Ministry of Foreign Affairs of the Russian Federation Moscow State Institute of International Relations (University)

Center for East Asian and Shanghai Cooperation Organization Studies

Alexander Lukin, Director

Sino-Russian Trade and Investment Cooperation: Prospects for the Future

The Global Institute Russia-India-China (RIC) Conference

4th Annual International Conference: 20-21 November 2008

Main Economic Results in 2007, Russia and China (US $ bln)

Russia China

GDP 1286 3249

GDP per capita (PPP) 14600 5300

GDP Growth (%) 8.1 11.4

GDP Structure (Share, %)

Industry 39.1 49.2

Services 56.3 39.1

Budget Revenue 299 640.6

Budget Spending 262 634.6

Foreign Debt 384.8 363

Currency Reserve 470 1493

Foreign Trade Turnout 625.4 2138.4

Export 365 1221

Import 260.4 917.4

Inflation, в % 12 4.7

Russia’s Exports’ Structure

•

1995 2000 2005

Food

Alcohol and Tobacco

Raw Materials except Food and Fuel

Fuel and Oil Products

Fat and Food Oil

Chemicals

Industrial Products made of raw materials

Machinery

Other

Russia’s Exports’ Structure in 2006 and 2007

(US $ thousands)

CIS Code Commodity2006 2007

Growth $ thousands % $ thousands %

Total: 17554116 100.0 19676895 100.0 12.1

01-24 Food products and agricultural raw materials (except for textile) 1283923 7.3 1433666 7.3 11.7

25-27 Mineral productsincluding: 9868979 56.2 10259445 52.1 4.0

27 Oil and Energy products 9464233 53.9 9341411 47.5 -1.3

28-40 Products of chemical industry, rubber 2188755 12.5 2552186 13.0 16.6

41-43 Leather and fur 12556 0.1 14439 0.1 15.0

44-49 Timber, paper 2800013 16.0 3759523 19.1 34.3

50-67 Textile, textile products and shoes 7727 0.0 9819 0.0 27.1

71 Precious stones and metals and jewelry 31650 0.2 44520 0.2 40.7

72-83 Metals and metal products 1133430 6.5 1332197 6.8 17.5

84-90 Machinery and vehicles 217155 1.2 256041 1.3 17.9

68-7091-97 Other 2286 0.0 4814 0.0 110.6

Russia’s Imports’ Structure 1996 2000 2005

Food products

Alcohol and tobacco

Raw materials (except food nd oi)

Oil and oil products

Fat and Food oil

Chemicals

Industrial products, made of raw materials

Machinery and vehicles

Other industrial products

PRC Trade with 10 Major Trading Partners in 2006, US $ blns (Chinese statistics)

Total turnout

Export Import Share of the total turnout

Growth (%) Change of the share (%)

US 262.68 203.47 59.21 14.9 24.2 0.0

Japan 207.36 91.64 115.72 11.8 12.5 -1.2

Hong Kong 166.17 155.39 10.78 9.4 21.6 -0.2

ROK 134.31 44.53 89.78 7.6 20.0 -0.3

Taiwan 107.84 20.74 87.11 6.1 18.2 -0.3

Germany 78.19 40.31 37.88 4.4 23.6 No data

Singapore 40.85 23.18 17.67 2.3 23.3 No data

Malaysia 37.11 13.53 23.57 2.1 20.9 No data

Netherlands 34.51 30.86 3.65 2.0 19.8 No data

Russia 33.39 15.83 17.55 1.9 14.7 -0.1

PRC Trade with 10 Major Trading Partners in 2007, US $ blns (Chinese statistics)

Total Turnout Export Import Share of the turnout (%. January-November）

Growth (%) Change of the Share (%. January-November)

USA 302.083 232.704 69.37874 14.0 15.0 (14.4/17.2) -1.0

Japan 236.021 102.0713 133.95 10.9 13.9 （ 11.4/15.8）

-0.9

Hong Kong 197.248 184.318 12.816 9.1 18.8 （ 18.8/18.9）

-0.3

ROK 159.898 56.141 103.757 7.4 19.1 （ 26.1/15.6）

-0.3

Taiwan 124.48 23.458 101.022 5.7 15.4 （ 13.1/16.0）

-0.5

Germany 94.112 48.718 45.393 20.4 （ 20.8/ 19.8）

Russia 48.165 28.488 19.677 2.2 44.3 (79.9/12.1) 0.3

Singapore 47.156 29.638 17.518 15.4 (27.8/-0.9)

Malaysia 46.398 17.691 28.708 25.0 （ 30.7/21.8）

Netherlands 46.341 41.413 4.928 34.3 （ 34.2/35.0）

China’s Outward FDI Stock by Countries and Regions (US $ mln)

Country/Region 2003 2004 2005 2006 2007

Total 33222.22 44777.26 57205.62 75025.55 117910.50

Hong Kong 24632.26 30392.89 36507.08 42269.91 68781.32

Cayman Is. 3690.68 6659.91 8935.59 14209.19 16810.68

Virgin Is. (UK) 532.64 1089.38 1983.58 4750.40 6629.54

USA 502.32 665.20 822.68 1237.87 1880.53

Australia 416.49 494.58 587.46 794.35 1444.01

Singapore 164.83 233.09 325.48 468.01 1443.93

Russia 61.4 123.48 465.57 929.76 1421.51

ROK 235.38 561.92 882.22 949.24 1214.14

Macau 446.86 624.83 598.70 612.47 910.67

Germany 83.61 129.21 268.35 472.03 845.41

Kazakhstan 19.71 24.78 245.24 276.24 609.93

Mongolia 13.42 75.95 130.63 314.67 592.17

Sudan 0.55 171.61 351.53 497.13 574.85

China’s Oil Imports 2006 (mln

tons)

Share .% Growth (%) 2007 (mln tons) Share (%) Growth (%)

Total 145.18 100 14.2 163.17 100 12.3

Saudi Arabia 23.87 16.4 7.6 26.33 16.1 10.3

Angola 23.45 16.2 34.4 25.0 15.3 6.6

Iran 16.77 11.6 17.5 20.54 12.6 22.4

Russia 15.96 11 25 14.53 8.9 -9.1

Russia’s Trade with Major Partners (2005-2007) US $ blns

Country Turnout2005

Export2005

Import2005

Share of totaltrade(%. 2005 )

Turnout2006

Export2006

Import2006

Share of total trade (%. 2006 )

Growth 2006(%)

Turnout 2007

Export2007

Import2007

Share of total trade (%. 2007 )

Growth 2007(%)

Germany 33.0 19.7 13.3 9.7 43.0 24.5 18.5 9.8 30.1 (24.1/38.9)

52.9 26.3 26.6 9.6 23.0 (7.3/43.9)

Netherlands 26.5 24.6 1.9 7.8 38.6 35.9 2.7 8.8 45.1(45.7/38/0)

46.6 42.8 3.8 8.4 20.0 (19.2/43.5)

Italy 23.5 19.1 4.4 6.9 30.8 25.1 5.7 7.0 31.4 (31.8/29.5)

36.0 27.5 8.5 6.5 17.0 (9.7/49.1)

China 20.3 13.0 7.3 6.0 28.7 15.8 12.9 6.5 41.0 (20.7/77.4)

40.3 15.9 24.4 7.3 40.6 (0.9/89.0)

Ukraine 20.2 12.4 7.8 5.9 24.2 15.0 9.2 5.5 19.7 (20.8/17.9)

29.6 16.3 13.3 5.4 22.4 (8.9/44.2)

Belarus 15.8 10.1 5.7 4.7 19.9 13.1 6.8 4.5 25.9 (29.3/19.8)

26.1 17.2 8.9 4.7 30.7 (31.2/29,8)

China’s Outward FDI Flow by countries and regions

Country/Region 2003 2004 2005 2006 2007

Total 2854.65 5497.99 12261.17 17633.97 26506.09

Hong Kong 1148.98 2628.39 3419.70 6930.96 13732.35

Cayman Is. 806.61 1286.13 5162.75 7832.72 2601.59

Virgin Is. (UK) 209.68 385.52 1226.08 538.11 1876.14

Australia 30.39 124.95 193.07 87.60 531.59

Russia 30.62 77.31 203.33 452.11 477.61 (112)

Singapore -3.21 47.98 20.33 132.15 397.73

Kazakhstan 2.94 2.31 94.93 46.00 279.92

Germany 25.06 27.50 128.74 76.72 238.66

Mongolia 4.43 40.16 52.34 82.39 196.27

USA 65.05 119.93 231.82 198.34 195.73

Sudan -- 146.70 91.13 50.79 65.40

ROK 153.92 40.23 588.82 27.32 56.67

Macau 31.71 26.58 8.34 -42.51 47.31

Russian Total Foreign Investment

Russian Total Foreign Investment by Country

Russian Total Foreign Investment by Country, 2006

Russian Federation: Inward Foreign Direct Investments in Nonbanking Corporations.by Country, 2007 - Q2 2008*

(Balance of Payments Data, inflows minus outflows)(mln. USD), Central Bank of Russia

Country 2007 2008 (Jan-June)

Total 47.853 39.203

Cyprus 12.061 15.300

Bermuda 8.369 5.124

Netherlands 9.384 6.108

Germany 7.695 1.827

US 1.498 1.505

Norway 1.302 332

ROK 120 104

China 112 37

Japan 80 20

Недооценка китайских инвестиций за счет операций в оффшорных зонах

Example: In July 2006, China National Petroleum Corporation (CNPC), bought a US$500 million stake during Rosneft's IPO and China Petroleum & Chemical Corporation (Sinopec) acquired a 96.9 percent stake in Udmurtneft for US$3.5 billion from TNK-BP International (British Virgin Islands). The Udmurneft acquisition is a prime example of Chinese investments in Russia which do not appear in the FDI statistics due to the channeling of funds through off-shore vehicles.

(Krkoska and Yevgenia Korniyenko 2008)

Chinese Investment. Major Sectors

• forestry• mining• light and textile industry • consumer electronics • communications• services

Major Russian-Chinese Projects in Russia

• Building of a Residence District “Baltic Pearl” in St. Petersburg (investment – $1.313 bln)

• Huaming Park in Moscow (Chinese biseness centre) - $ 300 mln.) • Paper factory in Chita region - $ 270 mln.) • Paper factory in Khabarovsk region - $ 230 mln.) • Federation Tower in Moscow - $ 58 mln.)

Russian Investment in China• In 2007 Russia’s contract investments in China decreased from $190 mln (2006) to

$ 52.07 mln. • In 2007 105 new project with Russian capital registered in China (2006 – 126).

Major areas – industrial production, construction and transport. • Accommodated Russian contract investment by the end on 2007 - $1.83 ( 2006 г. –

1.64 mln), growth 11,58%. • Russian FDI stock in 2007 $660 mln. (+ 8.19%), • Total number of projects with Russian capital - 2080.

Major Russian-Chinese Projects in China

• 2 block of Lianyonggang nuclear power plant (Jiangsu province) • Uranium enrichment factory. • Tu-204-120С aircraft• Russian energy equipment sales to a number of Chinese power plants• Russian mining equipment sales for Chinese coal mines

Chinese Contract Labour in Russia

2006 2007 Total 2007 Growth

Work Completed ($ mln)

660 1.100 4.460 32.7%

Contracts Signed

1.070 1.600 8.220 24.16%

Labourers sent to Russia (person/times)

22 852 25 385

Major sectors:

- Agriculture- Construction- Forestry- Textiles (Clothes)- Medicine

30.862 labourers in Russia in the end of 2007