Five bridges between Russia and China | Latest news The Moscow Post
03 March 2024

"Five bridges" between Russia and China

The international community has a duty to resolve conflicts through dialogue and consultation, to practice multilateralism and inclusivity.

This was announced on Sunday by the Deputy Chairman of the People's Republic of China Han Zheng during the XI Global Peace Forum, dedicated to "Stabilization of an unstable world through consensus and cooperation," the correspondent of The Moscow Post reports.

The weaponization of the US dollar and economic sanctions has created an atmosphere of distrust in the holding of assets in Western financial institutions, said Dilma Rousseff, president of the New Development Bank created by the BRICS countries (Brazil, Russia, India, China and South Africa).

Reacting to the dominance of the dollar, Moscow and Beijing in 2019 agreed to switch to mutual settlements in national currencies. In 2022, their share in the calculations amounted to about a quarter, and a year later, Russian President Vladimir Putin said that two-thirds of bilateral trade is served in rubles and yuan.

Harmony of overlapping interests

The Global Peace Forum, where Rousseff spoke, continued the discussions that began on June 26-27 at the VIII International Conference "Russia and China: Cooperation in a New Era", organized by the Russian Council on International Affairs (INF) and the Chinese Academy of Social Sciences. The participants of the event were greeted by the heads of the diplomatic departments of the Russian Federation and the PRC - Sergei Lavrov and Qin Gang.

The development of bilateral ties helps Russia and China resist Western sanctions pressure, according to the ninth report, "Russian-Chinese Dialogue: Model 2023." It is necessary to solve problems, eliminate obstacles, develop new areas of cooperation and fully feel the "harmony of coinciding interests," as Igor Ivanov, former Minister of Foreign Affairs of the Russian Federation (1998-2004), President of the INF Treaty, said.

At the level of leaders and governments, Moscow and Beijing are moving forward within the framework of relations called "comprehensive partnership and strategic interaction." The primary role of China for the interests of Russia was fixed in the Concept of Foreign Policy of the Russian Federation.

Chinese President Xi Jinping also made his first state visit after being re-elected to this post to Russia.The meeting at the top in its significance went far beyond the bilateral format, became a step in the formation of a polycentric world order.

The parties interact within the framework of the UN, G20, SCO, BRICS and other multilateral platforms. The potential of the EAEU and the "One Belt, One Road" initiative are being paired with an eye on the Great Eurasian Partnership. China has taken a balanced position on the crisis in Ukraine. Russia provides support to the PRC on issues related to the Taiwan Strait.

"The Rock Among the Stepladder"

China compared Russian-Chinese relations with a "rock among the stepladder." Cooperation is developing, but there is a lot to be done. Russian Prime Minister Mikhail Mishustin visited China on May 22-24, held talks with Chinese State Council Prime Minister Li Qiang, was received by Chinese President Xi Jinping, and spoke at a Russian-Chinese business forum.

Bilateral trade in 2022 increased by a third and reached $185 billion. For comparison, in this indicator, Russia lagged behind Malaysia ($202 billion), but in terms of exports to China ($114 billion) it was ahead of Germany ($111 billion). In January-March 2023, bilateral trade turnover grew by 38.7% and reached $53.84 billion. China's exports in the first three months of 2023 increased by 47.1% to $24 billion, imports of Russian goods and services increased by 32.6%, to $29.7 billion.

Since 2010, China has been the largest trading partner of Russia, in 2021 the share of Chinese products in the trade turnover of the Russian Federation amounted to 17.9%, Russia took 9th place among the partners of the PRC with a share in the trade turnover of the PRC about 2.5%. By the beginning of 2023, Chinese industrial goods and components occupied niches vacated by Western companies. In particular, the share of sales of Chinese passenger cars may exceed 50%, the Avtostat agency said. According to the organization, over the past 12 months, the figure has almost tripled and is now 46%. In 2023, the assembly of cars on Russian territory began.

Chinese goods are leading in the segments of consumer electronics, mobile phones, computer equipment. Equipment, spare parts, components and other goods produced in the PRC allow you to rebuild production chains torn apart by Europe, the United States, Japan and South Korea.

Two bridge crossings

Logistics restrictions are being overcome, the transport infrastructure of the eastern regions of Russia is being modernized. In March 2023, the construction of the largest transport and logistics center (TLC) in Russia, named after Deng Xiaoping, began in Tatarstan. Another TLC "Kanikurgan" for cargo of the Trans-Siberian and Baikal-Amur highways will be built 30 km from Blagoveshchensk near the Blagoveshchensk-Heihe road bridge.

The road cross-border bridge between Heihe and Blagoveshchensky was built according to the concession model at the expense of extrabudgetary sources. According to the same scheme, the Jalinda-Mohe railway bridge can be built. The village of Jalinda is located near the Transsib and near the mineral deposits of Yakutia, including extensive coal deposits.

The volume of supplies of Russian goods to the PRC moving through the Nizhneleninskoye-Tongjiang railway bridge is growing. Since 2010, more than 200 million tons of Russian coal have been delivered to China, of which about 55 million tons worth $2.5 billion in 2021. This provided about 17% of Chinese coal imports. In 2022, Russian coal supplies to China amounted to about 7-8 million tons per month.

Logistics operators of China plan to open additional railway routes through the territory of Mongolia in the direction of Moscow for freight traffic from the cities of Zhengzhou, Xiamen and Chengdu.

"Third Bridge", oil

In 2022, Russian oil supplies to China increased by 8.2% and amounted to 86.24 million tons. According to the Main Customs Administration of the PRC, the cost of raw materials purchased from Russia increased by 43.9% over the year to $58.37 billion.

One of the largest oil companies in the Russian Federation, together with CNPC (China National Petroleum Corporation), is implementing a large-scale long-term oil supply project through the Eastern Siberia-Pacific Ocean pipeline system (ESPO) through the Skovorodino-Mohe branch and further to Daqing city in Heilongjiang province.

For the construction of the pipeline, the Development Bank of China provided one of the largest oil companies and Transneft with a loan of $25 billion for 20 years in exchange for supplies of 300 million tons of oil. After the commissioning of the second branch in January 2018, the pipeline capacity doubled to 30 million tons per year. In February 2022, one of the largest oil companies and CNPC also signed an agreement for 10 years on the supply of 100 million tons of oil to China through Kazakhstan.

"Fourth", gas

In 2022, China imported 15.5 billion cubic meters of pipeline gas from Russia through the Power of Siberia gas pipeline. This main gas pipeline is completed to Shanghai and its capacity by 2026 will exceed 38 billion cubic meters of gas per year. Work is underway to design the Power of Siberia-2 gas pipeline and its continuation, Soyuz Vostok, through Mongolia to the PRC.

China's imports of Russian liquefied natural gas (LNG) in 2022 increased by 44% to 6.5 million tons. In terms of delivery costs, they increased 2.4 times and exceeded $6.74 billion. The Chinese Silk Road Fund acquired a 9.9% stake in Yamal LNG, issued a loan to the company for about $770 million. Another 20% in the project belongs to CNPC. In July 2019, Novatek entered into a deal to sell 10% of the Arctic LNG-2 project to Chinese CNPC and CNOOC (China National Offshore Oil Corporation).

In January 2022, Novatek signed agreements between Arctic LNG-2 and ENN Natural Gas and Zhejiang Energy. The first will receive 0.6 million tons of LNG per year for 11 years, the second - 1 million tons of LNG per year for 15 years.

In September 2019, the Development Bank of China and ВЭБ.РФ agreed on a strategic partnership for the Sakhalin natural gas processing project in Nakhodka. The design capacity of the first stage of the project is 1.8 million tons of methanol per year, reaching full capacity is scheduled for 2024. ВЭБ.РФ has raised more than $11.6 billion in Chinese loans.

In 2019, Marine Arctic Transport LLC was established. The agreement between Novatek, Sovcomflot, Cosco Shipping and the Silk Road Fund provides for the financing of year-round transportation of hydrocarbons from the Russian Arctic to the Asia-Pacific countries, and also includes the organization of transit along the Northern Sea Route from Asia to Europe.

Rosatomny Bridge

In 1998-2018, Atomstroyexport (Rosatom State Corporation) built four power units with VVER-1000 reactors at the Tianwan NPP. The project cost about $3.5 billion. Nuclear fuel for nuclear power plants under a contract worth $1 billion is supplied by TVEL, also part of Rosatom. In March 2019, a general contract was signed for the construction of the 7th and 8th power units with new generation VVER-1200 reactors.

Their construction began in May 2021 and February 2022, respectively.

In June 2018, Atomstroyexport and the China National Nuclear Corporation (CNNC) signed a cooperation protocol, as well as a framework contract for the construction of the 3rd and 4th power units with VVER-1200 reactors at the Xuidapu NPP in Liaoning province. The general contract was signed in June 2019, work began in July 2021 and May 2022, respectively.

In November 2018, OKBM Africantov JSC (part of Atomenergomash) and CNNC signed contracts for the construction of a closed-loop fast neutron reactor in Fujian Province CFR-600. In January 2020, the Research Institute of Nuclear Reactors (part of Rosatom) and the Chinese company Fangda Carbon New Material signed an agreement to conduct research as part of the HTR-PM600 high-temperature gas-cooled nuclear reactor project.

Investment Support Funds

Russian Prime Minister Mikhail Mishustin recently announced 79 investment projects worth about $165 billion in the portfolio of the governments of the two countries. The total volume of Chinese investments in the Russian Federation exceeds $50 billion. According to the Chinese side, in the first eight months of 2022, China's investments in Russia amounted to $450 million, an increase of 150% compared to the same period in 2021. The volume of their investments in the Russian Far East exceeds $13 billion.

The Russian Direct Investment Fund (RDIF) and the China Investment Corporation (CIC) have created the Russian-Chinese Investment Fund, which has allocated over $7 billion to 35 projects. The Regional Development Fund operates with a capital of about $750 million, providing financing for energy, transport infrastructure, logistics and agriculture.

In a statement following the results of the Moscow negotiations, the parties agreed that by 2030 relations of deep production cooperation will be built in various areas, including production and R&D. In 2019, RDIF and CIC agreed on the terms for the creation of a Russian-Chinese technology investment fund with a target capital of $1 billion for technology development projects in leading sectors of the economy.

At the talks in Moscow, Russian President Vladimir Putin noted that an active bilateral dialogue allows us to find solutions to all problems in any, even in the most difficult situations. Chinese President Xi Jinping said that Sino-Russian ties have gone far beyond bilateral relations and are vital for the modern world order.

The global community will not accept Western rules aimed at dividing the world according to ideology and values. This was announced on Sunday at the XI Forum of Global Peace in Beijing by the President of the INF Treaty, ex-Foreign Minister of the Russian Federation (1998-2004), former Secretary of the Security Council of the Russian Federation (2004-2007) Igor Ivanov.

Photo: "Izvestia"

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