Today, the world economy is in the stage when “economic development of individual countries is increasingly dependent on the nature of their relationships with major economic centres” [1, p. 79]. At the beginning of the 21^st century, new “centres of power” emerged in Asia around China, India, Brazil and Iran” [2, p. 161]. For this reason, inter alia, economic cooperation between Russia and China is becoming particularly important in the new millennium. Indeed, Russia and China are the two biggest powers in the world in size and population respectively, the permanent UN Security Council members and the nearest neighbouring countries with the economies in transition. However, in the context of globalization neither is self-sufficient, both having certain resource constraints hindering their economic growth. Together, they have mutually complementary geo-economic potentials and economic factors, which became a key prerequisite for their relatively rapid political rapprochement at the turn of the century.

Results

Foreign trade is the main structural component of Russian-Chinese economic relations. According to the Federal Customs Service, the top trading partners of Russia in January-December 2015 included China, the trade turnover with which amounted to US $ 63.6 billion (its share in the total turnover of the Russian Federation being 12.1%), Germany – US $ 45.8 billion (8.7%), the Netherlands – US $ 43.9 billion (8.4%), Italy – US $ 30.6 billion (5.8%), Belarus – US $ 23.9 billion (4.5%), Turkey – US $ 23.4 billion (4.4%), the United States – US $ 21.0 billion (4.0%), Japan – US $ 21.3 billion (4.1%), the Republic of Korea – US $ 18.0 billion (3.4%) and Ukraine – US $ 15.0 billion (2.8%). The data are presented graphically in Figure 1:

 Figure 1. The largest trading partners of the Russian Federation, January-December 2015

Source: compiled by the authors based on [3].

Among the largest Russian-Chinese trade and economic cooperation projects are:

1. Construction and commissioning of the Tianwan Nuclear Power Plant in the city of Lianyungang in Jiangsu Province. The master plan for the Tianwan Nuclear Power Plant, which is by far the largest Sino-Russian economic cooperation project, envisages construction of a total of 8 power generating units. Since 2007, two units have been commissioned.

2. Construction of the Baltic Pearl – a microdistrict in Krasnoselsky District in St. Petersburg. The Baltic Pearl is one of the largest projects in St. Petersburg involving foreign capital to construct a large multifunctional complex, which is designed to cover an area of 205 ha and accommodate more than 35 000 residents. The project investor is China.

3. Development of the Kyzyl Tashtyg polymetallic ore deposit in Tuva. The project envisages construction of an ore mining and processing complex.

4. Construction of the Amazar timber processing complex in Zabaikalsky Region, which is to become one of the largest deep wood processing projects in East Siberia. The project investor is Sinban Heilongjiang International Investment Corporation. The planned amount of Chinese investment is US $ 457 million.

5. Construction of a heat power plant in Yaroslavl Region. Chinese investment is projected at US $ 500 million. The project involves joint construction and operation of thermal power plants with a capacity of 450 MW.

More than 30 agreements with Russia were signed by a Chinese delegation headed by Prime Minister Li Keqiang towards the end of their visit to Moscow on 13 October 2014 [4]. The agreements extend cooperation between the two nations in a number of areas [5].

On the whole, in recent years the bilateral trade and economic relations have become more vibrant, as reflected by higher turnover growth rates, enhanced investment cooperation, intensified inter-regional and cross-border relations and noticeably greater interest of the Russian and Chinese business communities in mutual cooperation.

Bilateral economic cooperation should be mutually beneficial and therefore strive to achieve a balance of domestic and foreign as well as short-term and long-term interests of both sides. Thinking of optimizing the balance of the two countries’ foreign economic interests, it is necessary to focus on our common and specific features. Our common characteristics include:

- a transitional character of our economies: from producers’ dependence on the government in the planned economies to government regulated market aggregation and movement of the factors of production;

- a historical background of our economic cooperation, which has been quite fruitful ever since the 1950s and 1960s;

- a lengthy common border (about 4300 km) with ensuing opportunities for trade, transportation, communications etc;

- other geo-economic and geopolitical factors objectively bringing our countries closer to each other in a new multipolar world.

Russia’s specific economic characteristics as compared to China include:

- reduced export potential due to the disintegration of the Soviet Union and the collapse of the existing territory-based labour division system with a number of large and medium-sized export-oriented enterprises, particularly in heavy engineering, transportation engineering and the defence industry, which operated below capacity or had to suspend production in the 1990s;

- insufficiently up-to-date and insufficiently sustainable commodity composition of the Russian exports inherited from the Soviet Union, whose foreign economic policy was focused on exporting energy and other non-renewable natural resources, raw materials and low value added products;

- oversaturation of the Russian market with imported consumer goods, coupled with lack of proper motivation and government incentives for domestic producers working towards import substitution.

The following challenges of China’s economy must be highlighted in the context of this research:

- a demographic challenge (overcrowding, redundant labour force and high population density, particularly in the regions in Northeast China neighbouring the Russia Federation);

- a food challenge (weak production base of the country’s agriculture, scare ever-shrinking land resources, absolute dominance of manual labour in crop production);

- a raw materials challenge (the world’s largest coal supplier accounting for about 45% of the global coal exports, China however has nearly 35 times less plentiful oil and gas reserves than Russia, a substantial reduction in the country’s natural resources predicted by experts for the next 10-20 years being a compelling factor encouraging China to import the needed raw materials and derived products from Russia) [6];

- a challenge of intensifying the country’s economic growth, whose high rates are currently being achieved mostly extensively, with direct labour productivity remaining low and energy and capital intensity of production staying high;

- a quality challenge faced by exported Chinese products, whose insufficient compliance with international standards is undermining their competitiveness on the world market, especially now with the global supply exceeding the demand;

- a challenge of technical and technological upgrading of the country’s production and enhancing knowledge intensity of its exported products, fuelling, among other things, China’s continued interest in cooperation with Russia in science and technology.

Conclusions

On the whole, the study of the common and specific features of the two economies as well as the challenges faced by Russia and China today clearly shows that the two countries are highly interested in tackling the existing imbalances by intensifying their economic cooperation with each other.

According to the Concept of Long-Term Socio-Economic Development of the Russian Federation Until 2020, economic relations with China as one of the leaders of the global economic growth will be developed in a balanced manner in the following priority areas:

- promoting Russian engineering products on the Chinese market with an emphasis on Russian companies’ participation in the modernization of China’s industrial base and transport infrastructure as well as the development of the Chinese power industry, including nuclear and electrical power networks;

- expanding exports of grain, dairy products and other agricultural commodities;

- removing barriers hindering access to the Chinese market of Russian metallurgical products, chemicals as well as telecommunications goods and services;

- enhancing investment cooperation to develop border area infrastructure, transportation and distribution networks, agricultural production and storage etc;

- deepening cooperation in education, research and development;

- strengthening fight against the shadow economy and infringements of intellectual property rights [7].

“A strategy is a general plan of any activity; it covers a long period of time and outlines ways to achieve a comprehensive goal” [8]. According to Russia’s Strategy 2020, its comprehensive goal regarding China lies in enhancing economic cooperation between the two nations.