Positive development

"China-Russia trade development is very positive in 2012 even in the face of the sluggish world economy," Sergey Sergeevich Razov, Russia's ambassador to China, told a news briefing on Dec 18.

Chinese exports through Manzhouli to Russia increased 18 percent year-on-year to $1.63 billion in 2012 while imports from Russia dropped 17.8 percent year-on-year to $4.17 billion, according to the General Administration of Customs.

However, China's trade with Russia, the world's ninth largest economy with a population of 143 million, accounted for just 2.28 percent of China's total foreign trade last year, which increased 6.2 percent year-on-year to nearly $3.87 trillion.

The two countries agreed to expand bilateral trade to $100 billion by 2015 and $200 billion by 2020. China was Russia's largest trade partner in 2011 and 2012 while Russia is China's trade partner with the fastest growth, Vice-Premier Li Keqiang told a trade and investment promotion in 2012.

Feng Yujun, an expert on Russian studies with the China Institutes of Contemporary International Relations, said the trade target can be attained in 2013 if the growth momentum continues. He added that trade structure improved in 2012 as Russian exports of technology and manufactured goods, rather than raw materials, significantly increased while Chinese exports of mechanical and electrical products expanded.

"Contrasting the expanding trade, mutual investment between China and Russia, although it is growing, is not satisfactory and does not match the economic potential of the two countries," Razov said.

China's investment in Russia rose 26.1 percent year-on-year to $716 million in 2011, about 1.04 percent of China's overall non-financial outbound investment in 2011, according to the Ministry of Commerce. The year 2012 saw Chinese investment in Russia jump 117.8 percent while China's non-financial overseas direct investment increased 28.6 percent year-on-year to $ 77.22 billion.

Russia's former first deputy prime minister Soskovets added that Russia is creating a better environment for foreign investment, including input from China.

"China can help Russia in both capital and manpower for Russia to make great progress and further develop the Far East region after its WTO accession. In addition, China's developed electronic and high-tech industries complement Russia's heavy industries well and there are already many Chinese companies joining hands with Russian companies to explore energy and forestry resources in the Far East region," said Soskovets.

Across the border, investments are also heating up in Manzhouli which "has been growing into a bridgehead for investments from China, Japan and the United States to enter the emerging Russian market", Zou said.

Challenges ahead

Wanda Group invested 1.5 billion yuan in 2012 to build a 100,000 sq m commercial plaza, including supermarkets, restaurants and KTVs, which will be put into use in 2014. Meanwhile Beijing Taiai Peptide Biological Engineering Technology Co inked a 1 billion yuan investment in a recent promotion to produce collagen peptide in Manzhouli out of raw materials from ox and sheep bones from Russia and Mongolia.

Russia's accession to the WTO does not necessarily mean the opening of a "golden door" to China because obstacles remain across the border.

"For all the difficulties of the accession process, it would be wrong to assume that the hard work is over. In fact, the main challenges lie ahead," WTO Director-General Pascal Lamy said in a speech in Moscow on Jan 18.

Fu Jianzhong, 62, chairman of Zhejiang Eternal Industry Group, saw the joint company, Khabarovsk Muxing Timber Co established by Fu and Heilongjiang State-owned Chenneng Trade Co in 2003, closed down in March 2007 by a local procuratorate in Russia for alleged timber stealing. Assets worth 15 billion yuan were auctioned following charges of failure to pay taxes while the 49-year business operation rights of a 247,000-hectare forest farm were taken back, Xinhua News Agency reported on Jan 4.

Russia pledged to enhance its business environment from the current 120th place ranked by the World Bank to 50th by 2015 and in the top 20 by 2018, according to a guideline from the Russian Presidential Press and Information Office in late December.

Contact the reporters at lijiabao@chinadaily.com.cn and wangkaihao@chinadaily.com.cn