The present day trends of globalization and integration in the world economy are characterized by the formation of an innovative economy, the intensification of global competition at the world investment markets, science-intensive goods and services. The close interrelationship between science and technology policy, foreign, and trade and economic policies is highlighted to ensure economic growth and the increase of social standards of the people. Exit from the global economic crisis is associated with a wave of innovations that pave the way for the emergence of new technologies. Today's systemic crisis should end in a few years, with the capital, available at that time, flowing to new technological setup productions.
It is during such periods of global technological shifts that opportunities emerge for backward countries to make a leap forward and demonstrate "an economic miracle" to the world [1].
A key role in the modernization and development of the economy based on a new technological structure is played by a sharp increase in innovation activities. The share of science and technology progress in the up-to-date economy accounts for 90% of the total contribution of all factors of growth. Given the critical importance and high uncertainty of the results of research, the state should assume the functions of the intellectual and information centre of regulation and strategic planning of the economy, supporting relevant research and technological environment, which includes a developed base of fundamental knowledge and research, institutes of applied research and development, a system for stimulating the development and dissemination of new technologies. In all countries of the world, R & D funding is steadily increasing, with their share in the GDP reaching 4% [2].
World economy. The economic aspects of bilateral Russia-China relations should be considered in the context of the globalization of the world economy and regional integration associations. In particular, Russia and China have joined the WTO, ASEAN, BRICS, and SCO. The place of Russia and China in the global economy according to the Gross Domestic Product is reflected in Table 1, Table 2, Table 3 [3]. In 2014, China outpaced the USA in the amount of the GDP by purchasing power parity (PPP), but today the USA remains the world's largest economy at the nominal basis (US$ 18,569 million), China is the second (US$ 11,995 million), and Russia takes the twelfth place (US$ 1,283 million) with a significant backlog from both countries. In 2016, China ranked the first in the world with a share of GDP (PPP) of 17.71%, the United States - the second (15.50%), and Russia - only the sixth (3.21%). China will be able to outperform the USA according to both methods of calculating the GDP in about 2030, provided it preserves the current economic growth rate. Today, China is significantly behind the United States, as well as Russia, by volume of the GDP (PPP) per capita. The United States occupies the tenth place (US$ 54,597), Russia is the forty ninth (US$ 24,805), and China is the eighty-ninth (US$12,880), lagging behind the global index (US$ 15,147).
Russia occupies the 16th position among the world's largest export economies. In 2016, Russia exported goods worth US$ 282 billion, and imported US$ 180 billion, with a positive trade balance of US$ 102 billion. In 2016, Russia's GDP was US$ 1.28 trillion, GDP per capita equaled to US$ 23.2 thousand. The largest recipients of exports from Russia: the Netherlands (US$ 29.3 billion), China (US$ 28 billion), Germany (US$ 21.3 billion), Belarus (US$ 10.9 billion), Turkey (US$ 13.7 billion). Russian exports decreased over the past five years from US$ 506 billion in 2011 to US$ 282 billion in 2016. The largest suppliers of Russian imports are China (US$ 37.3 billion), Germany (US$ 23.6 billion), Belarus (US$ 10.9 billion), Italy (US$ 7.44 billion) and the USA (US$ 5.79 billion). Exports of the Russian Federation: crude oil (US$ 73.7 billion), non-specific goods (US$ 45.3 billion), refined petroleum (US$ 45.1 billion), coal briquettes (US$ 8.51 billion), aluminum (US$ 4.89 billion). The most widespread import goods were medicines (US$ 6.94 billion), non-specific goods (US$ 6.6 billion), vehicles (US$ 6.03 billion), machine building and equipment (US$ 5.96 billion), transport spare parts (US$ 5.68 billion) [4].
Table 1
Gross Domestic Product (per value) of Major Economies of 15 Countries in US Dollars According to the World Bank (2016)
|
Place in the world |
Country |
US$ Millions |
Place in the world |
Country |
US$ Millions |
|
1. |
USA |
18.569 |
9. |
Brazil |
1,796 |
|
2. |
China |
11,199 |
10. |
Canada |
1,530 |
|
3. |
Japan |
4,939 |
11. |
Republic of Korea |
1,411 |
|
4. |
Germany |
|
12. |
Russia |
1,283 |
|
5. |
UK |
2,619 |
13. |
Spain |
1,232 |
|
6. |
France |
2,465 |
14. |
Australia |
1,205 |
|
7. |
India |
2,264 |
15. |
Mexico |
1,046 |
|
8. |
Italy |
1,850 |
- |
Total in the world |
75,000 |
China is the world's largest export economy. In 2016, the People’s Republic of China exported goods for US$ 2.06 trillion and imported for US$ 1.32 trillion, with a positive trade balance of US$ 736 billion. In 2016, China's GDP was US$11.2 trillion, and the GDP per capita equaled to US$15.5 thousand. The most widespread Chinese exports: computers (US$ 136 billion), radio and TV equipment (US$115 billion), telephones (US$84.3 billion), integrated circuits (US$ 54.8 billion), lighting facilities (US$ 29.7 billion). The main imports consist of integrated circuits (US$ 128 billion), crude oil (US$ 116 billion), gold (US$ 62.6 billion), iron ore (US$58 billion), and automobiles (US$ 44 billion). The countries receiving the Chinese exports are: the USA (US$ 385 billion), Hong Kong (US$ 287 billion), Japan (US$ 129 billion), the Republic of Korea (US$ 93.7 billion), and Germany (US$ 65.2 billion). The largest exporting countries to China are Hong Kong (US$ 285 billion), the Republic of Korea (US$ 124 billion), the United States (US$ 115 billion), Japan (US$ 113 billion), and Germany (US$ 85.4 billion) [5].
According to the Stockholm International Peace Research Institute (2016), the United States is at the forefront of defence expenditures (US$ 611 billion), China ranks the second (US$ 215 billion), the third is Russia (US$ 69.2 billion). [6]
Table 2
The Share of the Largest Economies of 15 Countries in the World GDP (PPP) According to IMF Data (2016)
|
Place in the world |
Country |
Share |
Place in the world
|
Country |
Share |
|
1 |
China
|
17.71% |
9
|
UK
|
2.32%
|
|
2 |
USA
|
15.50% |
10 |
France
|
2.28%
|
|
3 |
India
|
7.24% |
11 |
Mexico
|
1.93%
|
|
4 |
Japan
|
4,35% |
12 |
Italy
|
1.86%
|
|
5 |
Germany
|
3,33% |
13 |
Turkey
|
1.66%
|
|
6 |
Russia
|
3.21% |
14 |
South Korea
|
1.61%
|
|
7 |
Brazil
|
2.61% |
15 |
Saudi Arabia |
1.46%
|
|
8 |
Indonesia
|
2,52% |
--- |
Other countries |
30.40%
|
Bilateral relations. The basis of Russia-China trade and economic relations is the Treaty of Good Neighbourly Relations, Friendship and Cooperation of 2001 [7], which defined them as an all-inclusive equal trust partnership and strategic interaction. Action plans are approved every four years to implement the provisions of this document.
Finances. The Chinese currency "yuan" has the status of an international reserve currency, with 10.92% of the IMF "currency basket", leaving behind the Japanese yen and the British pound. Its share in financial transactions is now 2.3%, but it has grown approximately fourfold compared with 2013 (now the share of the US dollar - 72%, euro - 19,95%). China is an export economy with a positive balance of payments and has US securities worth more than trillion US dollars [8].
The Bank of China became the first commercial bank in the People's Republic of China, which began settlement operations in yuan and rubles in Russia (March, 2003). Mutual settlements in national currencies in commodity circulation amounted to 9% in the first half of 2015. Today, about 110 Russian commercial banks have correspondent accounts for conducting settlements in yuan [9].
In December, 2014, the Central Bank of Russia [10] and the People's Bank of China signed an agreement on currency swap (an instrument that allows each party to access liquidity in the currency of another country without the need to purchase it on foreign exchange markets). The amount of the swap line is 150 billion yuan (US$ 24.5 billion), the term of the agreement is three years with the possibility of its extension.
In the autumn of 2016, Vnesheconombank [11] signed an agreement with the National Development Bank of China to attract about 6 billion yuan to invest in the Russian energy and transport industry. Russia stated in November, 2016 that it was ready to place part of its financial reserves in the Chinese currency. March, 2017 saw the opening of a settlement and clearing centre for operations in yuans in Moscow, which was aimed at strengthening ties between the financial markets of Russia and China.
Commodity turnover, investments. According to the Federal Customs Service (FMS) of the Russian Federation [12], the foreign trade turnover of Russia and China in 2016 amounted to US$ 66.1 billion (in 2015 - US$ 63.6 billion). Russia has a negative trade balance with the People’s Republic of China: exports amounted to US$ 28 billion in 2016, imports - US$ 38.1 billion (in 2015, respectively, US$ 28.6 billion and US$ 35.9 billion). China's share in Russia's foreign trade increased from 12.1% in 2015 to 14.1% in 2016. China has been Russia's largest trade partner since 2010. The Russian Federation occupies the 16th place in the list of partners of the People's Republic of China (2015). More than half of the Russian exports to China are supplies of mineral fuel, oil and petroleum products (60.7%), followed by timber and articles of wood (9.4%), non-ferrous metals (9%), fish and seafood (3.5%), chemical products (3.3%). Major categories of import from the People’s Republic of China to the Russian Federation: machinery and equipment (35.9%), clothing (13.7%), products of the chemical industry (9.1%), fur and products thereof (5.6%), footwear ( 5.3%), furniture (3%).
According to the Customs Directorate General of China [13], bilateral trade turnover in January-May, 2017 increased by 26.1% at a rate per annum and amounted to US$ 32.3 billion. According to forecasts, mutual trade in 2017 could exceed US$ 80 billion.
According to the Ministry of Commerce of the People's Republic of China, as of 1 January, 2016, the volume of accumulated direct Russian investments in China amounted to US$ 946.9 million. Chinese investments in the Russian Federation are ten times higher, they are estimated at US$ 8.94 billion.
Table 3
Distribution of the Largest Economies of 15 Countries by Volume of GDP (PPP) per Person in US Dollars according to the IMF (2016)
|
Place in the world |
Country |
GDP |
Country in the world |
Country |
GDP
|
|
1 |
Qatar |
143,427 |
28 |
Japan
|
37,390 |
|
2 |
Luxemburg |
92,049 |
29 |
Italy |
35,486
|
|
3 |
Singapore |
82,762 |
30 |
South Korea |
35,277
|
|
6 |
Norway |
66,937 |
46 |
Poland |
25,105
|
|
9 |
Switzerland |
58,087 |
49 |
Russia |
24,805
|
|
10 |
USA |
54,597 |
89 |
China |
12,880
|
|
18 |
Germany |
45,888 |
106 |
Ukraine |
8,668
|
|
20 |
Canada |
44,843 |
125 |
India |
5,855
|
|
24 |
France |
40,375 |
186 |
DRC |
704
|
|
27 |
UK |
39,511 |
|
Average world |
15,147
|
Oil and gas industry. One of the key areas of Russia-China cooperation is the fuel and energy sector. According to the Customs Directorate General of the People's Republic of China [13], the share of Russian oil in China's imports is 14.45%. Russia is the leader in the volume of oil supplies to the Chinese market (the second place is taken by Saudi Arabia). According to Forbes magazine, the Russian companies exported 47.8 million tons of oil worth US$ 14.6 billion to the People’s Republic of China in 2016. According to Rosneft, the share of China in the total structure of the Russian oil exports reached 20.6% in 2016.
According to an agreement signed in 2009, China Development Bank [14] has provided Russian companies Rosneft and Transneft with a loan of US$ 25 billion for 20 years in exchange for the supply of 300 million tons of oil during this period. A branch from the Eastern Siberia - Pacific Ocean pipeline was built in the framework of that agreement, and the first deliveries began in January,2011. Acontract was signed between Rosneft and the China National Petroleum Corporation (CNPC) in 2013 [15] for an additional supply of 325 million tons of oil, scheduled for 25 years. This transaction amounted to US$ 270 billion. In particular, Rosneft supplied 34.5 million tons of oil to China in 2016.
Today, Gazprom is building “Sila Sibiri” ("Power of Siberia") [16] gas pipeline, which will transport gas from East Siberia both to Russia's domestic market and export to China (the so-called "Eastern route"). It is expected that the supply of the gas to China will begin in 2019. The contract for the supply of 38 billion cubic meters of gas per year for 30 years was signed in May, 2014 by Gazprom and CNPC. The amount of the contract is not made public, but according to Gazprom, Russia will be able to earn US$ 400 billion by investing US$ 55 billion in the construction.
The second project on gas transportation to the People’s Republic of China (Western route) is under negotiation. It envisages the supply up to 30 billion cubic meters of gas along the Power of Siberia- 2 pipeline per year for 30 years. It is planned to build a gas pipeline from the Yamal-Nenets Autonomous District across the Altai Territory to the Xinjiang Uygur Autonomous Region in the northwest of China. The Memorandum of Understanding on this project was signed by Gazprom and CNPC in November,2014. Inaddition, investors from China are interested in Russian projects on the production of liquefied natural gas. In particular, the Silk Road Foundation [17] acquired 9.9% of Yamal-SPG shares in December, 2015 and issued a loan of € 700 million to the company. 20% of this project belongs to CNPC.
The parties signed a number of agreements in November, 2016:
- between Rosneft [18] and the Chinese company Beijing Gas Group [19] on cooperation in the gas business, including the acquisition of 20% of the shares of Verkhnechonskneftegaz Public Corporation (the amount of the agreement signed in June, 2017 estimated at US$ 1.1 billion);
- on the sale of the share of SIBUR Holding Public Corporation to the Chinese Silk Road Foundation;
- memorandum between Gazprom [21] and CNPC on a study of the possibility of cooperation in the field of gas-engine fuel.
Nuclear power engineering. The Russian company Atomstroyexport [22] built in 1998-2007 and commissioned the first line of the Tianwan nuclear power plant, which consists of two power units with WWER-1000 reactors with the capacity of 1060 MW each. The project of the second stage of this power plant is being implemented (the 3rd and the 4th power units, the volume of investments - US$ 6.5 billion). The works began in December, 2012, commissioning is scheduled for 2018. Now Russia and China are negotiating the construction of two more units. The Rosatom National Corporation signed a contract with the Chinese side for more than US$ 50 million in 2013-2016 for servicing of the commissioned facilities. Nuclear fuel for Tianwan nuclear power plant is supplied by TVEL Company being part of Rosatom. The contract, scheduled till 2025, amounts for more than US$ 1 billion.
Rusatom Overseas (included in Rosatom) and CNNC New Energy [23] signed a memorandum in 2014 on the construction of offshore nuclear power plants. China is interested in using this sort of nuclear power plants first and foremost to provide islands and offshore hydrocarbon fields. Russia, in its turn, is interested in building a series of such power plants.
Transport. In the transport industry, the most significant project that is in the process of implementation is the Western Europe-Western China corridor [24]. The total length of the highway is8,500 km, of which2,200 km are by the territory of Russia,2,800 km - by the territory of Kazakhstan,3,000 km - by the territory of China. Construction began in 2008, and completion is scheduled for 2019. Investments of the Chinese companies are estimated at 150 billion rubles. The volume of cargo transportation is assumed to be 33 million tons per year.
Another important project is the construction of a railway bridge across the Amur River near the village of Nizhneelinskoe of the Jewish Autonomous Region and the city of Tongjiang, Heilujiang province. This is the first railway bridge between Russia and China. The cost of the project is 9 billion rubles, the expected сarrying capacity - 5.2 million tons per year. The construction agreement was signed in May, 2013. Today, the financial operator of the project is the Russian-Chinese Investment Fund and the China Investment Corporation [25]. Now the bridge is about 50% ready, completion of the construction is expected in 2018.
A memorandum was signed in October, 2014 on the participation of the Chinese side in the construction of Moscow-Kazan high-speed railway line with the length of770 km. The total estimated cost of the project is 1.26 trillion rubles. The Chinese side intends to invest about 300 billion rubles, provide a loan of 400 billion rubles for 20 years at a rate of 4% and contribute 100 billion rubles to the charter capital of the company. In the future, this highway will become part of the Eurasian high-speed Moscow-Beijing corridor.
In December 2015, the Chinese Sinohydro Corporation and the Federal Road Agency of the Russian Federation [26] signed a memorandum of intent to implement an investment project on the construction and maintenance of a bridge across the Lena River in the vicinity of Yakutsk. The project should be implemented on the principles of public-private partnership, the preliminary cost of the project is estimated at 56 billion rubles.
The construction of a road bridge and a cableway across the Amur between Blagoveshchensk and Heyhe began in December 2016. The concession contract for construction was signed in June,2016, ajoint venture was set up to implement the project. The total cost of the project is about 18.8 billion rubles. It is planned that the bridge and access roads of the total length of20 kmwill be completed in 2019.
The SyarSisi Rus company (the Russian division of China Railway Construction Corporation Limited) [27] and the Mosinzhproekt company signed an agreement in January, 2017 on the construction of several stations of the Moscow Underground (Aminyevskoye Highway, Michurin Avenue and Vernadsky Avenue). The contract amounts to 22.98 billion rubles, completion of works is scheduled for 2019.
Metallurgy. Direct Chinese investments in Russian metallurgy have been estimated at US$ 2.6 billion since 2009. The largest project is the construction of Ozerny mining and processing plant in Buryatia, which involves the Russian corporation Metally Vostochnoy Sibiri [28] and the China Nonferrous Metal Industry's Foreign Engineering and Construction Company. The agreement was signed in October, 2013. Completion of the construction is scheduled for 2017. The amount of Chinese investment is estimated at US$ 750 million.
A joint Russian-Chinese aluminum mill Yulian was constructed in the province of Henan in 2006-2016 for the production of cold and hot-rolled aluminum products with a capacity of 1 million tons per year. Vi Holding investment company participated in the project on behalf of the Russian side, whose investment amounted to US$ 3.3 billion. The second turn of the rolling mill in the city of Gongyi was put into operation in November, 2016.
Agriculture. The share of food in total Chinese imports is steadily increasing. It reached 6.73% (about $ 107 billion) in 2016. This is about one sixth of the Chinese wholesale food market. The share of agricultural and food products in Russia-China turnover is 4.5% (US$ 2.9 billion). The parties agreed to open the Chinese market for Russian grain in December, 2015, which would increase the volume of trade [29]. According to Rosselkhoznadzor, Russia practically did not supply wheat to the People's Republic of China in 2015-2016. According to the Russian Grain Union, Russia will be able to supply 3 million tons of grain to China in 5 years.
On 26 April, 2016, the Far East and Baikal Region Development Foundation and the Chinese Asian-Pacific Food Foundation signed a joint stock agreement on the establishment of the Russia-China Fund for Agricultural Development in the Far East. According to the Ministry of the Russian Federation for the Development of the Far East, [30] it is planned to implement more than 20 investment agro-projects. The capital of the fund will be about US$ 10 billion, at the first stage - 13 billion rubles. Chinese investors will form 90% of the capital, Russian - 10%.
Science and technology. The world economy is in the process of transition to a new technological and economic structure, which is associated with a wave of innovations that pave the way for the emergence of new technologies. The present stage of modernization of the civilization is called post-industrial or postmodernist. Its basis is the priority role of science as a core, around which new technologies are created, economic and social progress of the society takes place. Modern trends of globalization and integration of the world economy are characterized by widespread use of information technologies; the formation of an innovative economy; internationalization of research, development and science-intensive production; the exacerbation of global competition at the world markets of investments, high-tech goods, and services. The current state of the Russian economy and the prospects for its modernization are closely linked with the state of the world economy, which is in the process of transition to a new technological and economic structure. The condition necessary for a successful implementation of the development strategy lies in advancing basic productions of a new technological structure and putting the economy into associated with it new long wave of growth. This requires concentration of resources to create the nucleus of a new technological structure and achieve the synergetic effect of forming clusters of new industries, which implies the coherence of macroeconomic policies with the priorities of long-term technical and economic development. Implementing such a policy requires establishing a system of strategic management capable of anticipating promising directions of economic growth and aiming the activities of national institutions of development and economic regulation instruments to their implementation [31].
Table 4
Domestic Expenditures for Research and Development in the Countries in 2016, % of GDP, According to the World Bank [32]
|
Place |
Country |
% |
Place |
Country |
% |
|
1 |
Israel |
4.38 |
13 |
China |
1.84
|
|
2 |
Republic of Korea |
4.03 |
14 |
UK |
1.77
|
|
3 |
Finland |
3.78 |
15 |
Ireland |
1.70
|
|
4 |
Japan |
3.39 |
16 |
Norway |
1.66
|
|
5 |
Sweden |
3.37 |
17 |
Portugal |
1.49
|
|
6 |
Denmark |
3.09 |
18 |
Spain |
1.33
|
|
7 |
Germany |
2.88 |
19 |
Italy |
1.25
|
|
8 |
USA |
2.77 |
20 |
Hungary |
1.21
|
|
9 |
Austria |
2.75 |
21 |
Russia |
1.12
|
|
10 |
France |
2.24 |
22 |
Greece |
0.60
|
|
11 |
The Netherlands |
1.85 |
23 |
Mexico
|
0.43 |
|
12 |
Czech Republic |
1.85 |
24 |
Ukraine |
0.41
|
Russia's share at the world market of high-tech products is at the level of 0.3%. The main problem of the scientific and technological complex of the Russian Federation is not in the state of fundamental research, which still remains at the world level, but in the almost complete elimination of branch and factory science as a result of the privatization of industrial enterprises in the 1990s years. As a result, the demand for innovation from the Russian industry and proposals from the side of applied science sharply reduced [33].
Attempts to create new innovation centres "from the scratch" tend to end in failure, which was proven by the actual failure of the Rosnano and Skolkovo projects. At its best, they implement ideas imported from the academic environment, but usually resources allocated for them are not spent on their intended purpose, in particular, innovation centres become a form of transformation of budget allocations into private development projects. International experience of successful innovation shows that it can be developed only in a supportive environment for collective scientific and technical creative activities, supported by academic research institutions.
The economic sanctions imposed by the USA and the EU following the annexation of the Crimea and aggression in the Donbass have led to a significant isolation of Russia from access to new technologies. Unless a solution to this situation is found, the Russian economy will be in a state of irreversible lag and development of a new technological setup in a few years. Russia already needs to establish an up-to-date system of management for scientific and technological development of the country, taking into account that the main structural components of applied research were destroyed during mass privatization. The total destruction of research institutes and design bureaux led to the tendency of industry transiting to a foreign technological basis.
The prolongation of sanctions can lead to destroying numerous production cycles in various sectors of the economy, stopping production, bankruptcy of a number of enterprises, a significant drop in living standards. It is impossible to ensure sustainability of internal social and economic order in Russia without long-term commitment, without concerted systematic efforts of national enterprises and people in paving the way to sovereign development based on advanced technology. Preserving dependence of the economy from the western core of the world financial and economic system leads to prolonging and deepening the crisis. It is impossible to improve the situation without changing the present raw material model of Russia's integration into the world economy [31].
Today, China holds leading positions in the scientific and technological field. In early 2016, the Harvard Institute of World Economy stated that China had moved from copying to an innovative country. The country has reoriented domestic technology parks from foreign investments to development, advanced training and stimulating inventions. In 2015, there were 1,600 scientific and technological incubators in China, more than 1,000 investment national institutions with a fund of over 350 billion yuan, specializing in investing in inventions. In 2016, the National Council of the People's Republic of China made public a programme to promote the transformation of science and technology achievements into productive forces, which reflected the crucial role of science for the market [34].
Since 2010 China has been ranking number one in the world in terms of patents received. Chinese Office for Intellectual Property revealed that in 2014 663 thousand inventions from 928 thousand had a market value and 485 thousand were made by specialized research centres. The number of engineers and technical workers in China doubled in 2000-2007. It is envisaged that there will be more scientists and researchers in China in 2024 than in the United States, the EU, and Japan taken together. As early as in 2013, China took the first place in the world by the number of scientific and technical workers according to the World Bank. The number of scientists from the total number of people employed in the production in the EU is 22%, in China - 19%, in the USA - 17%, in the Russian Federation - 6% [32].
A quarter of the world's high-tech exports exceeding 2.5 trillion US dollars, belongs to China. In 2014 China reached parity with the USA as for the share of value added in high-tech industries, where the USA had 29%, China - 27%, and its share has grown 10 times in ten years. It is anticipated that by 2020 China will have outpaced the USA in investment for research and development, accumulate an analytical mass of knowledge and results of scientific experiments that will contribute to a scientific and technological breakthrough [32].
Today, China demonstrates high investment efficiency in education, and is one of the leaders in the world education, and the United States is only the eighth or tenth. The country's leadership believes that the level of education for the future of China is the most important factor of competitiveness. Important for China is international cooperation in the field of military-industrial complex. The Chinese science has emerged and developed as an applied sector of defence industry.
Conditions and prospects. During the last decade, the growth of Russia's foreign trade has lagged behind countries with similar level of economic development. The share of exports to Russia's GDP is less than one third. The degradation of the scientific and technological sphere continues in Russia. Today, the country still has sufficiently powerful scientific community. Russia ranks the fifth in the world after the USA, EU, Japan, and China as for the number of scientists. However, Russia is actually the only country in the world where the number of scientists is constantly decreasing. In comparison with the USSR, the number of scientists has decreased by two and a half times, with almost twenty times the reduction of R & D funding. As for the share of R & D expenditures in the GDP, Russia is at the level of the third world countries (OECD total - 2.3%, EU-28 - 1.94%, Russia - 1.12%) [35]. The present state and trends of the transformation of scientific and technological complex of Russia will not allow the country to reach the level of developed countries, to be a leader of global and regional integration, particularly in such integrated economic and political associations as SCO and BRICS. Russia can actually act only as a secondary partner of China.
China has made a huge leap forward over the last quarter of a century. In 1983, the GDP of the People's Republic of China was estimated at US $ 301.8 billion, which was approximately 7.5% of the US GDP and about 30% of the indicator of the RSFSR. In 2016, the GDP (PPP) of the People's Republic of China reached US$ 21.292 trillion, exceeding that of the USA by 14% and Russia - 5.6 times. Over the years, the Chinese economy has increased its volume 70.5 times, with an average annual growth rate of 8.8%. It is also significant that over the years, the population of the People's Republic of China has increased from 1,032.35 million people to 1,376.57 million people (by 33.35%), while the population of Russia - from 142.17 million to 146.54 million (by 3.07%) [3]. In 2017, with estimated growth of 6%, China will generate in addition about US$ 1.27 trillion, which is one third of the total GDP of the Russian Federation in 2016.
It should be pointed out that the growth rate of the Chinese economy fell from 10.5% in 2010 to the level of about 6% in 2017 [3]. Continuing the deceleration of growth from the current 6-7% to 4.6% in 2030 will reduce the volume of Russian exports to China by about 17%. This will affect all sectors of the Russian economy: from 8% for the services sector employing highly skilled specialists, up to 24% for the raw materials industries (mainly for the mining industry). By 2030, exports of oil and gas may have fallen by 18%.
China is trying to play the role of one of the poles of gravity in foreign policy. China, thanks to its great achievements in the field of science and technology, holds leading positions in global integration projects, including APEC, BRICS, and SCO. One of the most promising regional projects is the One Belt - One Road project [36], on the routes of which a new economic structure may emerge over the next decades. The project is aimed at optimizing the logistics of Chinese exports. An efficient tool for China is to invest in the real sector of the economy of Russia and other partners, mainly in the transport infrastructure and accompanying industries.
China is attempting to diversify various modes of delivering goods to Europe [17]. Today, most of the freights to the EU are delivered by sea. Only 5-6% of Chinese cargo account for land transportation. Their main volume goes to the Russian Trans-Siberian Railway (1.5 million tons) at a cost of US$ 6-7 thousand per container. Transsib has been dominated even now by domestic Russian traffic due to low carrying capacity of the main line. The Russian route is just one possible option of the Chinese Silk Road project. Already in 2017, freights from China began to move along the Baku-Tbilisi-Kars railway line bypassing Russia. The completion of the construction of the main railroad to the Turkish Kars witnesses that the route from China to Europe has become more convenient and economically more favourable, as there is no need to pass the freights across the Black Sea. There is already a rail link to Central Europe from Kars via Greece and Bulgaria. The carriers are no longer satisfied with the speed of delivery of goods to the EU by the outdated Russian railway infrastructure. Average Transsib shipment of cargo is12 km/h. The speed of container deliveries in China and for export is40 km/h.
A negative factor for further development of Russia-China economic relations is also the political tension between Moscow and Brussels and economic sanctions imposed on Russia by the United States and the EU.
Conclusions
1. According to estimates of the President of Russia Vladimir Putin and President of China Xi Jinping, today the state of the Russia-China relations of strategic partnership and cooperation is the best during the entire historical period. An active work is underway to coordinate the development strategies of both countries. Agreements on joint actions within the framework of One Belt - One Road and the Eurasian Economic Union have been reached. Cooperation in such areas as energy, trade, investments, high technologies, finance, infrastructure, agriculture is developing steadily. The share of modernization and scientific and technological innovations is constantly increasing. The construction of the Tienwan nuclear power plant is an example of cooperation in the field of nuclear energy. The gas pipeline project is being successfully implemented along the eastern route. Major strategic cooperation projects, in particular the joint development of a wide-body passenger aircraft and heavy helicopter, will increase the overall strength and international competitiveness of both countries. There is an agreement on cooperation in growing industries, including innovation and e-commerce. The parties are actively working on promising cooperation projects in such areas as profound resource redevelopment, port linguistics, modern agriculture, and infrastructure construction.
2. Today, China is the main trading partner of Russia. At the same time, Russia occupies secondary positions in Chinese exports and imports. Russia-China trade and economic relations show that Russia is actually a raw material fringe of China. The main export items are commodities with little added value, and imports are industrial production goods. Russia has a permanent deficit in trade with China. Despite optimistic statements of the leaders of both countries about the prospects for the growth of mutual trade, there is no real economic basis for this due to the low pace of growth of the economy of Russia and its outdated structure.
3. The experience of China shows that it has achieved the current level of development thanks to the planned management of economic development; monetary control over the activities of commercial banks, over the use of foreign currencies in the country, loans, interest rates, investment in industry and pricing; control over foreign trade, which is expressed in subsiding export by the state and strict regulation of imports.
4. Negative experience in implementing the model of Russia's modernization and the positive one of China proves that only the reliance on a powerful scientific and technological complex can be the most realistic way for Ukraine to take a worthy place among economically developed countries, promote approval in the country of socially-oriented, structural-innovative development model. The level of national science largely determines the fundamental foundations of economic and military security of the nation and provides opportunities to exit the current financial and economic crisis. The next technological level can be reached, only being firmly based on the previous one, because each technological process is conditioned by the need for more up-to-date productive forces with corresponding industrial relations. It is important to keep the knowledge and practice of the previous methods, since it is impossible to maintain stability without the theory and practice of the previous methods.
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*Information about the author:
Oleksandr Vasyliev – Doctor of Technical Sciences, Senior Researcher, Institute of World History, National Academy of Sciences of Ukraine.
The article is prepared on the basis of the address at the International Conference "Russia and China: Current State and Development Prospects".