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. Last Updated: 07/27/2016

Chinese to Liberate Russia's Business Consciousness

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Russo-Chinese relations are currently at their best for the last 40 years. During his July visit to Moscow, Chairman of the People's Republic of China Jiang Zemin and President Vladimir Putin signed a comprehensive agreement on friendship and co-operation, outlining the basis for mutual relations for the next 30 years. And today, Chinese premier Zhu Rongji is in St. Petersburg for a meeting of the Russian and Chinese heads of government.

Unlike meetings of heads of state, where issues of a general political nature are discussed, at the regular meetings of government heads issues of economic cooperation are normally discussed. While in the political sphere, the positions of Moscow and Beijing on all key international issues are close, if not identical, economic relations are currently far from ideal -- indeed this is a key issue for discussion at the St. Petersburg meeting.

Above all, the volume of bilateral trade is rather small given the size and potential of the neighboring states, which share the longest land border in the world. Although under Boris Yeltsin targets were set to achieve trade turnover of $20 billion per year by 2000, in reality bilateral trade did not exceed $8 billion per year throughout the 1990s. This is considerably less than the volume of U.S.-Chinese trade over the same period.

Russia has much to answer for: Serious economic relations with foreign partners have been stymied by prevailing problems in the Russian economy, as well as the pervasive problems of corruption and weak rule-of-law.

Chinese businessmen complain that Russian partners frequently fail to observe contract terms, and of the general difficulties of operating in Russia, where Chinese businessmen have suffered at the hands of the mafia and arbitary law enforcement. The Russian business community, for its part, has expressed dissatisfaction regarding various matters.

Major Russian companies complain that Russian firms are often de facto not permitted to compete in tenders for contracts and are arbitrarily passed over in favor of Western competitors.

A number of inter-governmental bodies have been charged with resolving these problems, the most senior of which are the regular meetings between the Russian and Chinese prime ministers. These meetings have of late borne positive results. In 2000, bilateral trade reached a record $8 billion -- almost a 40 percent increase on 1999. And this year, the trend continues in an upward direction.

Furthermore, a number of very important documents are to be signed at this -- the sixth -- meeting of Russian and Chinese government heads. First, by special protocol a subcommittee is to be created on telecommunications and information technology. Second -- and of particular importance -- a contract should be signed for China to purchase five Russian civilian TU-204-120 airplanes. If the deal goes through, it will be a major breakthrough by Russian civilian airplane manufacturers onto the Chinese market -- a market that has been controlled by the United States and Western Europe since the mid-1980s.

Third, an agreement is to be concluded on conducting a feasibility study into building an oil pipeline from Russia to China (Transneft and Yukos are involved on the Russian side, and the National Oil & Gas Corporation on the Chinese side). Oil deliveries to China are expected to start in 2005. And finally, next April an exhibition on Russian technology is to take place in the capital of the border Chinese province of Liaoning. Deputy Premier Ilya Khlebanov is head of the committee's organizing committee.

However, efforts at the government level are clearly not sufficient. Today, it is high time for the captains of Russian industry and Russian businessmen in general to realize that -- regardless of the legal, cultural and other obstacles -- business with China, our closest neighbor and a country rapidly becoming one of the world's leading economic powers, is both perspective and profitable. As the Chinese say: It's time for businesmen "to liberate their consciousnesses."

Alexander Lukin is associate professor at the Moscow State Institute of International Relations. He contributed this comment to The Moscow Times.