Issues of concern in China-Russia bilateral investment cooperation
Release Time:
2009-12-21 18:05
Source:
Recently, the Development Research Center of the State Council and the Russian Strategic Research Center jointly held a seminar on "Strengthening Economic and Trade Cooperation between China and Russia" in Moscow. The following is an excerpt of the discussions by experts from both sides on bilateral investment cooperation issues:
In recent years, the scale of foreign investment attracted by Russia has been continuously increasing, ranking among the top in developing countries. According to the Russian Central Bank, in 2006 Russia absorbed $30.5 billion in foreign direct investment, $9.1 billion in securities investment, and $30.3 billion in other investments. The investment proportions in Russia's primary, secondary, and tertiary industries are basically balanced, with funding mainly from developed countries such as Europe and the United States, and a certain proportion of capital flight returning. Russia's outward investment is also high, reaching $23.2 billion in 2006, mainly directed towards the energy sector. The scale of direct investment between China and Russia is very small. In 2006, Russia's investment in China was only about 0.1% of the actual foreign investment absorbed by China that year, while China's investment in Russia accounted for 1.5% of Russia's total foreign direct investment absorption.
Russian experts believe that there is great potential for China and Russia to expand mutual investment. Both countries' foreign exchange reserves are growing rapidly, and their large enterprises are very active in the global market, hoping to develop into global operators. Therefore, expanding investment in each other's markets is a natural matter. Russian experts pointed out that currently, China and Russia's outward investments mainly aim to acquire resources and improve efficiency (such as participating in international division of labor and improving technological levels), with relatively little investment aimed at bypassing trade barriers to expand markets. So far, the investments of enterprises from both sides have not formed close industrial chain relationships. This is partly because both countries lack internationally competitive manufacturing enterprises, and partly because the Russian Far East region bordering China is sparsely populated and economically underdeveloped. Russia's strong enterprises are concentrated in the European part of Russia, with product markets mainly in Europe. Russian enterprises are interested in China's developed eastern regions, but first, they lack understanding of China; second, the distance to China is far, with very high transportation and communication costs; third, they worry that the eastern Chinese market is already saturated and investment projects will face competition from enterprises from developed countries and East Asia.
The Russian side very much hopes that China can increase its investment in Russia. Russian experts introduced the foreign investment attraction policies Russia has adopted in recent years and pointed out that due to rapid economic growth, rapid expansion of the domestic market scale, and continuous improvement of the investment environment, Russia has become one of the emerging market countries attracting the most foreign investment. Russian experts remind Chinese enterprises that local governments in Russia are very active in attracting foreign investment, and foreign investment policies vary greatly across different regions. Chinese enterprises need to strengthen communication with Russian local governments and make investment choices based on the conditions of different regions. The European part of Russia is economically developed, has good infrastructure, strong consumption capacity, and is suitable for Chinese enterprises oriented towards the domestic market to invest.
Although Sino-Russian economic and trade relations are developing rapidly, the current bilateral trade is a simple traditional trade model exchanging consumer goods for resources, without industrial chain relationships, and the economic ties between the two countries are not close. The Russian side is not very satisfied with the current bilateral trade structure. Chinese enterprises have no advantage in high-end products, and multinational companies from developed countries are increasing their investment and market expansion efforts in Russia. If the traditional trade model continues to be relied upon, it will be difficult for Sino-Russian economic and trade relations to have significant development. Therefore, to further strengthen economic and trade cooperation, it is necessary to increase the intensity of mutual investment between the two countries.
Russian experts believe that the fields with potential for expanding investment in the future include petrochemicals, machinery, energy, infrastructure, and high technology. In addition, given the rapid development of the real estate and financial industries in both countries, the Russian side is also very interested in expanding bilateral investment in these fields. Russia's economy is currently growing rapidly, and its consumption structure is continuously upgrading. Chinese automobile and telecommunications equipment enterprises have already taken the lead in investing in Russia and achieved breakthroughs. Relevant departments of our government should further study how to encourage domestic enterprises to increase investment in Russia.
[Excerpted from the China Chamber of Commerce "Chamber News"]
2007-12-21
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