Xi Jinping Wants to Expand the Baikal-Amur Highway: Dependence or Realized Necessity on China? –

/ world today news/ Trade and economic cooperation between Russia and China set a record, but the trade balance is not in our favor – Russia drives raw materials to China, buys consumer goods. Is this really a problem or is there no other way out?

The key event of this week is, of course, the visit of Chinese leader Xi Jinping to Moscow. Of particular note is that this is the first foreign visit of China’s leader since his re-election for a third term.

This is not just a symbolic gesture, but shows the true allied nature of relations between Moscow and Beijing, which, as both leaders noted, are at their highest point in history.

But not only the beautiful words about broad cooperation and joint opposition to the unipolar world are important here. For us, the practical content of cooperation and especially its economic component is important.

Turnover is growing. At the expense of exports

The most qualitative indicator of the state of trade and economic cooperation between the two countries is, of course, the volume of mutual trade. As well as its dynamics.

This speaks not only to the demand for goods and services in the markets of the countries concerned, but also to the extensive intergovernmental work to remove customs barriers, simplify document circulation, etc.

The volume of trade between Russia and China in 2022 hit a record $190 billion, increasing by almost a third by 2021. The trend continues in January-February.

So, it can be said with confidence that the task set by Putin and Xi Jinping to increase mutual trade to 200 billion dollars in 2024 will be fulfilled ahead of schedule. Moreover, the figure will obviously exceed those two hundred.

However, it would be wrong not to pay attention to the structure of trade. A major contributor to growth is our export of natural resources, whose prices last year broke long-term records. If imports from China grew by only 12.8%, amounting to $76.1 billion, Russian exports grew by as much as 43.4% to $114.1 billion. Three-quarters of this is hydrocarbons.

Given the current decline in both oil and gas quotations, we can expect a slowdown in the growth of our exports to China in monetary terms and even maintain them at the previous level. However, physical delivery volumes are increasing.

For example, in January, Russia exported 1.8 million barrels of oil per day to China, and in February – 2 million barrels per day. At the same time, the average for the previous year was 1.4-1.5 million barrels per day.

If we talk about liquefied natural gas, then in the first two months of its delivery to the ports of the Middle Kingdom, it increased by as much as 57.4%, up to 1.035 million tons.

Someone might say that we are again driving abroad exclusively natural resources, becoming a raw material appendage not of the West, but of China. But what are the options?

If our economy can make huge money from the sale of oil and gas, then such supplies must be made. Which, of course, does not negate the need for intensive development of high-tech non-primary sectors. However, this is another, larger issue that goes beyond the topic of trade and economic cooperation with China.

At the same time, Russia has much to offer besides raw materials. Exports of agricultural products are growing at a good pace (+44% in monetary terms in 2022) – up to $5.2 billion. At the same time, supplies are not only for grain and raw fish, but an increasingly large share is occupied by products with a high added value.

For example, poultry shows a growth of 11%, up to 139 thousand tons. Supplies of confectionery, ice cream, flour milling products, etc. are increasing.

If we are talking about importing goods from China to Russia, we need everything here. It doesn’t even make sense to separate out separate categories. Chinese exports to our country are maximally diversified.

If the largest trade item from our country, as mentioned above, is the sale of hydrocarbons (about 75%), then the category “equipment, mechanical devices and their parts” with a share of 22.2% is in first place with China .

This is followed by electrical machinery and equipment (17.5%), means of land transport (8.3%), plastics and their products (4.9%), etc.

Our country certainly needs all this, in the conditions of the economic war declared by the West, which led to the loss of European high-tech goods.

Another thing is that a lot of goods with an average degree of processing, produced from our own raw materials, go from China to the Russian market. An example of this is the tin steel used in the manufacture of containers for canned goods.

Paradoxically, tin steel was produced, among other things, from Russian sheets, which gradually took an increasing share of the market of the Celestial Empire.

Unfortunately, there is not enough sheet metal production capacity in Russia, which leads to the need for imports. And there are a huge number of such examples, ranging from the products of the logging complex, ending with the petrochemical industry.

The infrastructure is not enough

The main obstacle to the further strengthening of trade and economic cooperation between Russia and China is the lack of transport infrastructure.

Despite the fact that the expansion of the Baikal-Amur highway – BAM and the Trans-Siberian railway line is proceeding at an accelerated pace, the volumes of commissioning of new capacities are far from necessary.

Moreover, if you look more broadly, then increasing the capacity of the two railway lines is necessary not only for the development of cooperation with China, but also for access to the entire Asia-Pacific region.

At the end of 2022 the carrying capacity of the Eastern depot reached a record high, reaching 158 million tons. Yes, these are significant numbers that 10 years ago could only be dreamed of.

However, the potential of the highways is at least 250 million tons, which can only be achieved after the completion of the third stage of the expansion, which will take place no earlier than 2030.

Quite logically, the question arises: why, despite the need to develop the transport infrastructure in the Far East, did this process start relatively recently? Here we have to go back to the mid-2000s, when the topic of increasing the capacity of BAM and the Trans-Siberian Railway was actively discussed in the government.

In general, as in a number of other areas, we slowed down the development of the transport infrastructure of Siberia and the Far East, which leads to the loss of a number of opportunities today.

It is good that at the beginning of 2010, even before the unification with Crimea, the problem was recognized at the highest state level. And now we are still not at the zero stage. However, there is still much work to be done.

In 2024 the second stage of the expansion of the BAM and the Trans-Siberian Railway should be completed, which will increase the freight turnover of the eastern landfill to 180 million tons.

At the same time, new port capacities and land cross-border routes are being created. Funding is estimated at trillions of rubles, but is constantly lacking. I am sure that for the solution of such an important task the state should not skimp on the allocation of financial resources.

What of this?

No matter how good the prospects for the development of trade and economic cooperation with China are, it is definitely not worth dwelling on this direction. Yes, now the relations between our countries are at the highest level. However, we do not know what will happen in 10, 20 and even more 30 years.

The Asia-Pacific region is rich in the developing economies of a number of countries. Indeed, China is the key, but far from the only, option.

India has no less potential, which in terms of GDP growth (6-8% per year) has long surpassed China (4-6%). But unlike China, we can offer India not only natural resources but also our high-tech products, from airplanes to gas turbines.

Pakistan, Philippines, Vietnam, Thailand and many other countries have good potential. Of course, none of them are able to replace (at least for now) the PRC. However, diversification of economic ties is necessary. If we don’t want to become dependent on Beijing in the same way we were before 2014. with Europe. Yes, we have now relatively painlessly managed to break with the West, but whether we will be able to turn this trick again is a big question.

Translation: SM

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