In March, China announced its fourteenth five-year plan for the development of the country for the period from 2021 to 2025 which has set forward two primary goals: a doubling of the country’s GDP by the year 2035, as well as transforming into a high-income economy. While the rest of the world is presented with challenges in restarting their economies and returning to normal social life, the Chinese economy has been on the rise with many industries as well as trade currently booming. It is widely regarded that China is likely to overtake the United States as the largest economy in the world (in terms of nominal GDP numbers) by the end of the decade. All of these factors create a number of opportunities for Russian private and public sector industries and will likely facilitate a closer alignment of interests and international trade between Chinese and Russian businesses.
Firstly, one of the most prominent exported produce of Russia, natural gas, may anticipate increasing demand from China. Russia’s Gazprom, the world’s largest natural gas producer, using its gas supply channel named the “Power of Siberia Pipeline” as well as the planned second pipeline into China will provide China with natural gas, as China’s booming economy and urbanization are set to infuse the demand. Furthermore, liquefied natural gas suppliers can also expect the steady demand to continue in the future.
Secondly, while recent years have seen the growing number of electric cars and electric car manufactures in China, the demand for oil still remains high. Given the rapid recovery of the Chinese economy from the effects of pandemic and the volatile oil prices in 2020, China is likely to buy more oil especially at lower prices in order to ensure the stability of the domestic market. This creates a number of opportunities for Russian oil producers.
Opportunities in the Agricultural Sector
As China’s domestic consumption rises and its middle-class becomes more sophisticated, this provides the Russian agricultural industry exciting prospects in the booming Chinese market. While Russian agricultural exports have seen a rapid increase in the past decade, many Russian businesses are yet to begin trade relations with China. Furthermore, as the average middle-class consumer in China turns more sophisticated and selective, their choices and preferences will largely influence global consumer trends. Thus, as Russian-produced agricultural products are largely perceived by Chinese consumers as more eco-friendly and of higher quality, this fact will play an important role in the facilitation of international trade in agriculture between Russia and China.
One of the most significant modern technology that Chinese firms can begin implementing in Russia is the 5G networks, and this fact presents the domestic investors in Russia with a number of opportunities. Recently it was becoming more apparent that Chinese ZTE and Huawei are perceived as favorites and together with the domestic companies they could establish the necessary infrastructure. This in turn will provide the vital 5G infrastructure in the country, as at the moment 5G technology is accessible only in a few locations in Russia. The development of 5G networks is anticipated to give a push to such industries in Russia as retail, healthcare, financial services, transportation, and several others.
China’s latest five-year plan has set forward a number of priority areas in the country’s development. This presents Russian businesses with opportunities to enter the Chinese market, boost international trade, as well as to improve cultural, and socio-economic ties. Specifically, such industries as natural gas, oil, agriculture, and technology are likely to benefit from the closer ties between the two countries. From the perspective of Russian businesses, despite a potential drawback of a higher dependency on one trading partner, the benefits are anticipated to largely offset the potential risks. In establishing more economic relations with China, the Russian economy can receive the necessary stimulus that the country is very much in need of.
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