‘Withdrawal of Chinese tech giants from Russia is really possible’

Now Russian-Chinese technological cooperation is becoming more balanced. If earlier there was an opinion that only China needed Russian technologies, now there is a bilateral exchange of innovations. Svetlana Batanova, a senior lecturer at the Financial University under the Government of Russia, told Realnoe Vremya about this. However, according to her, there is a tangible possibility that technology giants from China may withdraw from the Russian market under the influence of Western sanctions.

“Now Russian-Chinese scientific and technical cooperation is becoming more balanced”

According to Svetlana Batanova, under the conditions of sanctions pressure on Russia, it is becoming increasingly clear that not only China is interested in Russian technological developments, but Russia has also begun to show interest in innovations from China.

For example, in early November, the XIV International Airshow China was held in the Chinese city of Zhuhai. According to the expert, 740 companies from 43 countries of the world took part in it. The latest examples of Chinese aircraft construction were also presented there. At the same time, Svetlana Batanova draws attention to that the Russian delegation was most interested in Chinese-made unmanned aerial vehicles (UAVs).

“A distinctive feature of this year is that earlier the undisputed leader that attracted the attention of the whole world was Russian military aircraft. At the same time, new military aircraft of the People's Liberation Army of China, such as J-20, Yunyou 20, and Z-20, were presented, which aroused the interest of all visitors, including among Russians," the expert says.

At the air show, China also presented the new models of BZK005, Wuzhen 7 and Yunying drones, and also announced the YF-209 rocket and space engine. Its peculiarity is that it works on methane, which is cheap to produce, environmentally friendly, safe, non-toxic, harmless to the environment, Svetlana Batanova notes.

“If we move away from aviation technologies, then we all know that, for example, in the field of smartphones, cars and other areas, the Chinese are also actively entering our market," the expert adds.

In addition to military and civilian developments, the Chinese company Noercan presented its developments in the field of cochlear implantation at the VI Russian International Forum of Otolaryngologists. The company has operated on the Russian market since 2017, and its products are used by almost 500 hearing-impaired, the youngest of whom is only one year old, and the oldest is 75 years old. The forum itself was held from October 13 to 14 in Moscow, it was attended by 1,200 specialists from all over the world.

“We can state the fact that now Russian-Chinese scientific and technical cooperation is becoming more balanced. If earlier it meant the transfer of Russian technologies to the Chinese side, now it is more harmonious and developing in both directions," concludes Svetlana Batanova.

“But the withdrawal of some Chinese tech giants, the suspension of projects with Russia are really possible”

Among other achievements of Russian-Chinese cooperation, the expert refers to the September decision to combine efforts to create satellite navigation services between the two countries. The governments of Russia and China have signed agreements on cooperation in the field of the use of global navigation satellite systems GLONASS and BeiDou for peaceful purposes.

“The implementation of this agreement will be a serious step in strategic cooperation between our countries. Ground-based information base stations of the Chinese navigation system BeiDou will be installed in Obninsk, Irkutsk and Petropavlovsk, while GLONASS information stations will be located in Changchun, Shanghai and Urumqi," says Svetlana Batanova.

At the same time, concerns are caused by media reports that the Chinese manufacturer Huawei may withdraw from the Russian market. In particular, at the end of October it was reported that the company had suspended shipments of smartphones to Russia.

“It should be noted that Huawei is already the most long-suffering Chinese company that is regularly 'punished' by Western countries, so it is not entirely clear what else it should be afraid of. But the withdrawal of some Chinese tech giants, the suspension of projects with Russia are really possible," Svetlana Batanova states.

She explains this by that many major Chinese players are tightly integrated into the global economy and are dependent on the West on at least two issues:

  1. regarding the supply of components that are manufactured by Western companies and imported to China;
  2. in the matter of the value of shares that are placed on European and American stock exchanges, any sanctions or even threats of their application will cause a drop in the value of securities.

According to the expert, the situation is aggravated by that from the point of view of Chinese manufacturers, the Russian market is quite small when compared with the European Union or the United States. This state of affairs may lead to that Russian-Chinese scientific and technological cooperation will change its format.

“On the Chinese side, companies that do not have assets and projects in Western countries will participate”

According to Svetlana Batanova, there are several options for changing the format of technological cooperation between Russia and China. For example, the exclusion of companies that are tied to the West from it, or the regionalisation of cooperation.

“For example, on the Chinese side, companies that do not have assets and projects in Western countries, created specifically for cooperation with Russia, will participate in it (scientific and technological cooperation with Russia — editor's note). Another option is the regionalisation of cooperation," the expert says.

Regarding the second option, we can recall the Russian-Chinese Summit on the Digital Economy, Svetlana Batanova explains. It was held not in the world's artificial intelligence and digital economy giants, in Shanghai or Shenzhen, but in the least developed region of China — Heilongjiang Province.

The advantage of this region is its location in the very north of the Celestial Empire. That is why Heilongjiang accounts for the largest volume of interregional relations between China and Russia.

“The main volumes of international activity of Heilongjiang companies fall on Russia. Therefore, it is likely that in the near future the role of Heilongjiang in our relations will grow: Chinese business will create companies there specifically for interaction with our country," the expert concludes.

Russia is becoming an economic appendage of China

In one of our previous materials, Associate Professor of the Department of Economics of the RUDN Marina Reshetnikova told that the current state of Russian-Chinese trade is actually turning Russia is an economic appendage of the “World Factory”.

According to her, this is primarily due to that raw materials are exported to China: fuel, ores, ferrous metals, copper, and technological products are already imported to Russia. This position is confirmed, in particular, by the recent statement of the General Customs Administration of the People's Republic of China that LNG shipments to China increased by 32% in January-October of this year.

“Unfortunately, as sad as it sounds, we are increasingly slipping into the raw nature of interaction. Russia exports raw materials, importing everything from China, from feminine hygiene items and children's toys to high-tech goods, from smartphones to cars," says Marina Reshetnikova.

At the same time, the expert notes, cooperation between the innovative sectors of Russia and China continues to be more formal than real and productive.

Artem Gafarov

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