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14 Oct, 2009 10:06

ROAR: Russia and China depend on each other

ROAR: Russia and China depend on each other

Analysts are wary of the new program of economic cooperation between Russian and Chinese boundary regions.

Russian and Chinese companies signed contracts worth $3.5 billion during Prime Minister Vladimir Putin’s visit to Beijing. Bilateral trade and economic relations have overcome the challenge of the global economic crisis, Putin said.

One of the most important was a framework agreement on natural gas supplies from Western Siberia and offshore Sakhalin fields to China, signed by representatives of Russia’s Gazprom and China National Petroleum Corporation (CNPC).

Gas supplies may start in 2014-2015. However, the implementation of the project may be difficult because of the lack of a good infrastructure.

Russian state-owned oil producer Rosneft and CNPC are planning to build from 300 to 500 gas stations on the territory of China as part of a joint refinery project. The refinery will be located some 100 km outside Beijing.

Russia and China have had no disagreements in political cooperation over the last 15 years, believes Fyodor Lukyanov, editor-in-chief of Russia in Global Affairs magazine. “Now the two countries are beginning more close practical cooperation,” he told Gazeta daily.

Lukyanov said that years should pass before it would be possible to know any results regarding Russian-Chinese cooperation in the economic sphere. “One thing is to say about creating infrastructure and another is to actually create it,” he said.

The editor added that now there is absolutely no infrastructure because of the orientation of Russia toward the West. “At the same time, the situation now makes it possible to develop such infrastructure.” China is interested in Russia’s raw materials, so Beijing will actively develop new projects, he added.

There has been a panicked reaction in the Russian media after the program of cooperation between regions of Russian Far East, Western Siberia and territories of China’s northwest for 2009-2013 had been announced, Vedomosti daily wrote.

Many say that Russia “is selling Siberia to the Chinese,” that the country is becoming a source of raw materials for Beijing, the paper added.

The program includes 205 joint economic projects. The majority of the projects to be implemented in Russia are those that involve developing deposits of natural resources – coal, ore, precious metals, apatite and molybdenum. At the same time, “China’s part of the projects involves processing industries,” Vedomosti wrote.

The daily explains this situation by the lack of Russia’s investment in geological prospecting and developing new fields of natural resources over the last years. Chinese investment into mining operations is good for the country that “lacks its own investment,” the paper said.

Another problem for Russia is that “the density of the population in Eastern Siberia is one of the lowest in the world,” the daily added.

As for the fears about “China’s expansion”, it depends on the skills of the government if “Siberia will be sold,” the paper said, adding that Russia could use China’s investment and work force for its own economy.

Moscow should also diversify its cooperation regarding raw materials in Southeast Asia and build stronger economic ties with such countries as Japan, Vietnam, South Korea and others.

Some Russian observers and the media were rather critical of the new program because they think it may be disadvantageous to Moscow. Russia, however, is ready to give China raw materials “so as not to lose territory,” Moskovsky Komsomolets daily explained.

Moscow is planning to make several decisive steps towards its Eastern neighbor, the paper said. According to Russia’s energy strategy till 2030, the oil and gas flows “will be redirected from traditional Western buyers to the East,” the paper wrote.

“If last year Russia’s gas export to the East amounted only to eight percent of the whole gas export, it will increase to 20-25% by 2030,” Moskovsky Komsomolets said. Yet the new program of cooperation with China raises questions, the daily said, adding that it is premature to hope that China will share its modern technologies with Russia.

“However, it seems that the Russian leadership does not have any choice,” the paper said. “Our country lacks the human and technical recourses to develop natural riches.” In the present situation, “it is better to give raw materials for processing than to give territory where this raw material lies,” the paper stressed.

It is especially important now “because China’s economy is demonstrating growth even during the economic crisis,” the paper added.

Aleksey Maslov, director of the Center of Strategic China Studies, also believes that the cooperation between the two countries will be built in the near future according to the principle “our raw materials and your technologies.” The technological development in China is a few times cheaper than in Russia’s Far East, the analyst told Vedomosti daily.

The relations between Moscow and Beijing have stepped up over recent years, Dmitry Abzalov of the Center for Political conjuncture agrees. He also stressed that now the cooperation means “raw materials or goods in exchange for money.” China is intensively crediting Russia, and Moscow is giving resources, he told Gazeta daily.

Critics of the new program of cooperation with China explain themselves why Russia needs it, the government’s Rossiyskaya Gazeta daily wrote. Even if Russia has the necessary technologies, the country lacks the labor force and infrastructure, and it cannot build processing plants on its territory due to these reasons, the daily said.

Analysts note that the only alternative to the new program of cooperation with China is “not to undertake anything,” the paper added.

Sergey Borisov, RT