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China/Russia: Talks Aim At Boosting Trade

Prague, 25 February 1999 (RFE/RL) -- Chinese Prime Minister Zhu Rongji arrived in Moscow yesterday at the start of a four-day official visit aimed primarily at boosting Sino-Russian trade relations.

This is the first visit to Moscow by Zhu -- China's key economic policymaker -- since he was named prime minister last March. Zhu is scheduled to meet tomorrow with Russian President Boris Yeltsin and Prime Minister Yevgeny Primakov and will be accompanied by China's former trade minister and now deputy prime minister, Wu Yi.

The two sides are expected to sign a package of agreements to counter a decline in bilateral trade.

Since the end of the Cold War in 1989, Moscow and Beijing have made substantial progress in resolving long-standing border disputes and have signed numerous military and disarmament agreements. But this success has not extended to their economic relations.

According to Aleksii Voskresensky of the Russia-China Center at Moscow's Institute for the Study of the Far East, Moscow and Beijing are enjoying unprecedentedly warm political relations:

"At the very top, there are no particular problems in Russia-China relations. The aim of the visit is primarily economic. Today, especially after the August [financial] crisis [in Russia], there has been a dramatic drop in Russian-Chinese trade, and so Zhu's visit will be dedicated to economic issues."

Voskresensky also says Zhu's visit is a good opportunity for China to evaluate likely candidates ahead of Russia's upcoming parliamentary and presidential elections.

He also says that Primakov -- himself considered to be a possible presidential contender in 2000 -- is held in high esteem by the Chinese leadership.

"For the Chinese side, Primakov is a key figure. They have long-established ties with Primakov; they know him well. The Chinese side in general supports his policies ... I think that Primakov is a key figure for the Chinese."

On the economic front -- despite the oft-stated desire for greater economic cooperation -- trade between the two countries has actually fallen over the last three years. It would now appear that Yeltsin's plan to boost bilateral annual trade to $20 billion by the year 2000 is unachievable.

Russia's economic decline and a slowdown in China's own fast growth are cited as the main reasons for a drop to $5.5 billion in two-way trade in 1998, down from $6.1 billion in 1997 and from $7 billion in 1996.

"In my opinion, the situation with economic relations is very difficult. In this year alone, trade has slumped by 10 per cent because of the difficult economic situation in Russia, and difficult problems are currently being encountered in China. But I think that significant progress will be reached on a range of economic issues during the current visit."

Over the last decade, Russia has been a ready market for Chinese consumer goods, while China has been chiefly interested in Russia's vast timber, mineral and fuel resources.

China has also become a major customer for Russia's ailing defense industry, purchasing fighter jets, missiles, submarines and destroyers. Indeed, Itar-Tass reports that negotiations on the Chinese purchase of up to 50 Russian Su-30 MKK multi-purpose fighters are well advanced and are due to resume next month.

Among the more than 15 documents due to be signed during Zhu's visit are accords on commercial cooperation, intellectual property, a natural gas pipeline and petroleum deliveries.

Russian Deputy Prime Minister Yuri Maslyukov said Tuesday that cooperation with China in the oil and gas sectors is a top priority, "not just as the joint development of fields but as a comprehensive program for development of powerful energy systems and equipment."

Other issues due to be discussed during Zhu's visit include cooperation in the nuclear power, space and civil aviation industries.

China also plans to set up a trade center and department store in Moscow and will encourage entrepreneurs to boost investments in Russia.

The Russian media report that there are some smaller trade issues to be resolved, centering on the non-payment of some $300 million of debts by Russian companies in Beijing. Also, Zhu is expected to raise the issue of recent raids against Chinese businesses in Moscow by the Russian tax police, in which millions of dollars have reportedly been confiscated.

So far, progress on economic cooperation between Russia and China has been sporadic. Zhu, for example, is expected to discuss with Moscow a proposal for China to send 6,000 loggers into the Khabarovsk region -- in Russia's Far East -- to remove timber from 1.5 million hectares of Siberian forest damaged by fires last year. There are also plans to assemble television sets and other electronic equipment in Russia with Chinese technology and Chinese components.

How far these measures go toward reversing the negative trend in trade relations between the two countries remains to be seen.