Since 1991, Russia and China have actively supported business relations. After the normalization period in 1991-1996, the states transitioned to a partnership model in key economic sectors. In 2001, a treaty on good neighborliness, friendship, and cooperation was signed between Russia and China. In 2022, after the introduction of sanctions by the US and the EU against key Russian enterprises, there is a noticeable trend of a significant increase in trade turnover between Russia and China. Playing a key role in the development of business relations are the Russia-China Business Council and investment funds.
Russia-China Business Council
The council was established in 2004 as part of a program to strengthen and develop business cooperation. Its strategic tasks include resolving disputes between companies, protecting investments, and implementing joint economic projects. Since the beginning of 2004, over 10 large-scale projects have been implemented in Russia and China.
1. Museum and Cultural-Educational Complex in Vladivostok
In 2019, contracts were signed for the design work to create a cultural-educational complex in Vladivostok. Plots on Russky Island and the Orlyonok Nest hill with a total area of 140,000 square meters were allocated for building construction. The museum center is expected to enhance cooperation between the Tretyakov Gallery, the Museum of the East, the Russian Museum, the Hermitage, and other partners. Buildings equipped for exhibition spaces will also house a restoration complex and workshops for painting, graphics, and sculpture.
2. Development of a Deposit in the Republic of Tuva
The project is managed by LLC “UK Intergeo.” An investment of 141.7 billion rubles is planned for the development of the Ak-Sug deposit in the Republic of Tuva. The estimated explored reserves amount to 24 million tons of copper. Production was launched in 2022, and it is planned to reach the design capacity by 2025. The approximate operating period of the Ak-Sug deposit is 27 years, with the enterprise processing up to 500,000 tons of copper concentrate per year.
3. Project to Increase the Export of Electrical Energy from Russia to China
In 2012, as part of increasing electricity supplies to China, the “Amur-Heihe” power transmission line with a capacity of 500 kWh was built. The East Energy Company took on the construction of the crossing over the river. According to the contract terms, electricity supplies are planned for 25 years, with a planned volume of 100 billion kWh. The line’s design capacity is 6-7 billion kWh per year.
4. Project to Organize LNG and Propylene Supplies from Russia to China
The project’s task is to build infrastructure for the transportation of liquefied natural gas (LNG) and propylene through the Zabaykalsk-Manzhouli border crossing. The terminal’s capacity is 1.05 million tons per year, making it the only large-tonnage transshipment complex on the border between Russia and China. The terminal was built as part of the extensive “One Belt, One Road” project. A railway line with a gauge of 1520 mm was additionally laid to the border crossing. Construction began in 2019 with the participation of several Russian oil and gas sector companies (Gazprom, Rosneft, SIBUR, etc.). The terminal’s operator and co-owner is the Avestra Group. At the time of the start of project work, the LNG deficit in the Northeastern part of China was estimated at 3 million tons per year. The terminal is included in the list of priority projects for cooperation between Russia and China.
5. Yamal LNG Plant
The Yamal LNG project was implemented on the Yamal Peninsula. The investment in the construction of production facilities is estimated at $26.9 billion. The plant has three production lines with a total capacity of 16.5 million tons of LNG per year.
The project is operated by OJSC “Yamal LNG.” The controlling stake in the joint venture belongs to OJSC “NOVATEK” (50.1%). Project partners also include TOTAL (20%), CNPC (20%). The remaining part of the assets belongs to the Silk Road Fund. It is expected that LNG production at the planned level can be maintained for the next 20 years.
6. Development of the CR929 Aircraft
The project was initiated by the Russian OAK (United Aircraft Corporation) and the Chinese company COMAC in 2014. The total investment for creating the prototype of the wide-body CR929 aircraft was estimated at 13 billion dollars. As early as 2019, a full-scale mock-up was presented at the Zhuhai Airshow. By 2020, the plans included the design of the aircraft and the selection of onboard systems. Estimates for the overall project cost were revised upwards to 20 billion dollars. It was expected that around 1000 aircraft would be built over a 25-year period. In 2023, it was announced that the Russian side was no longer participating in the project, and the further development was taken over by the Chinese company COMAC.
7. Construction of a Cement Plant in the Penza Region
The project was implemented by the company “Asia-Cement.” The construction cost of the cement plant was estimated at 370 million dollars. Raw materials for production were planned to be supplied from the Sursko-Mayskoye deposit. The designed capacity of the plant was 1.86 million tons of cement per year. The Russian Vnesheconombank financed the project. In addition to its own funds, it provided the company “Asia-Cement” with money obtained from Chinese banks. The construction of production facilities took place from 2010 to 2013. In 2014, the cement plant reached its design capacity.
8. Construction of the Huadian-Teninskaya Thermal Power Plant in Yaroslavl
The agreement to build a 450 MW thermal power plant in Yaroslavl was signed in 2010. The project involved OAO “TGC-2” (51% of shares), the China Huadian Corporation (49% of shares), and the Bank of China ICBC. Land works began in 2012. A total of 20 billion rubles was spent on implementing the project. The main equipment for the power plant was gas turbines with generators from the German manufacturer “Siemens.” The power station started operating in June 2017. In 2018, OAO “TGC-2” sold a significant portion of its shares. The construction of the power plant became the largest project in the field of power generation between Russia and China.
9. Construction of the Nizhneleninskoye-Tunzian Railway Bridge
The construction of a bridge over the Amur River near the settlements of Nizhneleninskoye and the city of Tunzian was planned as part of a project to strengthen trade and economic ties between Russia and China. The total length of the crossing is 2.2 km, with 309 m on the Russian territory. This is the first railway bridge between Russia and China. The total cost of the project was 9 billion rubles. In 2018, the connection of the supporting parts of the Russian and Chinese parts of the bridge was successfully completed. The project provided an opportunity to strengthen the trade and economic ties between the countries and create transport infrastructure for further increasing the export of Russian enterprises’ products to the Far East.
10. Construction of the Federation Multifunctional Complex
The construction of a new facility in the business center was entrusted to LLC “ChinaStroy.” The Federation Multifunctional Complex includes two towers: “Vostok” (95 floors) and “Zapad” (63 floors). The Chinese corporation CSCEC participated in laying the foundation of the buildings and erecting the reinforced concrete frame. The construction of the “Zapad” tower was completed in 2009, and the “Vostok” tower in 2017. The total area of the complex is 442,915.2 sq. m.
11. Electricity Supplies from the Far East to China
The project to increase the volume of electricity supplies from Russia to China was approved in 2005. Its implementation was carried out by OAO “UES of Russia” and the State Grid Corporation of China. Within the project, several power lines (110-500 kV) were built in the Far East. In 2018, the capacity of the power lines reached 6-7 billion kWh per year. In 2012, Russia and China signed a contract for the supply of electricity until 2037.
Russian-Chinese Investment Funds
To coordinate investments, Russia, represented by the Russian Direct Investment Fund (RDIF), and China, represented by the China Investment Corporation (CIC), have established a special Russian-Chinese Investment Fund. By September 2023, it has allocated approximately $170 billion to implement 79 projects in various sectors of the economy. In 2022 alone, $13 billion was attracted to finance projects in the Russian Far East. Russian companies are investing in various sectors of the economy that became available after the departure of US and EU companies in 2022.
To implement new projects in 2018, the China-Russia Regional Development Fund was also created. Its priority is to finance projects in logistics, transportation, energy, and agriculture within the framework of extensive programs aligning with the EAEU and the comprehensive infrastructure project “One Belt, One Road.” The main investors in the fund are major Chinese corporations such as SPIC, CNNC, and CMEC. The target capital of the regional development fund is $750 million.
Summing Up
Joint projects within the framework of business cooperation establish a solid foundation for the economic development of both Russia and China. In the future, an increase in the trade balance of the two countries and the volume of investments in federal and regional projects can be expected. There is also an anticipation of expanding cooperation in other sectors of the economy. In addition to energy, metallurgy, and mining, Russia and China have good prospects for developing partnership relations in agriculture and the high-tech sector.
Разрабатываем Стратегии для собственников бизнеса в целях оптимизации группы компаний, решения нестандартных задач и продажи активов. Оказываем услуги по сопровождению сделок M&A, управлению непрофильными активами и проектами в целом.
