Alexei Chekunkov, Minister for the Development of the Far East and the Arctic, admitted in an interview with Kommersant that cooperation between Russia and China has not turned out to be as strong in reality as in words. According to him, the volume of investments of the second economy of the planet in Russia is too small.
“As for the turn to the East, although most of Russia is already in Asia, the public part of our relations with the same China was ahead of their practical implementation. If you count those projects in Russia where large Chinese investors actually participated, then the fingers of one hand will suffice, ”the minister said.
Chekunkov noted that for an economy with a stock market capitalization of $20 trillion and banking system assets of $50 trillion, there is little investment in the Russian economy. The minister proposes to rectify the situation with the help of joint ventures with Chinese companies, he suggests taking the experience of the 90s as a basis, when Western companies entered the Russian market.
“In the early 1990s, this was the format in which Western companies came to Russia with the aim of entering our growing consumer market. But then it led to the replacement of Russian manufacturers. We were unable to protect our market, unlike the same Chinese, who defended their interests very rigidly,” Chekunkov explained.
He is convinced that this time the Russian authorities will be able to avoid previous mistakes and prevent the vulnerability of Russian manufacturers in cooperation with China. As Russian advantages, the minister calls: the richest resource potential and the maximum creation of added value in Russia, access to the huge markets of Asia, as well as access to their financial markets.
Chekunkov also acknowledged that the existing transport capacity for a turn to the East is not enough – it will be necessary to develop routes through the Arctic and the Far East, since there will be no other opportunity to develop trade – there is no capacity. To simplify trade, it will be necessary to invest in railways, ports, border crossings, warehouses, logistics complexes, and modernize transport.
“We are already seeing a shortage of carrying capacity in the East of Russia, exceeding 70 million tons, and in three years, according to our estimates, it will reach 150 million tons. Only large-scale maritime transportation, including container transportation along the Northern Sea Route (NSR), will allow solving this problem,” the minister says.
The Russian authorities have repeatedly spoken about the readiness of the Russian economy to reorient itself to the East, primarily implying increased cooperation with China and India. However, the authorities failed to quickly expand the economy – there are not enough transport capacities, and the countries themselves are in no hurry to increase cooperation due to sanctions risks. Many Chinese companies have left the Russian market following Western competitors, and the dynamics of the trade balance does not yet indicate a sharp increase in cooperation with Asian business.