Legitimate Russian businesses and investors in China are reporting difficulties in being able to open or operate their bank accounts in the country, apparently due to the effect US sanctions are having on the international business environment. Dezan Shira & Associates report that their Russian clients in Beijing and elsewhere in China are unable to access banking facilities, or establish accounts as Chinese banks are unwilling to operate them under threat of retaliatory punishments from the US. For the small number of Chinese banks that are prepared to offer services, the corresponding (clearing) bank is declining transactions.
Economy & Politics
Chinese State Council Premier Li Keqiang has stated that trade between Russia and China will reach US$100 billion. “There are huge prospects for Russian-Chinese trade and economic cooperation and there is no doubt that trade can reach $100 billion,” Li said at a press conference.
China was Russia’s largest trade partner. In 2017, trade between Russia and China grew by 20.8 percent year-on-year to reach US$84 billion. Chinese exports to Russia increased by 14.8 percent to US$42.9 billion, while imports from Russia increased 27.7 percent to US$41.2 billion, according to China’s General Administration of Customs. That means Russia is one of the few countries to have a relatively balanced trade accord with China.
Construction of the Nizhneleninskoye-Tongjiang railway bridge is expected to be completed this year, together with other cross border infrastructure programs aimed at enhancing Russia’s connectivity with China, Central Europe, and Central Asia, according to senior officials of northeast China’s Heilongjiang Province. The Nizhneleninskoye-Tongjiang bridge, which crosses the Amur River in the far northeast corner of Russia and China, aims to enhance Russia’s connectivity with China, and the Belt and Road routes.
Heilongjiang is a landlocked province, and the bridge will help connectivity for Russian goods to be processed in China then shipped onto markets in Japan, South Korea, and North America via the Primorye-1 Corridor.
Two major recent events have begun to impact EU attitudes towards Russia as the reality of unpredictable weather together with an increasing trade unreliability with the United States has jolted European nations out of the rut of anti-Russian views. The US has damaged its credibility with the EU and its other trade partners, as President Trump, reacting to protect a declining industry (as he did with coal) to “make America great again”, has raised import tariffs for steel and aluminium – in an attempt to bring back jobs and to protect his ratings. Yet, even as he insists that these are necessary measures to protect against what he calls Chinese dumping on US markets, the latest data from the US Department of Commerce actually shows that Canada and the EU are the largest suppliers of steel to the US, and not China.
Russian GDP per capita income set to rise to be three times higher than China’s
Russian President Vladimir Putin gave his annual address to the nation yesterday, with the economic and business sectors receiving some much needed boost. “Russia must not only firmly entrench itself among the world’s largest economies but, by the middle of the next decade, increase GDP per capita by half,” President Putin stated.
That gives Russia a target of US$16,650 GDP per capita income to achieve by 2025, comparable with several EU nations today and significantly higher than EU countries such as Lithuania, Poland, and Hungary. It is also about three times higher than China’s existing GDP per capita figures.
President Putin also said Russia needed to increase spending on healthcare to five percent of gross domestic product. He set the targets during the domestic policy portion of a speech in which he also adopted a stance consistent with that of global institutions such as the World Bank, who have said that Russia must improve living standards and lift state spending on education and healthcare, both of which currently account for less than four percent of GDP. Continue reading…
Russia is well along the development path to establishing a Gambling Zone in Crimea, according to the regional head, Sergey Aksenov. He told reporters yesterday: “the gambling zone is to start operating [in Crimea] by September 2019”. The decision to establish such an enterprise was taken at the end of 2017, while a a preliminary location has already been decided upon.
Aksenov reported that the gambling zone has an investor that is ready to join in the project, but, considering the sanctions, he would withhold details for now as discussions are still on-going. “There is a large operator that is ready to join in the project implementation. <…> There are some aspects, chiefly linked to the sanctions regime, so there is a need to preserve the incognito for the one that will be doing it.”
US Needs to Decide Whether Unproven Allegations Or North Korean Missiles Are More Important after Latest Russia Wind Up
The United States has issued a “Kremlin list” of close associates of Russian President Vladimir Putin, naming 114 Russian politicians and 96 businessmen. It includes ten Russian ministers, such as Prime Minister Dmitry Medvedev, Defense Minister Sergei Shoigu, and Foreign Minister Sergei Lavrov among other high-profile officials. Though the new report does not automatically impose new sanctions, it paves the way for more anti-Russian restrictions as international banks will now be looking to limit access to any overseas accounts held by such individuals. The list was compiled under the U.S. Countering America’s Adversaries Through Sanctions Act (CAATSA), and released apparently in retaliation for Russian meddling in the previous US election campaign – despite there being no actual evidence released thus far that this took place.
Economic Counseller Maurice Obstfeld of the International Monetary Fund (IMF) has stated that Russia is among primary sources of global GDP acceleration along with the United States, Canada, Brazil, and Turkey.
That position was immediately echoed by Kirill Dmitriev, chief executive of the Russian Direct Investment Fund (RDIF), who commented:”Statements of the International Monetary Fund that Russia will be one of global GDP growth acceleration sources reflects objective realities evolved as a result of skillful monetary and budget policy, industry, and agriculture support measures, and stabilization of global oil prices. We in the RDIF believe that the Russian economy will be one of the most attractive for investments in coming years, and are ready to continue investing together with our partners into promising and quickly growing sectors, such as high technologies, construction of infrastructure, and agriculture.”
Russian President Vladimir Putin has called for the tax on profits realized overseas then repatriated to Russia to be scrapped. A recent amnesty has been in place, although this expired in mid-2016. Russia’s tax laws counter that a 13 percent tax is due on profits remitted back to Russia.
The President also proposed to exempt entrepreneurs who transfer business from abroad to Russia from paying income taxes.
Meeting with a group of Russian MPs ahead of next year’s elections, President Putin said, “The first step is to extend the amnesty period for capital, referring to those external restrictions that do not become smaller, but, on the contrary, appear to have a tendency to increase.”
Chinese Premier Li Keqiang has said on a visit to Moscow last week that China is ready to step up efforts to link the China-initiated Belt and Road Initiative with the Eurasian Economic Union (EAEU) when meeting with Russian President Vladimir Putin. The alignment, Li said, can boost bilateral cooperation in traditional and emerging areas to expand cross-border trade and further develop Russia’s Far East.
China and Russia are making progress in new areas such as the digital economy, technological innovation, and small and medium-sized enterprises while promoting cooperation in traditional areas such as energy, transportation, production capacity equipment, and agriculture, Li said.
The premier said China would like to strengthen coordination with Russia in international affairs and maintain close exchanges under multilateral mechanisms. This includes the Shanghai Cooperation Organization, which will help regional cooperation and inject constructive ideas to global peace and development.