Strengthening the economy of the Russian Federation within the framework of cooperation between the Eurasian Economic Union and the People’s Republic of China

The development of any country's economy is associated with numerous risks and challenges, and relationships with other countries are one of the main elements both for forecasting and in the process of the state's functioning as a whole. Currently, fundamental changes in the foundations of relationships in global trade among leading world powers are being observed, with rapid development seen in relatively young communities and partnerships, the influence and political weight of which will only continue to strengthen and grow. The Eurasian Economic Union [1] is one of the vivid examples of effective partnership between countries, which not only helps to increase trade turnover among the union's member states but also enables to build relationships with other countries more productively. A successful example is the growth of trade turnover between the Russian Federation and the People's Republic of China (PRC), which has already approached the $200 billion mark. Moreover, the Russian Federation, as the largest economically member of the union, successfully develops economic ties with other countries, deepening and expanding cooperation at various levels.

The Eurasian Economic Union

In October 2007, Russia, Belarus, and Kazakhstan embarked on an endeavor to establish a unified customs territory, leading to the formation of the Customs Union (CU). Subsequently, on December 19, 2009, the leaders of these nations solidified their commitment by signing a Joint Declaration marking the formation of the Customs Union. The implementation of the Common Customs Tariff ensued on January 1, 2010. By 2011, the Customs Union of Belarus, Russia, and Kazakhstan commenced regular operations, and on January 1, 2012, seventeen agreements constituting the foundation of the Single Economic Space (SES) took effect. These agreements comprehensively addressed various pivotal aspects of economic integration among the "Eurasian trio," spanning from the coordination of macroeconomic policies to the facilitation of labor migration [2].

It is arguable that the Eurasian Economic Union (EAEU) transitioned into a customs union by 2011. The founding members of the EAEU established it with a specific vision of their enduring political and economic aspirations. Within this framework, its primary aim is to facilitate member states in harnessing the potential of regional economic connections, modernizing their domestic economies, and fostering conditions conducive to entry into global markets. The establishment of a unified marketplace encompassing goods, services, capital, and labor stands as the principal objective of Eurasian integration. Furthermore, supplementary infrastructure supporting Eurasian integration, including the EAEU Court, the Eurasian Development Bank, and the Eurasian Stabilization and Development Fund, is already operational within the EAEU framework.

Presently, as per data from the EAEU's open portal of macroeconomic indicators, mutual trade within EAEU countries, except for Russia, has notably surged in 2022. Intra-regional trade volume (exports) reached $83.3 billion, marking a 14% increase from 2021 [3]. Armenia experienced the most significant surge in exports to the EAEU market, rising by 2.8 times to $2.5 billion. Belarus saw a 38.0% increase in exports to Union countries, totaling $24.1 billion, while Kazakhstan and Kyrgyzstan recorded increases of 20.5% (to $9.7 billion) and 81.7% (to $1.4 billion), respectively [4]. The macroeconomic indicators for EAEU countries and observer nations as of January 2023 are detailed in Table 1.

Based on data released by national statistical agencies, Armenia saw a substantial increase in real GDP, rising by 10.5% in January 2023, while Kazakhstan and Kyrgyzstan experienced growth rates of 5.0% and 4.8%, respectively. Conversely, Belarus witnessed a notable decline in GDP, dropping by 5.0%. Industrial output in Russia and Belarus also contracted during the same period.

Kyrgyzstan emerged as the leader in industrial growth rates among EAEU member states, with a remarkable 7.5% increase compared to the corresponding period last year. In terms of consumer inflation, Armenia and Kyrgyzstan reported the highest levels within the EAEU in January 2023, ranging from 1.4% to 1.5% compared to December 2022.

The mutual trade growth rates surged significantly for all EAEU countries except Russia, attributed to trade flow redirection due to external constraints. Armenia and Kyrgyzstan observed the highest growth rates in this regard.

Table 1. The macroeconomic metrics for the EAEU nations and observer countries as of January 2023.

Indicator	Armenia	Belarus	Kazakhstan	Kyrgyzstan	Russia
Real GDP Growth (preliminary data)	10.5%	-5.0%	5.0%	4.8%	-2.1%
Industrial Production	1.4%	-4.1%	1.4%	7.5%	-2.4%
Consumer Price Index	1.4%	0.8%	1.1%	1.5%	0.8%
Growth Rates of Mutual Trade with the EAEU	184.4%	38.0%	20.5%	81.7%	-1.2%

Thus, despite unprecedented pressure and sanctions against the Russian Federation, the EAEU continues to operate successfully, with the People's Republic of China being Russia's main trading partner.

Sino-Russian cooperation

The enduring and mutually advantageous alliance between Moscow and Beijing spans over two decades. The declaration of the Si-no-Russian "strategic partnership" in April 1996 marked a significant juncture in the foreign policies of both nations during the mid-1990s. Since 2009, China has held the posi- tion of Russia's foremost individual trading partner. In 2018, bilateral trade between Russia and China exceeded $100 billion for the first time, surging to $107 billion, constituting 15% of Russia's total exports and imports [5]. Amid the Ukraine crisis that erupted in 2014, Russia witnessed a decline in trade with all of its top ten trading partners, with the exception of China. Between 2014 and 2019, trade volume between Russia and China experienced a notable increase of 17% [6].

The convergence between Russia and China is attributed partly to their complementary economic profiles: China's insatiable demand for natural resources finds a significant supplier in Russia.

In December 2019, the commencement of natural gas delivery to China via the Power of Siberia pipeline marked a significant milestone. Chinese state-owned enterprises emerge as pivotal stakeholders and primary purchasers of liquefied natural gas from Russian ventures in the Arctic region. Moreover, Russia is witnessing an uptick in its food exports to China.

The recent erection of two bridges spanning the Amur River, dedicated to railway and automobile transportation respectively, serves as a tangible representation of the deepening rapport between Russia and China. Historically, the Amur River delineated the principal boundary between Russia and China, yet until recently, no permanent bridge spanned its course. Many analysts speculate that China's gradual disengagement from the U.S. economy is likely to amplify Beijing's enduring interest in Russian merchandise [7, 8]. Given the potential imposition of trade embargoes and maritime blockades by the U.S. and its allies in the event of a military confrontation with China, Russia's predominantly overland deliveries offer enhanced security.

Russia's pivot towards China, alongside a divergence from the U.S., extends into the financial domain. In 2018, the Central Bank of Russia notably decreased its U.S. asset holdings from 29.9% to 9.7%, while concurrently elevating its Chinese assets from 2.6% to 14.1%. Moreover, the proportion of the Central Bank's dollar reserves dwindled from 45.8% to 22.7%, whereas its yuan-denominated reserves surged from 2.8% to 14.2% [9]. In June 2019, Moscow and Beijing inked an agreement to transition to national currencies in bilateral trade, intensifying efforts to diminish reliance on the U.S. dollar [10].

China maintains a non-aligned stance, eschewing cliques, and advocating for a global community with a shared destiny. It fosters economic development through cooperation, facilitating human progress and shared prosperity. While open to cooperation with the United States, China laments the consistent targeting and demonization it faces from U.S. quarters, along with the propagation of unfounded rumors portraying China as a common enemy of humanity. China asserts its independence and steadfast refusal to comply with directives from any nation that contradict the will of its people, disrupt peaceful cooperation, or risk plunging the world into the abyss of nuclear conflict.

While U.S. leaders avoid direct conflict within their own borders, they maintain a global military presence to pursue their interests elsewhere, exhibiting hegemonic tendencies that garner more disdain than admiration from the international community. Threatening weaker nations serves only to evoke revulsion rather than respect.

The influence of United States to Sino-Russian cooperation

In recent times, the United States has mobilized its entire nation to suppress Chinese enterprises and hinder their growth, with the aim of impeding China's technological advancement and overall progress. This strategy has elicited discontent among the Chinese populace. While it is inevitable that Sino-U.S. relations will deteriorate, the Chinese continue to maintain communication and collaboration with friendly individuals in the United States, striving to uphold cooperative ties with the American people to the best of their ability.

Simultaneously, it is inevitable that the Western world will impose a comprehensive boycott on Russia, leading to a peak in Sino-Russian cooperative relations. As Western nations comply with directives from the United States and refrain from engaging with Russia, China and Russia intensify their collaboration. It is the West that redirects all Russian business towards China. Who should bear responsibility for this situation? The United States encumbers China, suppresses Russia, and seeks to hinder Chinese-Russian cooperation. As a sovereign nation, what authority does the United States possess to dictate terms to the Chinese people and expect their compliance?

While American authorities aim to contain China, there are individuals within the United States who clandestinely foster cooperation with China. They struggle to manage their own populace, yet anticipate that the Chinese will refrain from collaborating with Russia. This stance is inherently unreasonable. We express the hope that those in power in the United States will return to a state of rationality, take necessary actions, and permit free communication between the peoples of China and the United States. They should refrain from employing administrative measures to sanction particular entities, thereby violating their own principles of free trade and undermining their credibility. If a major nation acts in a manner that lacks integrity and exhibits duplicity, can it truly expect respect from others?

Despite the pressures of sanctions and attempts by certain countries to isolate Russia on the global stage, cooperation between the Russian Federation and the People's Republic of China continues to evolve dynamically.

Conclusion

Collaboration within the Eurasian Economic Union (EAEU) offers manifold benefits, including unfettered trade in goods and services, a unified labor market, collective ventures, streamlined customs procedures, uniform standards and regulations, bolstered political stability, and infrastructure enhancement. This framework ultimately facilitates heightened trade levels, augmented competitiveness in the global arena, enhanced product and service quality, increased labor mobility, decreased unemployment, and contributes to regional political stability. EAEU constituents join forces in bolstering infrastructure like transportation networks, energy installations, telecommunications, and more, thereby catalyzing increased investment and job opportunities.

The deepening cooperation between Russia and China within the EAEU holds the potential to uplift other union members in several key dimensions. Firstly, given Russia and China's status as the largest economies in the region, their collaboration can open up fresh avenues for trade and investment for fellow EAEU members. Strengthened economic bonds between Russia and China can precipitate a surge in trade and investment volumes, thereby positively influencing the economies of other nations.

Secondly, Russia and China wield considerable influence on the global stage, and their cooperation can empower other EAEU members to fortify their global positions. Unified endeavors by Russia and China can reinforce the EAEU's presence in international bodies such as the World Trade Organization (WTO) and the United Nations (UN).

Thirdly, cooperation between Russia and China can spur infrastructure development in the region, with potential benefits for other EAEU members. Collaborative investments in various ventures such as transportation networks and energy projects can enhance regional infrastructure and stimulate new avenues for economic advancement.

Fourthly, cooperative efforts between Russia and China can contribute to bolstering security for other EAEU members. Joint initiatives in counter-terrorism and drug trafficking control can enhance regional security.

Therefore, deepening cooperation between Russia and China within the EAEU holds the promise of bolstering trade and investment levels, strengthening global positions, advancing infrastructure, and fortifying security across the region for all union members.