Cooperation between China and Urals has Brilliant Future

02.09.2009 — Analysis

In what spheres are large scale joint projects expected? Should Urals enterprises fear the competition from the Celestial Empire? Is there economic confrontation between Russia and China? How many Chinese people are working in the Urals? These and other questions are answered by Xie Jinying, the Consul General of the People's Republic of China in Ekaterinburg, in the interview given to RusBusinessNews.

- Mr Xie Jinying, how actively are the economic bonds between China and the Urals region developing today?

- Economic relations are developing successfully. The trade turnover is growing every year. In 2008, the volume of trade between the People's Republic of China and the Sverdlovsk Oblast had amounted to almost 800 million US dollars. Today cooperation is developing mostly in the sphere of retail, construction, and agriculture. I do not think this is enough as the Urals is one of the most economically developed regions of the Russian Federation. There is a very powerful industrial base established here, there are large enterprises here, science and technology are rapidly developing. So, I would say that the prospects for our cooperation are excellent.

In the future we must develop cooperation in the spheres of energy saving, timber processing, machine building etc. We could jointly produce construction materials, develop and implement high technologies.

The Urals and the Chinese industrial companies maintain close economic contacts. In 2008, for instance, Uralmash Machine Building Corporation has signed an agreement with a group of heavy machine building companies from Guangzhou. The Ural Optical and Mechanical Plant has established a subsidiary company making geodetic instruments in China. This is why the cooperation between the Sverdlovsk Oblast and China has to move forward reaching ever higher levels.

- Nevertheless many managers of Urals companies, especially in the machine building sphere, fear competition from China. Recently PRC has been selling machinery and equipment to Russia very actively. These products are cheaper than Russian and the quality is being improved continuously. Is the Russian manufacturers' fear to lose competition in their own domestic market justified?

- In the conditions of the market economy, undoubtedly, there are both competition and cooperation between companies. As you know China today is a large world class producer of machines and equipment. Many Chinese commodities are sold in the global market. There are ever more Chinese-made products in Russia. Companies in the Sverdlovsk Oblast do have an advantage, however, especially in the sphere of heavy machine building.

The most competitive products from China are light industry products and electronic equipment. I think that in the future the establishment of joint ventures in Russia and China will be possible. Unfortunately there are no large scale Russian-Chinese projects being implemented in the Urals so far. There are some small projects in furniture making and timber processing. Chinese trucks used to be assembled at the Novouralsk Amur plant in the Sverdlovsk Oblast; this had to be suspended due to the economic crisis.

- The assembly had ceased because the Russian Government raised customs duties on imported automotive parts. Can we say that now there is an economic confrontation between Russia and China?

- Chinese trucks are about the same in terms of quality and price as Russian trucks, there is direct competition. This is why the actions of the RF Government has undertaken for the development of the domestic automotive industry are perfectly understandable.

- Crisis notwithstanding, the Chinese economy is actively developing. The country has accumulated large financial resources and now has the capacity to purchase assets whose prices plummeted in other countries. Are there any negotiations on the Chinese purchasing large companies located in the Urals region?

- We do not have any such information so far. Of course the economic crisis affects China also. The Republic's economy is export oriented. The global demand has fallen, so the export of Chinese goods has decreased considerably. PRC is seeking to stimulate the domestic demand in order to encourage trade and manufacturing. In the first half of 2009 China's GDP has grown by 7.1%. This is a good result. We are striving to achieve a 8% GDP growth this year.

- As well as the Sverdlovsk Oblast, what other subjects of the Russian Federation seem to you as the most promising in terms of cooperation?

- If we are talking about the Urals Federal District then the Chelyabinsk Oblast is engaged in active economic cooperation with China. This region imports equipment for power stations and metals industry. China itself needs to import special alloys made by metallurgic companies in the Chelyabinsk and Sverdlovsk Oblasts.

- You mentioned the cooperation in agriculture. Not long ago there were reports in Russian media that in the Chelyabinsk Oblast there were several greenhouses found where Chinese nationals were growing vegetables harmful for one's health. Do you follow up on this kind of information? Do you reckon that this was a PR campaign for the support of Russian agricultural producer or are there really some facts of unscrupulous dealings by Chinese nationals in Russia?

- Yes, I have read about this. I think both causes do exist. The majority of Chinese farm workers work in Russian agriculture legally. Some problems do arise, of course. Some problems do arise in China too. Some people want to make more money using dishonest means.

- How many Chinese nationals live in the territory covered by your Consulate?

- According to the data from the Federal Migration Service there are 20,000 Chinese nationals working in our Consular District which covers the Sverdlovsk, Novosibirsk, Omsk, Chelyabinsk, and Tyumen Oblasts, the Krasnoyarsk Krai, the Khanty-Mansiysk and Yamalo-Nenets Autonomous Okrugs. This figure was growing before the last year; it has started to decline in the end of 2008 and the first half of 2009.

Now Chinese nationals have the opportunity to go abroad freely to work, to have a holiday, or to study. The position of the Government of PRC is as follows: Chinese citizens abroad have to obey the law of the country of accreditation, lead normal life, work, and cooperate with local people, thus contributing towards the development of friendship and cooperation of the Republic with other countries.

- When will the Ekaterinburg Chinese Consulate General start issuing visas for those wishing to visit China?

- Up until recently our Consulate General was working out of a hotel and there were no proper conditions for visa issuing. We only moved to the new premises in May 2009, the preparation work is ongoing. I think that in September-October 2009 we will begin processing visas for people from all Russian regions covered by our Consulate. Now the visas for them are issued in the Chinese Embassy in Moscow. Our experience makes us expect that we will be issuing no less than 10,000 travel permits annually.

The interview has been prepared by Pavel Kober