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Deputy Prime Minister Alexander Zhukov called on Chinese investors to invest more actively in the Russian timber industry
Russia intends to more actively attract Chinese investment, including within the framework of special economic zones (SEZs) being created in our country. “Taking into account the experience accumulated in China in the functioning of such entities, the development of dialogue within specific SEZs seems very timely and promising,” said Deputy Prime Minister Alexander Zhukov yesterday in Shanghai, where, together with Deputy Prime Minister of the State Council of the People's Republic of China Wu Yi, he held a regular meeting of the commission on preparation meetings of the heads of government of the two countries (Mikhail Fradkov arrives in China tomorrow, November 9). According to Deputy Prime Minister Zhukov, Russia is interested in “promising, multi-year projects both in technology development zones and in industrial production zones.” In Mr. Zhukov’s opinion, Chinese companies could pay attention to the SEZs in Tatarstan and Dubna, where specialists from China have already visited.This is not to say that there is no Chinese investment in Russia. For example, the “Baltic Pearl” residential microdistrict is being built in St. Petersburg (the volume of investment from the Chinese side within the framework of this project should amount to $1.1 billion), and in Moscow the Chinese business center “Park Huaming” is being built. However, this, according to the parties, is clearly not enough. By the beginning of 2006, the total volume of accumulated Chinese contract investments in Russia amounted to $977 million. The share of capital investments in Russia by Chinese businesses, which now have enormous investment opportunities, is extremely small. In the total volume of accumulated investments, it is, Mr. Zhukov admitted, only one percent.
The investment presence of Russians in China today is characterized by the following data: the total number of approved projects is 1849, the volume of contract investments is $1.4 billion, of which $541 million has been practically used. Russian business is investing in China in the processing of agricultural products, production of chemical goods, processing of mineral raw materials, production of transport equipment, as well as in construction, provision of transport services.
Deputy Premier of the State Council of the People's Republic of China Wu Yi named nuclear energy, biotechnology, and space among the most promising areas for investment cooperation in China. The parties hope that the expansion of the flow of mutual investments will be facilitated by the Russian-Chinese Week of Promotion of Investment Cooperation, opening on November 9 in Beijing, as well as the 3rd Russian-Chinese Investment Forum. The agreement on the encouragement and mutual protection of investments, which is expected to be signed following Mikhail Fradkov’s visit to China, will also play a positive role.
As Alexander Zhukov and Wu Yi said yesterday, the parties are fully capable of fulfilling and even, as the Russian Deputy Prime Minister emphasized, “significantly exceeding” the previously set goal of bringing the level of Chinese investment in Russia to $12 billion by 2020.
Alexander Zhukov considers Chinese investment in Russian timber processing to be a very profitable business. So far, Russia exports almost exclusively round timber to China. The share of lumber is only 5%. The Russian government intends to change the situation. It has already been decided to build two wood-processing pulp and paper mills in the Chita region and Khabarovsk region using Chinese investments. The total investment volume is more than $500 million. Wu Yi asked Alexander Zhukov that the Russian government establish a preferential regime for the import of Chinese equipment to these enterprises, and also simplify the entry and exit procedure for Chinese specialists.
The largest Chinese private automobile manufacturer, Great Wall, intends to invest its $100 million in Russia. Moreover, it intends to locate car production in the special economic zone of Tatarstan, the city of Yelabuga, where Mr. Zhukov invited the Chinese yesterday. Back at the end of September, Russian Minister of Economic Development German Gref stated that regarding the Great Wall project in Yelabuga, “we, for our part, have made all the fundamental decisions, but technical issues remain.” Then the minister said that a final solution to the issue could be expected during Prime Minister Mikhail Fradkov’s November visit to China.
Yesterday, Alexander Zhukov and Wu Yi talked about another brainchild of bilateral investment and innovation cooperation - the Russian-Chinese technology park "Druzhba" in Moscow, which is being created on the basis of the scientific park of the Moscow Energy Institute in collaboration with Harbin Polytechnic University. According to Wu Yi, the Chinese side selected 15 out of 52 enterprises that expressed a desire to work in Druzhba. As in the case of pulp and paper mills, they asked to make life easier for these companies in Russia: to give the technology park the same benefits regime as laid down for enterprises operating in Russian special economic zones.