It is difficult for Russia to get rid of the role of China's "raw material appendage"

According to statistics, in the first three quarters of 2021, the total trade turnover between the Russian Federation and the PRC reached $ 102,5 billion. At the same time, the parties reduced the use of the dollar in mutual settlements from 90% to 46%. It sounds very optimistic, but if you look at the structure of the trade, then it leads to rather sad thoughts.

We often hear that Russia is a raw material appendage of the West. Say, we drive oil, gas, metals and other natural resources for export, and in exchange for petrodollars we buy everything we need. "Gaidarovschina" in its purest form, about which we have recently reasoned... In 2014, the Kremlin tried to make a so-called "pivot to the East", where Europe as a strategic partner was to be replaced by China. After 7 years, it can be stated that Russia has become a "raw material appendage" for the Celestial Empire.



Let's see what is the structure of our mutual trade.

What is Russia buying from China? Yes, almost everything that he produces: electronics, household machinery, clothes, toys, cars and accessories for them, devices, machine tools, industrial equipment, etc. The Chinese even export some food products to the Russian border regions. It can be concluded that, in a sense, the Celestial Empire has really replaced Europe for us as a supplier of products with high added value, although of significantly lower quality than in the West. Well, Chinese cars or machine tools cannot be compared in reliability, for example, with German ones.

What is Russia exporting to China? In principle, everything is the same as for Europe. These are mineral raw materials, including oil and products of its processing, gas, timber, coal, ore, food. In particular, Russian cereals, dairy products, honey, eggs, sugar, butter, furs, meat and seafood, art and collectibles are highly valued in the PRC. I just want to add the classic "hemp and flax".

Since oil and gas is “our everything” in the modern Russian Federation, it is necessary to tell in more detail about the export of hydrocarbon raw materials to the PRC. In 2014, President Putin gave the go-ahead for the construction of the Power of Siberia pipeline as part of a demonstrative "pivot to the East". Starting from 2019, gas supplies from fields in Yakutia to Primorsky Krai and further to China have been going through it. The maximum design capacity of the gas pipeline is 38 billion cubic meters per year. The price of "blue fuel" in the export contract is tied to oil quotations, so today it is very modest, amounting to only $ 171 per 1 cubic meters. The tax breaks given to Gazprom for the payment of mineral extraction tax help keep the Power of Siberia afloat. How profitable it is for the Russian budget is another interesting question.

Great hopes are pinned on the recently opened Amur gas processing plant in the Far East. It will separate the associated gases ethane, propane and butane from methane, and process the feedstock into ethylene, polyethylene and polypropylene. It is assumed that the products of chemical processing of natural gas will also be exported to neighboring China. In addition to pipeline supplies, Russia sells liquefied gas to the PRC. Domestic LNG goes to receiving terminals in China along the Northern Sea Route from the Arctic fields of the Yamal LNG project.

The cooperation between the Russian Federation and the PRC in the field of nuclear energy stands apart from resource supplies. Nuclear reactors and other equipment for nuclear power plants are unexpectedly mixed with untreated raw materials and foodstuffs. The second stage of the Tianwan Nuclear Power Plant is under construction in the Chinese city of Lianyungang. It was created according to a Russian project and is recognized as one of the safest in the world. The first two power units, which were built by Rosatom, have already set a record among Chinese nuclear power plants for the duration of non-stop operation during the first fuel cycle. Currently, the state corporation is building power units 7 and 8 for the Celestial Empire. In addition, Beijing gave Moscow a contract for the construction of two power units at the Xudapu nuclear power plant. Rosatom will also participate in the development of the Chinese CFR600 fast neutron demonstration reactor. The company will be able to earn at least $ 1 billion from the supply of the elements of this reactor.

Note that, unlike Turkey with its Akkuyu nuclear power plant, China buys reactors and other equipment for nuclear power plants from Russia for real money. Also, Rosatom's income will be formed from the subsequent maintenance of nuclear power plants and the supply of nuclear fuel. The presence of such advanced technologies in the field of energy allows our country not to slide down to the level of purely "raw materials".

What conclusions can be drawn? There is nothing wrong with making money by exporting food, and it is good that Russia has something to offer China. But it would be much better if we systematically switched from the supply of raw materials to the export of products of its internal processing. By selling hydrocarbon fuels, ore and timber to China or Europe, we only contribute to development economics our direct competitors. It is necessary to invest in our own industry and infrastructure, reducing the critical dependence on the West and the East.