“The traditional form of trade is a thing of the past”: Maximov, deputy head of the Ministry of Economic Development, on Russia's partnership with Asian countries

- Today, China is Russia's largest trading partner in Asia. In 2018, the mutual trade turnover of the two countries amounted to $ 108 billion, and, as previously stated, by 2024 the amount should reach $ 200. Timur Igorevich, due to what is it planned to double the volume of trade in these six years?

- In our opinion, it is important to evaluate economic cooperation with China not only in the framework of trade in goods, but also in services.

Thus, if we take into account services, in 2018 the volume of trade between countries is no longer $ 108 billion, but $ 114 billion.

When Prime Minister Dmitry Medvedev instructed us to prepare an action plan to increase mutual trade to $ 200 billion, we just proceeded from the fact that this figure will also include a large integrated sphere of trade in services.

In June, during the visit of Chinese President Xi Jinping to Russia, we prepared and signed a framework document on promoting mutual trade with our Chinese colleagues. Now we are working to prepare a specific list of decisions and deadlines for each branch block.

- At what stage is the discussion now? Which industries will become priority in working with China?

- Already discussed with the Ministry of Agriculture of China cooperation in the agricultural sector. The same work is being done through energy cooperation, industry and the service sector. First of all, we are talking about transport services, tourism, partnerships in the field of information technology and communications.

In September, Prime Minister Li Keqiang’s visit to Russia is planned. During a joint meeting with Dmitry Medvedev, we will discuss concrete actions to implement the plan.

- How is partnership with China in the field of investment developing today? How much money do Moscow and Beijing intend to invest in joint projects in the coming years?

- On the investment line, we also have established regular work with our Chinese partners. A specially created intergovernmental commission operates. Its goal is the selection, monitoring and support of major Russian-Chinese investment projects. In the list that we have formed, there are already more than 70 projects totaling $ 120 billion.

• Timur Maximov on joint investment projects of Russia and China

In particular, one of the projects that we recently discussed in detail is the construction of the Meridian highway along the route Europe - Western China. A private road will connect China, Kazakhstan, Russia and continue to Europe. Chinese partners have an interest in this project. Moreover, its implementation fits perfectly into the logic of the Chinese initiative “One Belt - One Way” on the transport connectivity of the countries of the region.

- How much money is planned to invest in this project?

- According to preliminary estimates, the volume of investments is $ 9 billion. It is clear that it will be rather difficult and wrong to finance such a complex construction by one country. The main economic parameter that will bring the project to an effective level is the cargo base. All parties involved in the project should provide it.

- Together with China, South Korea, India and Japan are also included in the list of Russia's largest trading partners in the Asia-Pacific region. These four countries today account for almost 25% of Russian trade. What is the reason for such interest in Asian markets? How is Russia going to strengthen its position in the region?

- In the next 15-20 years, the region will be one of the main engines of the global economy. Today it is a fast-growing market with great potential and consumer demand, which is why Russia will continue to pay attention to the development of bilateral contacts with the Asia-Pacific region.

On the margins of the WEF, we held negotiations and consultations with our colleagues. With almost all of the above countries, we have ambitious plans.

For example, with India we plan to increase trade to $ 30 billion and bring mutual investments to $ 15 billion in each of the parties.

• Maximov on strengthening trade partnership with Asia-Pacific countries

We are now discussing similar plans with colleagues from the Republic of Korea and with ASEAN countries. We are conducting a dialogue on improving access to our markets for goods, services and investments. In addition, an agreement on a free trade zone (FTA) with Vietnam is already in force, and now we are completing the negotiation process on the establishment of a FTA with Singapore.

- What Russia may be interested in Asian markets today? What are the advantages of our products and services?

- One of the key factors is the competitiveness of our products and a fairly high technological level.

The main competitive advantage that we have is not a cheap labor force, but rather the knowledge-intensive products, that is, the ratio of development and production costs. The backlog that we have and was created back in the Soviet era allows us to take advantage of this advantage and increase the share of goods with high added value in trade with Asia-Pacific countries.

On the example of our trade with India, ASEAN countries or Vietnam, it is clear that the engineering products and services we supply have a fairly high share of added value. The states of the region are well aware of our products and the quality that we offer, therefore they actively consume Russian goods and services.

- You mentioned that negotiations with Singapore on the creation of a free trade zone are coming to an end. When is it planned to sign the contract?

- We have completed the entire negotiation process on an agreement on a free trade zone for goods. A meeting of the Supreme Eurasian Economic Council is scheduled for October 1, where this document is supposed to be signed.

• Timur Maximov on a free trade zone with Singapore

At the same time, Singapore and I are working on a similar agreement in the field of services and investments. I think that by the end of 2019, negotiations will be completed. So, already in 2020 it will be possible to sign and ratify the entire agreement on the free movement of goods, services and investments.

- What other states are planning to conclude similar agreements on a free trade zone within the EAEU in the near future?

- We already have several negotiation areas with a number of countries. Discussions have been launched and will need to be completed shortly. I am referring to Israel, Egypt, and also India.

- The main share of our supplies to the Asia-Pacific countries falls on commodities. What is the reason for this? How can the trend change in the coming years?

Today, in global trade, we are no longer talking about the supply of finished goods to the final market immediately. The world today lives in global value chains. Firms from one country can take advantage of the competitive advantages of another state and create a joint production cycle. This allows you to make a successful product for further deliveries to the global market.

The traditional form of trade, when countries sell finished goods to each other, is already largely a thing of the past. Today, the volume of trade in intermediate goods is about 70% of world trade. This is a key factor that we must consider.