21 August 2002 00:00
REPLIES BY CHAIRMAN OF THE GOVERNMENT OF THE RUSSIAN FEDERATION MIKHAIL KASYANOV TO QUESTIONS FROM THE CHINESE NEWSPAPER RENMIN RIBAO AND THE RUSSIAN NEWS AGENCY RIA NOVOSTI
Question: Esteemed Mr. Premier, please say what you are expecting from the seventh regular meeting of the heads of government of China and Russia? And what concrete proposals aimed at the expansion of trade and economic cooperation between our countries will be put forward at this meeting by the Russian side?
Answer: The seventh regular meeting of the heads of the Russian and Chinese governments will be held in the conditions of a considerable increase of Russian-Chinese trade and economic cooperation. For the third consecutive year the goods turnover has been increasing at a rapid pace, hitting in 2001 a record level of 10.7 billion dollars. In the first half of the current year its growth constituted approximately 20 percent and the volume of trade reached 5.5 billion dollars. This gives grounds to expect that the goods turnover will have reached a new record level by the end of the year.
There has considerably increased the activity of largest Russian companies in the Chinese sector. I can give as examples such projects as the construction of the Russia-China Oil Pipeline, the participation of the Gazprom concern in the project for the construction of a gas pipeline across China between Tarim and Shanghai, the development of comprehensive cooperation in the aluminum industry and a number of others.
Over the recent period, a growing interest was noted on the part of largest Chinese companies as well in the development of ties with Russia. This concerns supplies of goods (with the share of engineering products growing particularly swiftly), investment in such branches of Russian industry as communication and telecommunications, the forest sector, the extraction of commercial minerals (oil and gas), and the development of scientific and technological cooperation.
In the course of the upcoming talks my counterpart, Premier Zhu Rongji, and I will discuss creating stable and predictable conditions for the development of cooperation for the long term. This theme encompasses a broad range of very many-sided questions of bilateral trade and economic cooperation.
Apart from this, we are planning to put forward a number of concrete proposals associated with the implementation of promising projects, from our point of view. They are, for example, supplies of Russian aircraft and helicopters, cooperation in the field of automobile construction, notably: the creation of joint ventures for the production of cars and trucks, the expansion of partnerships in the field of power machine-building. We expect that from the Chinese side too some interesting proposals will be heard with respect to a number of areas of cooperation.
At our past meeting in St. Petersburg in September 2001, Premier of the PRC State Council Zhu Rongji compared Russian-Chinese trade and economic cooperation to a car which has gone through the breaking-in and come onto a fast lane. At our present meeting, if we are to use this image, "this car must undergo a technical examination" in order to enhance its speed and reliability.
Question: Mr. Premier, how do you regard the economic complementarity between China and Russia against the background of the integration of the global economy?
Answer: I consider that the strategic partnership of Russia and China in the economic field is already an accomplished fact today. The intensity of the ongoing dialogue on the questions of trade and economic cooperation is very high. Ever new areas and projects of cooperation are being included in the sphere of our common interests.
So far as the complementarity of our economies is concerned, it should not be understood simplistically without seeing the prospects on the realization of which we should be working now. In our opinion, mutual complementarity means the active utilization of industrial partnerships, the exchange of advanced technologies, the development of investment cooperation, and the joint development of the transportation system.
Question: In your opinion, what tasks are priorities for the improvement of the general setting for trade and economic cooperation between our countries at present? What potential level of trade between our countries can be reached?
Answer: The economies of Russia and China are market economies now. This signifies that for the successful promotion of joint projects we need to see continuous, thorough and painstaking work, in the first place by interested Russian and Chinese enterprises and companies. And it is the task of the governments of the two countries to provide favorable conditions for business activity.
In this connection, we believe, one of the hindrances to the development of bilateral trade and economic cooperation is quite often the lack of full information on potential partners and the legislation of the two countries. To deal with this problem it is necessary to employ the whole complex of available means from specialized editions to systems of electronic data transmission. At present the Russian Ministry of Economic Development and Trade and the PRC Ministry of Foreign Trade and Economic Cooperation are already carrying out joint work on the creation of a Russian-Chinese Internet site to cover the issues of trade and economic cooperation.
Another important question is the system of mutual settlements between partners. Most of the commercial settlements are currently being effected through banks of third countries, which complicates and increases the payment for deliveries made. Active joint work on the establishment of direct ties between banks of the two countries is necessary.
Finally, the transport infrastructure is still insufficiently developed, and not always do the crossing points function effectively on the Russian-Chinese border.
Solving these and other problems as quickly as possible will contribute to the further growth of bilateral cooperation, whose potential we evaluate as sufficiently high.
We are confident that Russian-Chinese trade and economic relations generally have very good prospects. With a high degree of probability it can be predicted that over the next few years the volume of mutual trade will increase further still. Just the implementation of the joint projects in the oil and gas sector, above all the bringing into operation of the Russia-China Oil Pipeline with a capacity of 20-30 million tons of oil per year, will bring in an addition amounting to several billion dollars.
But we should not be captive to the magic of figures. For all the importance of the quantitative indicators it is becoming an even more important task to switch our cooperation to a qualitatively new level when industrial partnerships and investment cooperation will be put at the top of the list.
Question: Does the state policy of intensive development of the Russian Federation's far east and Siberia give a big chance for the rapid increase of the Chinese-Russian trade turnover? When it comes to the development of these regions, to possible cooperation between China and Russia in the labor market, some Russian media show an extraordinary sensitivity, fearing negative political results of such cooperation. Mr. Premier, please say how you comment on such views?
Answer: Yes, we are considering various schemes of cooperation with China in the development of the economy of Siberia and our far east. Much will depend on the character and forms of cooperation which the Chinese partners will be able to offer. The main priorities in this work should be the high economic effectiveness of the projects proposed and the ensuring of employment in those regions.
In its turn, Russia is interested in the participation of our organizations in the implementation of the program for the accelerated development of the western areas of China, primarily in the fields of energy and supplies of construction machinery and equipment.
I think that such cooperation will help the deepening of bilateral economic ties and will set the stage for new forms of the cooperative effort, including on an interregional basis.
As to the prospects of cooperation in the labor market, the fears can be eliminated through ensuring the strict observance of Russia's immigration legislation. We count on effective collaboration in this direction with the appropriate Chinese structures.
Question: In your estimation, what role are small commercial firms playing in trade between our countries? What deficiencies do you think are present in the activity of these firms? What measures will the Russian government take to switch the business of these firms onto a track corresponding to international norms?
Answer: A considerable part of the goods being imported into Russia comes via the channels of the so called unorganized trade. These goods, as a rule, are being brought in by small Chinese and Russian firms with the violation of customs rules and do not comply with either technical or sanitary norms. Unfortunately, all of this undermines the reputation of high-quality and inexpensive Chinese goods among Russian consumers.
We agree with our Chinese colleagues that the time has come to establish order in this sector. A new Customs Code is currently being prepared in Russia. The Government of the Russian Federation is considering regularizing the procedure for the importation of goods by natural persons. Other measures will also be taken, which will help to switch this form of trade onto a civilized track. I want to stress that we do not intend to prohibit this form of trade. This question has not only an economic, but also a social dimension and affects the interests of a large number of both the Russian and Chinese citizens engaged in this business. And this fact has to be taken into consideration.
Question: Mr. Premier, please acquaint Chinese readers with the present day Russian economy. What are, in general outlook, the plans of your government? Concern about the economic development of the state and the satisfaction of the current needs of citizens - are these your chief priorities?
Answer: The Constitution of the Russian Federation defines the economy of Russia as socially oriented. Such a definition conditions the special attention of the state to the social sphere, where the tasks have been set of providing conditions making it possible to ensure the general accessibility and the socially acceptable quality of basic, social services in the fields of education, health and culture, of enhancing the protection of socially vulnerable sections of the population through rendering state support more targeted and forming legal and institutional foundations for the development of institutions of the social and cultural sector. A separate important objective one can say is improving the quality of the provision of pensions for citizens.
The possibility of the fulfillment by the government of its social commitments directly hinges on the state of the economy of the country. Russia's economy has since the beginning of the 1990s gone through a difficult transformation stage. The legacy of the Soviet economy - highly monopolized, extensively developed, with low labor productivity and considerable structural disproportions - had predetermined the difficulties of the transitional process in the economy and the high social "cost" of reforms. The period of the transformation decline and the reformation of the economy ended in the crisis of August 1998.
Since 1999 the economy of Russia has been demonstrating a not bad rate of economic growth, hitting 9 percent in 2000. In 2001 the increase of GDP constituted 5 percent, and fixed capital investment rose by 8.7 percent. There takes place the leading growth of real cash incomes of the population (by 5.8 percent for the year 2001 as a whole) and of the consumption of goods by the population (the retail trade turnover increased by 10.8 percent).
Nevertheless, the situation in the economy now is rather complicated because of the continuing structural disproportions in the economy as well as because of the insufficient development of a number of market institutions (in the first place the stock market and the banking system). This kind of situation necessitates a vigorous pursuit of reforms in all the fields of the economy and the social sector.
In order to ensure the purposeful and systemic character of reforms the government has worked out and endorsed a medium-term program of economic and social development (for the 2002-2004 years), on the basis of which detailed action plans are annually being drawn up.
Among the questions to the solution of which the Government of the Russian Federation pays special attention one can single out the following:
- improving the well-being and social protection of the Russian citizens;
- carrying out a comprehensive judicial and legal reform;
- perfecting the tax policy;
- lowering the administrative barriers in entrepreneurial activity;
- carrying out a reform of the natural monopolies;
- increasing the investment attractiveness of Russian companies in the international market, and raising the level of corporate governance;
- increasing government support for small businesses;
- carrying out reforms of local self-government.
Question: Of course, financial oligarchs exist not only in Russia. But in the last few years the international press has been paying considerable attention to the Russian oligarchs. What influence do they exert on the economy and the process of decision making by the Government of the Russian Federation? What is the fate of the oligarchs and their influence on the economy as the market character of Russia's economy becomes further enhanced?
Answer: In any countries, including in the most developed ones, the representatives of big business exert considerable influence on the political and economic decision making. Up until recently there really existed in Russia the problem of some members of big business being "closer" to the representatives of authority.
At present the relationship between big business and authority has been taken out of the semi-shadow position into "light". Business has received legal, transparent, socially controllable methods of influence on authority through the associations of entrepreneurs (the Russian Union of Industrialists and Entrepreneurs, the Chamber of Commerce and Industry), as well as through the Business Council attached to the Government of the Russian Federation.
This situation makes it possible to take into account the interests of business as a whole when formulating economic policies and, unquestionably, is a positive factor of economic development.
Question: It is known that Russia intends to enter the World Trade Organization. How do you assess the process of current negotiations between Russia and members of the WTO?
Answer: Accession to the WTO is one of the priorities of the Government of the Russian Federation.
Russia is striving to intensify the accession process. The main criterion determining the possible timeframe for accession is the elaboration of acceptable conditions of our country's membership in the WTO. We proceed from the assumption that at the end of the day a reasonable balance should be achieved of the rights and obligations of our country in this international organization.
At the present time the Russian side is reaching the concluding stage of the accession process. It is necessary to stress that at this stage of negotiations there remain the most complicated and problem issues which can be solved if not only Russia, but all the other concerned parties show a sufficiently balanced and pragmatic approach.
Speaking of the negotiation process, I cannot fail to note the constructive stand which China holds at the bilateral negotiations on Russia's accession to the WTO. Though our delegations began the negotiations only several months ago, we believe that there are all the prerequisites for these talks to be successfully completed soon.
Question: After the events of September 11 the role of Russia as an energy power has increased. How do you assess the process of the development of Russia's energy industries from the point of view of the general economic development of the country and the process of the integration of the energy industries of the Russian Federation into the world energy market?
Answer: After the events of September 11 world consumers began to actively search for ways of diversifying the import of energy resources with a view to increasing the reliability of supplies and stabilizing the world market.
Russia with its enormous reserves of hydrocarbon raw materials and a powerful fuel and energy sector is today one of the main factors of stability of the energy market of Europe. At the present time Russia is the world's first producer of natural gas, and second - of crude oil.
Russia is also interested in diversifying its energy exports. In order to elaborate coordinated positions on the measures of cooperation in the energy field the Russian side is holding consultations within the framework of the Russia-European Union energy dialogue. In October 2002 a Russia-USA energy summit is due to be held; it will be devoted to cooperation in the oil and gas industries of the two countries. Russia is also in continual contact with OPEC and independent oil producers with a view to maintaining stability in world energy markets.
One of the promising ways of export of Russian energy resources is the dynamically evolving market of the PRC. Russia has long since been successfully cooperating with China in various branches of the fuel and energy sector and intends to comprehensively develop that cooperation.
The fuel and energy sector plays the most important role in the economic and social development of Russia, forming a considerable share of the tax and foreign exchange revenues of the country. It will retain this importance over the long term as well. At present the elaboration is being completed of the Russian Energy Strategy for the Period Till 2020, which must determine the basic guidelines for the development of the industries of the sector, as well as the role and place of Russia in world energy markets.
As part of this work, proposals will be worked out for perfecting the legislation in the domain of taxes, resource use and PSAs (production sharing agreements), which must establish equal conditions for all market participants, create a favorable investment climate, facilitate the development of entrepreneurial activity and generally ensure the strengthening of the energy security of the country and accelerate the economic growth of Russia.
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