Sino-Russian economic and trade cooperation and countermeasures analysis under the new development pattern

Introduction

In recent years, facing the challenges of complex changes in the international situation, China and Russia have continuously strengthened strategic coordination, maintaining the high convergence in strategic positions and the close communication and contact at the top level with a high level of bilateral economic and trade relations. According to statistics, since the 18th CPC National Congress, General Secretary Xi Jinping has held high-frequency meetings with President Putin five times a year on average for seven consecutive years, sending out a strong signal that the top leaders of China and Russia attach great importance to the friendly relations between the two countries. The China-Russia relationship as a primary bilateral relationship for both sides has become an important, positive and reliable force for regional stability and world peace [1] (Zhao Chuanjun, 2021). China-Russia relations have reached a new historical high with the year 2021 marking the 72nd anniversary of the establishment of diplomatic ties between China and Russia, the 20th anniversary of the signing of the Treaty of Good-Neighborliness, Friendship and Cooperation between China and Russia, and the 25th anniversary of the establishment of China-Russia strategic partnership of coordination. To effectively take on new challenges in the international situation, further tap the huge potential of China-Russia economic and trade cooperation and consolidate the foundation for the growth of China-Russia relations, this paper puts forward the measures to make steady progress and key breakthroughs in Sino-Russian economic and trade cooperation, envisaging the prospects of Sino-Russian economic and trade cooperation from the perspective of politics, economy, history and culture with the analysis of the changes of domestic and foreign environment.

The favorable conditions for stable and sound development of China-Russia economic and trade cooperation

High level of political mutual trust. The Joint Communiqué of the 25th Regular Meeting between Chinese and Russian Prime Ministers released on December 2, 2020 indicated that the two sides are willing to consolidate the sound momentum of cooperation and strive to overcome the adverse impact of COVID-19 on economic cooperation at an early date. To this end, the two sides agreed to further strengthen economic, trade and investment cooperation, promote the signing of the Roadmap for the High-quality Development of China-Russia Trade in Goods and Services to 2024, and meet the goal of expanding trade [2] (Wang Nana, 2021). On June 5, 2019, Chinese President Xi Jinping pointed out during his talks with Russian President Vladimir Putin in Moscow that the current China-Russia relations are in the best period in history, with sustained, stable and sound development at a high level. The two sides firmly support each other in safeguarding each other's core interests and enjoy solid political and strategic mutual trust. The two countries have actively promoted cooperation in various fields, with the internal driving force of our relations emerging and our interests increasingly converging. Both sides have actively participated in international affairs and global governance and played an important and constructive role in maintaining world peace, stability and international fairness and justice. Putin said that since the establishment of diplomatic ties between China and Russia 70 years ago, Russia-China relations have reached an unprecedented high level with fruitful all-round exchanges and cooperation thanks to the joint efforts of both sides. Russia and China have established a comprehensive strategic partnership of coordination worthy of its name, which has not only benefited the two peoples, but also become an important force for maintaining global security and strategic stability. We cannot be satisfied with what we have already achieved, but we need to make our relations even better. Russia and China should continue to strengthen coordination on major international and regional issues, jointly cope with the challenges posed by unilateralism and protectionism and safeguard world peace and stability [3] (Guo Xiaoqiong, 2017).

Economic and trade interdependence. Economic and trade cooperation between China and Russia is highly complementary. In addition to agricultural cooperation, the two countries also cooperate in forestry, building materials, light industry, energy, minerals, trade and other fields [4] (Feng Yujun, 2017). In recent years, the local exchanges between the two countries have become closer, especially the cooperation between China and Russia along the Yangtze River and the Volga River, the extensive cooperation between China's northeast and Russia's Far East [5] (Wang Shuchun, 2021), and the deepened cooperation between the border port areas. Businesses from both sides have taken an active part in the China-Russia Expo, the Eastern Economic Forum and the China International Import Expo, and signed a number of cooperation agreements. The bilateral trade structure has been continuously improved, and the trade in agricultural products and cross-border e-commerce has witnessed rapid growth, which has promoted practical economic and trade cooperation between the two countries.

China is an important trading partner of Russia. In 2020, China-Russia economic and trade cooperation withstood the test of the epidemic and showed strong resilience. China remained Russia's largest trading partner for 11 years in a row. According to statistics, the bilateral trade volume in goods in 2020 reached US $107.77 billion, down slightly by 2.9% year on year, exceeding US $100 billion for three consecutive years. China's export to Russia was 50.585 billion US dollars, up 1.7% year on year. Imports from Russia were $57.181 billion, down 6.6% year on year [6] (Sun Fang, 2021).

Energy cooperation is the ballast of China-Russia economic and trade cooperation. Oil demand was weak in 2020 due to COVID-19, but China, the world's largest importer of crude oil, still saw the strong demand. In 2020, Russia exported 83.57 million tons of crude oil to China, ranking second after Saudi Arabia (84.92 million tons). However, compared with 2019, in 2020 Russia's crude oil supply increased by 7.6%, forming stable energy interdependence. On May 21, 2014, Gazprom and CNPC signed a purchase and sale contract to supply natural gas through the "Eastern Route". The contract started in 2020 and was expected to supply 38 billion cubic meters of gas annually in 2024. In 2018, the two countries discussed natural gas cooperation on the "Western Route", which aims to supply China with 30 billion cubic meters of natural gas annually from natural gas sources in West Siberia. CNOOC has acquired Russia's largest LNG project Yamal (Yamal), which is expected that China will purchase at least 3 million tons of LNG (equivalent to more than 4 billion cubic meters of gas per year) every year.

Agricultural cooperation has become a new highlight of China-Russia cooperation. In 2017, China became Russia's largest food importer. In 2020, Russia's total export of agricultural products amounted to 28.96 billion US dollars, with a year-on-year growth of 18%. China remained the largest importer of Russian agricultural products, with imports of US $3.98 billion, up 25% year on year. China's agricultural imports from Russia mainly include fresh frozen fish, vegetable oils, edible oils and crabs. In addition to trade in agricultural products, cooperation in agricultural development and industrial chain is also being actively carried out.

In the area of trade in services, trade in services between China and Russia reached US $17.59 billion in 2018, an increase of about 100 percent year-on-year. In 2019, the cross-border e-commerce transaction volume between China and Russia was $5.07 billion, involving 521 million cross-border parcels. At present, Russia has become the country with the largest cross-border e-commerce transaction volume among the countries along the "One Belt And One Road" and China. In 2020, Russia's e-commerce trade volume exceeded 46 billion US dollars, a year-on-year growth of 50% [7] (Lu Wei, 2021). In the field of infrastructure, the Sino-Russian Tongjiang–Lower Leninskoye Railway Bridge and the Heihe–Blagoveshchensk Road Bridge were completed in the first half of 2019. The Moscow metro tunnel, built by China Railway Construction Corporation, has been completed using a shield machine independently designed and developed by China. Financial cooperation has developed rapidly, with positive progress in cooperation mechanisms, local currency settlement, cash transfer, cross-border financing and UnionPay card payments. The RMB has been included in the basket of Russia's reserve currencies. China and Russia are also increasing their synergy in institutional arrangements. In May 2018, the two sides signed the Agreement on Economic and Trade Cooperation between China and the Eurasian Economic Union, and successfully completed the joint feasibility study of the Agreement on the Eurasian Economic Partnership, laying an important foundation for the establishment of high-level economic and trade arrangements in the Eurasian region.

On June 5, 2019, during his visit to Russia, President Xi Jinping pointed out that both countries should promote all-round upgrading of bilateral economic and trade cooperation, boost simultaneous development of major strategic projects and cooperation in emerging areas, and strengthen cooperation in economy and trade, investment, energy, science and technology, aviation, aerospace, connectivity, agriculture, finance and sub-national cooperation. We should work to synergize the “One Belt and One Road” with the Eurasian Economic Union, and work to promote regional integration and integrated economic development. President Putin said that Russia is committed to deepening cooperation with China in the fields of economy and trade, agriculture, finance, science and technology, environmental protection, communications and infrastructure construction, increasing regional exchanges and enhancing people-to-people and cultural exchanges in education, culture and tourism. Russia is ready to provide China with sufficient oil and gas energy, increase export of soybean and other agricultural products to China, and accelerate the connection between the Eurasian Economic Union and the "One Belt And One Road".

Social stability. China's rapid economic growth and long-term social stability are two miracles that are universally recognized. No matter how the international landscape changes, the Chinese government has always been committed to integrating its immediate interests with long-term interests and its partial interests with overall interests, effectively coordinating various interests and resolving various social conflict. Social harmony and stability have been maintained for a long time, and people have lived and worked in peace and contentment. People's sense of gain, happiness and security has been continuously improved. Social stability reflects China's national governance capacity and level of governance, and provides a favorable social security guarantee for China-Russia economic and trade cooperation.

Although Russia's economic status has declined, its society is still very stable, and Putin's approval rating has remained high for a long time. First, Putin's patriotism and strong governing ability meet the requirements of contemporary Russian society. Second, the self-esteem and confidence of the Russian people as well as rich resources can help strongly bear the economic pressure. Third, the western economic blockade has inspired the cohesion of most Russians. Fourth, the consciousness of a great power is highlighted. The Russian government's tough performance on the issues of Chechnya, the Caucasus, Crimea and Syria has enhanced the sense of honor and superiority of the Russian people. After the failure of Russia's drastic market-oriented reform, the strategic industry sectors such as banking, transportation, energy and technology were controlled by state-owned enterprises, which increased social stability.

Cultural inclusiveness. Culture is the most important soft power, and there are frequent and smooth cultural exchanges between China and Russia. According to Russian media, the number of Chinese citizens educated in Russian universities has increased from 13,500 in 2016 to 45,000 in 2019. At present, a total of 542 Russian universities have diplomas recognized by China. On April 1, 2019, Russia held the Russian national unified examination of Chinese subject for the first time, and the Far East region bordering China held the Chinese subject test in advance. Grade 11 students in the 2018–2019 academic year will take the Chinese subject test for the first time. Chinese has become the fifth foreign language in Russia's national exam, after English, German, French and Spanish.

China tops the list of countries that have established solid and friendly relations with Russia, according to a poll by the All-Russian Public Opinion Research Center. In the poll, 45 percent of Russian respondents said China was the friendliest country. The poll results showed that the relationship between the two peoples was getting closer and closer, and is gradually forming a state of "the enthusiasm stemming from both the governments and the people". Cultural inclusiveness will undoubtedly contribute to the future economic and trade development between the two countries.

Uncertainties in China-Russia economic and trade cooperation on the rise

There is a solid foundation for China-Russia economic and trade cooperation, but there are also many factors that influence it, some of which are due to the international environment and others are due to their own and regional factors.

International environment. The world economy and investment significantly declines

Influenced by COVID-19, the global economy in 2020 suffered the most severe recession since the Great Depression of the 1930s. In particular, in the second quarter of this year, economic blockades were implemented in many countries. Manufacturing and service industries were shut down, unemployment soared, and GDP in many countries fell by a record amount. Since the third quarter, the economy has picked up as countries have gradually loosened their blockade, but the resulting spread of the epidemic has again triggered economic blockade policies and weakened the momentum of economic recovery. According to the statistics of the International Monetary Fund (IMF), the global economy will shrink by 4.4% in 2020, and international trade and investment will shrink by a large margin. According to the statistics of the World Trade Organization (WTO) and the United Nations Conference on Trade and Development (UNCTAD), the global commodity trade will decline by 9.2% and 9% respectively in 2020.

Unilateralism and protectionism are on the rise, and economic globalization is facing a headwind. In 2020, unilateralism and trade protectionism are on the rise, and the international industrial chain and supply chain are impeded, aggravating the deterioration of the international trade and investment environment. Some policy makers in western countries believe one-sided that the globalization of production leads to the shortage of medical and production materials in their countries during the epidemic. In some countries, priority was given to ensuring domestic supplies and export restrictions were imposed on medical supplies. Tariff and non-tariff barriers were revived, hindering the normal development of global trade. The reform of the World Trade Organization is still in a difficult and even existential crisis.

The world economy is rising from the east and falling from the west. In 2020, Asian countries have performed well in combating COVID-19. They have not only controlled the spread of COVID-19 quickly, but also minimized the impact of COVID-19, and suffered less economic impact, thus further expanding their share in the world economy. In 2020, in addition to the positive growth of China's economy, Myanmar's GDP is expected to grow by 2%, Vietnam's GDP is expected to grow by 1.6%, and Indonesia's GDP will decline by a modest 1.5%. Japan's new Prime Minister Yoshihide Suga has basically inherited the "Abenomics". While continuing to implement loose monetary policy and flexible fiscal policy, he has vigorously implemented the strategy of "driving economic development with reform" and intensified the reform on the supply side. It is estimated that the combined GDP of the 21 APEC members will account for 60% of world GDP in 2020, up from 46% in 1980. The signing of the Regional Comprehensive Economic Partnership (RCEP) has given a strong boost to the sustained development of Asia-Pacific economic integration.

Western economic sanctions are imposed on Russia. After the Ukraine Crimean crisis, the West launched several rounds of economic sanctions against Russia [8] (Sun Yong, Qiu Sinong, 2018). The U.S. sanctions against Russia include individuals and Russian businesses. In particular, economic sector sanctions against Russia covered major Russian industries such as finance, energy, mining and military. In addition, the United States imposed several rounds of sanctions on Russia on the grounds of "Russia's interference in the US election" and "the Stribal poisoning case", which resulted in severe capital outflow from Russia, the collapse of the ruble exchange rate and the stock market, and the downturn economic.

Although part of Russia is in Europe, it is difficult for Russia to truly integrate into Europe. Even some Soviet alliance partners and CIS countries have joined NATO to restrain Russia's development.

The Chinese and Russian respective domestic environments

The Russian economy remains weak. After the outbreak of the Crimean crisis, the Russian economy entered a cold winter under the sanctions and repression of the United States. The capital outflow was severe, and the ruble exchange rate and the stock market both plummeted. The COVID-19 epidemic has made Russia's economic growth slow even worse. In 2020, Russia's GDP is only 1.4 trillion US dollars, the total capital investment has decreased by 4.2%, and the annual economy has decreased by 3.1%.Russia's budget deficit in 2020 will be about 3.9% of GDP, and real incomes will fall by 5%.Even though the government is spending 8% of GDP to support its people, the ruble's decline is making life harder for ordinary citizens and the poor.

China's economic pressure is increasing. In 2020, China's GDP was 10.159 billion Yuan, or about 14.73 trillion US dollars, an increase of 2.3% over the previous year, accounting for 17.42% of the global total. China is also the only major economy in the world to achieve positive economic growth in 2020, with its GDP exceeding 100 trillion Yuan for the first time. But at the present stage, China's economy is still interwoven with old and new problems, and cyclical and structural problems are superimposed. Although the economy is on the whole stable, it is still under pressure and there are worries about stability. China still faces many difficulties and problems, and the difficulties in developing foreign trade should not be underestimated. Prices of labor, land and other factors remain high. The trade friction between China and the United States has led to the "export scramble" in the early stage of this year's export share. Affected by the imposition of additional tariffs, some companies have accelerated the pace of global layout and accelerated the transfer of production capacity and orders.

Relevant regional cooperation. Russia. Sanctions imposed by Western countries have accelerated Russia's efforts to promote trade facilitation. First, Commonwealth of Independent States is composed of most of the former republics of the Soviet Union and operates in multilateral cooperation [9] (Li Qingxia, 2018). At the time of its establishment, all the other 12 Soviet republics were full members of the CIS except the three Baltic states. In August 2005, Turkmenistan announced its withdrawal from the Commonwealth of Independent States. On August 18, 2009, Georgia formally withdrew from the Commonwealth of Independent States. In March 2014, Ukraine formally started the withdrawal process because of the independence of Crimea from Russia. Second, the Russia–Belarus–Kazakh Customs Union incorporated Kyrgyzstan and Armenia, forming the Eurasian Economic Union in 2015. The former has negotiated with Vietnam, Syria, Turkey, India and Switzerland, while the latter has recently signed a free trade agreement with Serbia and is negotiating with Uzbekistan, Mongolia, Iran and China. Third, in October 2019, the Russia-Africa Economic Forum was held, and the total amount signed exceeded 800 billion rubles. Among them, the Russian Transportation Machinery Holding Company signed an agreement with the Egyptian national railway company on the supply of 1,300 train cars to Egypt. Energy, transportation and communications infrastructure are key areas of cooperation. Mining, sea and river ships, aviation equipment are also promising. Digital technology, health care and education will be key areas of cooperation as well.

In 2020, the value of Russia's foreign trade was US $571.9 billion, a decrease of 15.2% compared with 2019. Among them, the annual export trade volume in 2020 was 338.2 billion US dollars, a decrease of 20.7% compared with the same period in 2019, with CIS countries accounting for 14.4% and non-CIS countries for 85.6%.The import volume was US $233.7 billion, down 5.7% from the same period in 2019, with CIS countries accounting for 10.7% and non-CIS countries 89.3%.The trade surplus for the whole year in 2020 was US $104.5 billion, a decrease of US $73.9 billion compared with the same period in 2019. In 2020, Russia's oil exports reached 223.5 million tons, down 12.7 percent year on year. From the perspective of major trade partners, the top three are China, Germany and the Netherlands. The Netherlands is mainly engaged in entrepot trade with Europe. Then is tariff ally, whose market is concentrated in Europe and northern Asia.

China. First, China accelerates the development of domestic free trade zones. On September 1, 2019, China inaugurated six pilot free trade zones in Shandong, Jiangsu, Guangxi, Hebei, Yunnan and Heilongjiang. So far, China's pilot free trade zones have expanded to 18. They are spread across the country, east, west, north and south, and clearly differentiated in their functional orientation, demonstrating China's new efforts to open up wider. The Heilongjiang Free Trade Zone is of great significance for building a regional cooperation hub between China and Russia and Northeast Asia.

Second, new breakthroughs were made in multilateral economic and trade cooperation. China plays a constructive role in guiding the G20 economic and trade cooperation, upgrading the Protocol on the China-ASEAN Free Trade Area, and making substantive progress in the Regional Comprehensive Economic Partnership (RCEP). Breakthroughs have also been made in negotiations on free trade zones with the Republic of Korea, Pakistan, Norway and Israel, while negotiations on free trade agreements with Panama and Peru have been launched.

Third, "One Belt and One Road" achieved remarkable results. In 2020, the trade volume of goods between China and countries along the "One Belt and One Road" routes will reach US $1.35 trillion, up 0.7% year on year, accounting for 29.1% of China's total foreign trade. The China-Europe freight trains play a more prominent role as trade routes. In 2020, more than 12,000 freight trains will run, an increase of 50% year on year, reaching 92 cities in 21 countries, an increase of 37 compared with the end of 2019.

Impact of COVID-19 on trade and economic cooperation between the two countries

In 2020, influenced by COVID-19, Russia's GDP decreased by 3.1% year on year, while China's GDP increased by 2.3% year on year, making it the only country in the world to achieve positive economic growth. The trade volume between China and Russia was US $107.77 billion, down slightly by 2.9% year on year. China's export to Russia was US $50.585 billion, up 1.7% year on year. Imports from Russia were $57.181 billion, down 6.6% year on year. Despite the impact of COVID-19 on the global industrial chain, trade between China and Russia has shown a high degree of resilience. In the first half of the year, China's exports of medical equipment, textile materials, electronic appliances and other products to Russia all achieved double-digit growth, while imports of energy, minerals and agricultural products from Russia continued to expand. The epidemic has boosted the rapid development of cross-border e-commerce, and China-Europe freight trains are growing faster in Russia.

Conclusion: prospects and countermeasures of Sino-Russian economic and trade cooperation under the new development patterns

Given the convergence of development goals and interests of China and Russia and the smooth implementation of major projects, the fundamentals and long-term positive trend of China-Russia trade remain unchanged, and bilateral economic and trade cooperation will continue to grow in a sound way [10] (Liu Huaqin, 2019). At present, China is actively building a new pattern of development, and China-Russia economic and trade relations are at a crucial stage of in-depth development. It is the common goal of the two countries to accelerate the upgrading of China-Russia economic and trade cooperation and move toward high-quality development. In the future, China-Russia economic and trade cooperation can seek breakthroughs in the following aspects.

1. Deepen cooperation between the "One Belt and One Road" and the Eurasian Economic Union.

At present, the "One Belt and One Road" and the Eurasian Economic Union have moved from the initial stage of mutual understanding and evaluation to the stage of pragmatic and close cooperation, which will also play a positive role in the prosperity of the Eurasian economy and the economic development of the whole world [11] (Zhao Shuhua, 2020). For some time to come, China and Russia should continue to strengthen the construction of freight corridors, and there will be a lot of space for the development of water, land and air infrastructure. For example, the construction of special broad gauge lines along the border areas of eastern Mongolia, Heilongjiang and Jilin, and the construction of special domestic standard rail lines along the No. 1 and No. 2 Binhai lines will facilitate the transportation of goods and reduce costs. In addition, China and Russia should jointly develop waterways linking the Arctic Ocean to China's coast, and speed up the construction of land and sea passages linking the Tongjiang Railway Bridge to the Russian Arctic Circle and North America.

2. Accelerate the China-Russia energy cooperation in a diversified and scientific way.

On the basis of crude oil and natural gas cooperation, China and Russia can further deepen energy diversification and scientific and technological cooperation [12] (Xu Poling, 2017). The shale gas revolution in the United States has promoted the traditional energy system framework. The development and utilization of green energy, greatly reduced the use of coal, and greatly strengthened the investment and utilization of green energy such as wind, water and solar energy. The dependence on traditional energy has gradually changed from rigid demand to flexible demand, and the transformation and upgrading of energy cooperation is unstoppable. Russia also has great demand in the field of new energy and has certain advantages in nuclear energy and hydrogen energy. The two sides may deepen technological cooperation and promote trade development.

3. Enhance China-Russia intra-industry trade cooperation.

China's export trade to Russia is dominated by labor-intensive products, such as textile and light industrial products, while capital and technology-intensive products have weak competitiveness and take a relatively low proportion in exports [13] (Su Lijuan, 2020). In order to further expand the Sino-Russian intra-industry trade market and provide greater space for the development of China's intra-industry trade, it is necessary to accelerate the adjustment and upgrading of China's industrial structure, promote the development of leading industries, accelerate the transformation of the production and processing trade of low value-added products, and facilitate the optimization and upgrading of industrial structure. At the same time, Chinese and Russian enterprises should achieve the manufacture differentiation and specialization based on their own comparative advantages with economies of scale, and improves the level of intra-industry trade between China and Russia.

4. Promote China-Russia cooperation in agricultural science and technology.

Agricultural cooperation between China and Russia started early, mainly focusing on agricultural trade, overseas agricultural investment and development, agricultural labor cooperation and agricultural technology exchanges [14] (Guo Xiaoqiong, 2020). In recent years, with the continuous growth of China's investment in Russian agriculture, the importance of China-Russia agricultural science and technology cooperation has become increasingly prominent. In order to further strengthen China-Russia cooperation in agricultural science and technology, on the basis of the joint establishment of the China-Russia Agricultural Science and Technology Cooperation Innovation Center, crops in the cold region, cash crops in the forests, animal husbandry and aquatic products in the cold region should be listed as the key areas of China-Russia agricultural science and technology cooperation. By stepping up the cooperation in agricultural science and technology between China and Russia and the joint research and development of high-yield, safe and healthy agricultural new varieties, China and Russia keep food security in place.

5. Expand China-Russia sub-regional economic and trade cooperation.

With the deepening of high-level economic and trade cooperation between China and Russia, the all-dimensional and multi-field sub-national cooperation is deepening continuously. The two sides should consider strengthening regional cooperation and upgrading the strategic economic and trade relations so as to push the bilateral economic and trade cooperation to a larger scale and a higher level [15] (Jiang Jing, 2020). China's domestic free trade zone can carry out trade facilitation cooperation with Russia's free ports and advanced development zones to promote the free flow of capital, land, talent, labor, technology, services and other factors. The free trade zone has outstanding advantages in entrepot trade, bonded value-added trade, financial leasing, goods guarantee, spot and futures trading market, commodity exhibition and display, foreign employment, service outsourcing, and establishment of foreign branches and branches, etc. We should make full use of it to promote the continuous development of Sino-Russian economic and trade relations.