China cannot solve all the problems of Russia

Yesterday Moscow and Beijing, which have serious difficulties in their economies, signed a contract on establishing a joint investment fund. The document was signed by the chairman of the board of ROSNANO, Anatoly Chubais, and the chairman of the Board of the Zhongrong International Trust, Fang Tao. The fund will be focused on investments in projects directed at the implementation, development and transfer of modern technologies to Russia, which are connected with electricity power supply and the oil-and-gas industry, as well as microelectronics and biotechnologies. Investments in projects and project companies will be provided in Russia (no less than 70%), China, and other countries. Yesterday, information on record-breaking growth of oil consumption in China in 2015 led to a rise in world oil prices.

Meanwhile, Andrey Ostrovsky, deputy director of the Institute of Far Eastern Studies, director of the Center for Economic and Social Studies of the Chinese Academy of Sciences, thinks that the problem of oil is quite urgent in China: “The total amount of China's oil imports in 2014 amounted to 205 million tons per year, in 2015 it was 350 million tons. Today China imports 70% of its total oil consumption.”

That is why China is forced to switch to other sources. “It has already shifted to such sources as wind turbines and solar energy. China has already overtaken Germany to take first place in the world in proportion to energy resources to power consumption. The main problem for the share of China in energy consumption is coal, which still amounts to 66-68%. And this problem should be solved in China through an increase in the share of consumption of natural gas or oil consumption. This is why China pays great attention to the contract that was signed in May 2010 during the visit of Vladimir Putin to the country. This is a very important point. Russia’s turn to the East depends on how quickly it can provide opportunities for the oil and gas supplies to China. We supply oil, but the price of oil is falling. The ruble exchange rate is heavily dependent on oil and gas sales. The prices are falling and the ruble is falling. Even in 1999 the share of engineering products in exports amounted to about 20%. Today, it is one and a half. We need to change the structure of exports, because Russia, as a country that can actually produce everything, must not depend on oil like Saudi Arabia,” the expert says.

However, he thinks that Russia has followed the path of Saudi Arabia; and it is impossible to count on the fact that the Chinese market will end all Russian problems. “We should focus primarily on the development of our own economy, to diversify production in general, import substitution, orientate ourselves toward the development of science and technology, and to abandon the old course orientated only toward the sale of energy, including in relations with China,” Andrey Ostrovsky said.