On September 16-18, Premier of the State Council of the People’s Republic of China Li Keqiang paid a visit to Russia. He held a meeting with Russian Prime Minister Dmitry Medvedev and discussed issues for strengthening bilateral trade and economic cooperation. After his talks with Russian President Vladimir Putin, Li Keqiang said that the two countries have enormous prospects for cooperation. This visit came at an important moment for Russia-China relations in the context of tectonic shifts in world affairs, said Eric Li, founder and managing director of Chengwei Capital, in an interview with valdaiclub.com.
In the wake of the Cold War, the economic relationship between Russia and China was mainly between that of a major energy supplier, Russia, and one of the world’s largest energy consumers, China. Geopolitically, the two countries cooperated with the primary objective of deterring Western hegemony.
The world has now changed. The decision by the United States to use aggressive methods to defend its trade interests at the expense of the global trading system has increased the need for the two countries to expand their economic relationship. Trade has been growing and, most importantly, trade in the non-energy sectors has been growing much faster. Trade in services has doubled over the past year. China is opening its market wide to Russian businesses beyond the energy sector: in services, agriculture, finance, and technology. The increase in economic activities between the two countries in non-energy sectors could disproportionately benefit small-to-medium-sized businesses in Russia. This could help develop a weak segment of the Russian economy – the small share of SME’s in the overall economic pie.
In international finance, the United States, beginning in the Obama administration and continuing in the Trump administration, has been aggressively weaponising its dominance of the global financial system and the status of the US dollar as the reserve currency to achieve its political goals and national interests around the world. This has the potential to undermine the functioning of the global financial system and the US dollar’s reserve currency status. China and Russia are probably the only two major powers that have both the independence and the political will to seek to develop much-needed alternatives for themselves and perhaps for the world. As such, the Joint Communiqué signed between the two premiers on September 18th included more specifics on how both countries can collaborate on the BRI and cross-border finance.