

and who will forbid them? they understand that now they need them as a substitute for the west, and skillfully take Faberge

[Hon]

Chinese labor is not so cheap anymore

[Karlovar]

Dorože rossijskoj odnoynačno ....

[Hon]

Quote: Karlovar

Dorože rossijskoj odnoynačno ....

or maybe look at the minimum wage of China? in the poorest province at least $ 200

[DimerVladimer]

I agree that hiring a Chinese engineer was not cheap before - but after the devaluation it’s unrealistically expensive

[DimerVladimer]

You are wrong. The Chinese (medium-sized businesses) do not seek to work in Russia - because there is no rule of law here and either very large Chinese companies (with serious state support) or small companies (which have nothing to lose) work here.
After the devaluation of the ruble by half (which is almost tantamount to a default), serious investors fled from Russia. For comparison, investors are also "fleeing" from China because of the devaluation of the yuan by .. 6%.
Import substitution is a slogan for fools.
Impossible to produce everything! If you launch 10 civilian satellites a year, then you don’t need to block the production of special protected electronics, investing billions of rubles, it is more expedient to buy 10 boards from the French.
In our country, every achievement in the field of "import substitution" is either an outdated shit from the seventies, or a poorly working prototype, at a price 10-100 times more expensive than an imported one.
If 1-10 three-dimensional machining centers are bought in the country, then there is no point in "blocking" their production.
The failure with the SSJ-100, which poured more funds than the Boeing spent on the development of the Dreamliner, teaches nothing. And as a result, a complete failure of sales ...

[marshes]

Quote: DimerVladimer

You are wrong. The Chinese (medium-sized businesses) do not seek to work in Russia - because there is no rule of law here and either very large Chinese companies (with serious state support) or small companies (which have nothing to lose) work here.

Not much about the specifics of Chinese business, as a rule.
last year, last year, our bazaars were burning, as it was not strange that the wrong people belonged to them. That the Chinese offered their sellers an interest-free loan, moreover they will write off the debt. And they will provide goods.
So we can say warm feelings to the Chinese. Well done, they need to sell the goods, which burned down, well, these are associated losses.
I respect them, especially from the east, the "bazaars" are watched ...

[DimerVladimer]

The bazaar is a very small Chinese business (like greenhouses, car repairs, etc.).
Chinese goods on the Russian market are 2.5-3 times more expensive than costs from a Chinese manufacturer.
Getting 150-200% of the profit in the Russian knitwear market - you can afford a commodity loan and fire and repairs. For comparison, their margin in the domestic Chinese market is usually 3-5% in bulk and 10% -15% in retail (sites like alibaba or aliexpress)
In retail stores in Russia, I have never seen a Chinese product with a margin of less than 100% - two prices! Not a weak "business in Russian" ?.

[andrei.yandex]

"Oil Chemistry" FRS

[Belousov]

It is necessary to cooperate with China, but only carefully, the principle of "soft power" preached by them is very effective and they are not going to abandon it. And with us, as soon as a new "friend" was announced, everyone fell into his arms and then they start scratching their turnips, the example with Turkey is very indicative. It would not work out with China.

[Nikolay71]

And yet we must remember: China and Russia are “a long game”
What is a "long game" for us may be a "short episode" for China.

[DimerVladimer]

Back in 2007, talking with the vice president of the Bank of China branch in Moscow about investments, I heard from him a key phrase that explained a lot in China’s financial policy. He said: our goal is not in lending and developing the Russian economy, but in developing the Chinese economy, for this we are promoting Chinese goods on the Russian market. This is a very clear and concise position.
Five years later, it was very funny to see how the Russian government naively hoped that after they were kicked out of the credit markets of the West, the Chinese would accept them "openly" and lend money (which once again showed that the Russian economy is run by naive amateurs).
The Chinese are pragmatic - they will take advantage of the situation to the maximum, as soon as you have shown interest - bargaining will be tough and not profitable.
A similar situation with the Power of Siberia pipeline was exactly the same with the gas pipeline through Kazakhstan to China: before the start of construction, one price was agreed upon, after the end of construction, when huge funds were invested - the Chinese "squeeze" the price twice as low - politely spreading their hands, do not want to leave pipeline.

[marlin1203]

Aren't agreements on gas supplies being concluded first, and only then on the construction of gas transmission facilities? Well, or in a complex? This is the first time I hear about the construction of an "empty" pipeline that has not been contracted for gas ...

[DimerVladimer]

That's the nuance, the Chinese do not sign contracts with a specific price or pricing formula. Rather, it is an agreement of intent to buy gas, and then a specific price type - then when you build ... They themselves invest only in their pipe section, which is several times cheaper than the costs of partners.
When infrastructure is ready, real bargaining begins. Turkmenistan and Kazakhstan faced this practice much earlier than Russia, but this experience was not taken into account either in the South Stream, or in the Turkish Stream, or in the Power of Siberia. Business in the east is a delicate matter.
If a European says Yes, then it really is. If the Chinese says - YES - it is 90% "Maybe", and 10% No.
It is in this ratio from my 10-year practice that the Chinese fulfill their obligations under the contract. In 90%, the terms of the contract are violated - for a Chinese, this is not at all a significant moment, such as the shipment occurred, but the fact that two months later than the agreed date - well, "could not ..." and this is typical for Chinese factories and corporations of any level.

[sapper2463]

Good point. In the purely economic aspect, one cannot disagree with you. But there is also a political aspect. Our government is trying to play with China on the political ...

[vladimirvn]

In our country there is a shortage of leaders and specialists of patriots. Hard, uncompromising. ready for their country to gulp a throat. As an example, the behavior of Yu. Trutnev in conflict with Poroshenko.
It is high time to edit the work under the article "Wrecking" and involve our leaders and specialists who admit inaction and lack of professionalism, as well as depending on the consequences of their activities.

[Skym]

Either to the East, then to the West, then somewhere else. Maybe enough to unfold somewhere? Maybe it’s worth proposing something of your own and developing it, so that everyone will unfold to us, and build pragmatic relations with everyone? Then they will be afraid and respect, and will cease to be rude. We will all return somewhere, feed everyone, and having such wealth should have long been a locomotive of development for the planet. Both spiritually and materially. Nobody values ​​good uncles in geopolitics. Yes, you don’t need to turn into moral monsters. But first of all, you need to think about yourself. Then we will have more stability, and peace on the planet, as it will have the strength to prevent some from plunging everything into chaos.

[Gomel]

The "long game" continues.

well, it cannot be otherwise; it has just begun. True, I would not say that it began in the 2014 year ...
the minimum of 2012 of the year is the first large-scale open analytical reviews in the economic expert community (not in the blogosphere - it’s generally like water, where it tends to flow there ...), just in 2014 it was announced on political level. Apparently the moment required it.
And so there were enough large-scale projects by 2013. And the quality of the elaboration of the same "Mila of Siberia" hints at earlier agreements and okktakty. And there is nothing to say about the laying of icebreakers by China (2008-2010), as well as about the fact that in August 2012 a Chinese icebreaking supply vessel for the first time in history passed the Northern Sea Route (NSR), and in the summer of 2013 the Chinese Shipping Company launched on the NSR, regular commercial flights ... (well, like regular twice a year, but on schedule ... :))
So it was this part of the game that began at least in the middle of the 2000's. And given the factor of Iran and the trans-Iranian sea route that they wanted to build back in the 19 century ... uh. The game was long and did not stop. It was just that Russia was somewhat distant from this field, and there was not enough strength to pay attention. But now, forces, means, and time and people appeared.

[Balagan]

China will not amicably pour loot into its northern brother. As it is profitable for him - so it will do. He is not a friend to us, but it’s good that, although not an enemy.

[sds87]

I’m interested in one thing - will the Kremlin ever take a course on Russia and its people? Or will it pull pipes and cover losses at the expense of the people? And then money was exported to the west, and now they are trying to the east. When will the dialogue with his people begin? And then only while the genocide of the Russians is the real one and nothing more.

[sapper2463]

Only in the case of open hostilities in the territory of our state. What has already happened in history more than once. And so yes, it is annoying for our elite, while the entire developed world stimulates domestic demand and a course towards the well-being of its people, our government is looking for something else to sell in order to fulfill its minimum social obligations, but what a beautiful wrapper these obligations are wrapped in! It's a shame, but pike cancer and pike cancer, and based on this and a high rating and support, we have no serious alternative, not a useless opposition ...