China & Russia Propose Vast Eurasian Free Trade Zone & SCO Development Bank

[Shotgunner51]

China & Russia Propose Vast Eurasian Free Trade Zone & SCO Development Bank
Posted on October 31, 2016 by China Briefing
By Marina Romanova and Chris Devonshire-Ellis

From left, Kyrgyzstan's President Almazbek Atambayev, Kazakhstan's President Nursultan Nazarbayev, Russian President Vladimir Putin,
Chinese President Xi Jinping, Uzbekistan's President Islam Karimov and Tajikistan's President Emomali Rakhmon
pose for a group photo at the Shanghai Cooperation Organization summit in Tashkent, June 2016.​

Both China and Russia have proposed to establish a free trade area between members of the Chinese and Russian-led Shanghai Cooperation Organization (SCO). The Chinese announcement came on Friday, following the successful conclusion of the first meeting of the Chinese Academy of International Trade and Economic Cooperation in Beijing. According to a statement made jointly by Qian Keming, the Chinese Vice Minister of Commerce, and Gu Xueming of the Academy, such a free trade area would facilitate regional economic cooperation and would enhance trade and economic cooperation between SCO members.

The proposal also called for the expedited establishment of an SCO development bank, which would provide funding for regional projects together with other multilateral funds and development banks.

The SCO includes China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan, with India, Iran and Pakistan poised to join. Dialogue partners include Armenia, Azerbaijan, Cambodia and Nepal, along with the existing dialogue partners of Sri Lanka and Turkey. In addition to these countries, Afghanistan, Belarus, Iran and Mongolia are observer nations, while guests include the trade blocs of ASEAN, the CIS and Turkmenistan.​

The proposal therefore raises the potential of a Free Trade Zone with significant countries such as China, India, Iran, Pakistan and Russia, and possibly at a later stage, Turkey.

Qian also called for better coordination and more policy transparency in cross-border investment, noting that protectionism must be avoided. “Investment in infrastructure, industrial cooperation, agriculture, and high-tech areas should be expanded between SCO members,” he said.​

Furthermore, Beijing also suggested that SCO members “should build an economic think tank alliance to offer long-term intelligence support for regional economic cooperation.”​

According to the Chinese media, Rashid Alimov, representative of Tajikistan and the current secretary-general of SCO, responded positively to Gu’s proposal. In the China Daily, he is reported as saying, “An alliance would be an important intelligence platform on which experts from different countries could discuss how to develop regional economic cooperation.”​

Meanwhile, the Russian media has cited a more discreet passage of SCO’s secretary-general.

“Apparently, this proposal has its supporters and those who consider such suggestion a bit premature. I believe that the scientific study of this issue would help in the search for optimal models to fuel trade and economic cooperation,” Russian news agency TASS quoted Alimov as saying. Later in his interview with the TASS, when answering a question about China’s idea of a free trade zone, he called the issue a “very sensitive area due to the different production capabilities of the SCO members”.​

This initiative is also supported by Russia, with President Vladimir Putin being quoted in the Russian Sputnik News Agency that Moscow has proposed integrating the Silk Road concept (One Road, One Belt initiative), the Eurasian Economic Union, the SCO and ASEAN into a “Big Eurasian Partnership”, subsuming most of the trade blocs in Asia and Europe.​

Beijing and Moscow have not yet officially reacted to one another’s proposals. But both will undoubtedly do so at the SCO prime ministers council, which is scheduled to take place in the Kyrgyzstan capital city of Bishkek on November 2-3, 2016.

The proposals for a Shanghai Co-Operation Organisation Free Trade Zone or even a Big Eurasian Partnership are game-changers. Although details have yet to fully emerge, the fact that the highest authorities in both Beijing and Moscow have suggested this means it will almost certainly take place in some form. An FTA that involves China and India, let alone Russia, Pakistan and others is going to be of huge significance. It also absolutely determines where the bulk of China’s Overseas Direct Investment is going to be heading – to Eurasia.


http://www.china-briefing.com/news/2016/10/31/42969.html

 

[Shotgunner51]

SCO Prime Ministers' Meeting Gives Strong Boost to Regional Economic, Security Cooperation
Xinhua | Updated: 2016-11-05 16:03

BISHKEK - The just-concluded prime ministers' meeting of the Shanghai Cooperation Organization (SCO) greatly boosted economic and security cooperation among SCO member states, providing fresh impetus to a new type of international relations marked by win-win cooperation.

Over the 15 years since its inception, the organization has played an indispensable role in promoting regional stability and prosperity and also contributed to world peace and development.

Upholding the "Shanghai Spirit" of mutual trust, mutual benefit, equality and consultation, the SCO is about to embrace a brighter future by continuing to deepen pragmatic cooperation on economy and security among its member states.

During the meeting in Kyrgyzstan's capital Bishkek, Chinese Premier Li Keqiang put forward a six-pronged proposal on the organization's future development and cooperation.

Li's proposal, covering a wide range of fields including industrial cooperation, innovation, a regional financing mechanism and people-to-people exchanges, reflected the strong willingness of the SCO members to deepen practical cooperation.​

The proposal, which is in line with the overall interests of the whole region, will also help improve people's livelihood and well-being in the region.​

Security cooperation and economic cooperation have been two major driving forces behind the rapid development of the regional cooperation mechanism.

Safeguarding regional security is an important mission of the SCO, and one of the top priorities in cooperation among its member states. As a major multilateral mechanism in safeguarding regional security, the organization has dedicated itself to improving its risk resistance capacity and creating a harmonious environment conducive to regional stability.​

On security cooperation, Li urged all members during the meeting to observe a concept of common, comprehensive, cooperative and sustainable security, suggesting more information exchange and cooperation in law-enforcement so as to ensure the safety of peoples, institutions, enterprises and personnel of SCO members.​

He also asked SCO members to further strengthen their cooperation and coordination on security and boost the construction of regional anti-terrorism institutions and mechanisms.​

It is expected that the SCO will continue to play a pivotal role in safeguarding security in the Eurasian region.​

Economic cooperation is another major force driving the development of the organization. Amid a sluggish world economy, accelerating industrial upgrading and carrying out multilateral cooperation are the common aspirations of SCO member states.

During the meeting, leaders of the SCO member states vowed to make joint efforts to drive forward regional economic cooperation and integration and signed a joint communique on deepening cooperation within the SCO.​

In the communique, the six leaders agreed that expanding and deepening cooperation among SCO members are in line with the overall interests of the sustainable development of the regional economy.​

They reaffirmed that promoting people's welfare and living standard while further enhancing cooperation in fields that accord with common interests are the SCO's top priorities.​

According to the communique, initiatives proposed for regional economic cooperation, including China's Silk Road Economic Belt Initiative, are conducive to seeking new models for international cooperation and cementing ties among member states.​

They also ratified a list of measures to further promote cooperative projects within the SCO from 2017 to 2021.

Premier Li said that China stands ready to make joint efforts with other SCO members to boost regional trade and facilitate investment, adding that China is open to the initiative of establishing a SCO free trade zone.

As to enhancing production capacity cooperation, Li said China is ready to make joint efforts with other member states to make production capacity cooperation a pillar of regional trade cooperation. Major cooperation projects, including a power plant in Uzbekistan, an oil refinery in Kyrgyzstan, a cement plant in Tajikistan and a China-Uzbekistan industrial park are underway.


http://www.chinadaily.com.cn/business/2016-11/05/content_27284163.htm

 

[hirobo2]

Lol NEAU lmao! This G2 is the real one. It's not just in Asia, Russians are friendly towards Chinese even in North America where I live.

 

[KediKesenFare3]

FTA with China would be the most stupid thing Russia can do. Their products simply aren't competitive enough. Look at Greece and learn your lesson.

 

[hirobo2]

FTA with China would be the most stupid thing Russia can do. Their products simply aren't competitive enough. Look at Greece and learn your lesson.

Hmm, is this what Premiere Li is trying to accomplish with Japan and Korea? I knew something was fishy when China tried ever so hard to economically get closer to KR and JP despite all the political differences. Anyways about face! NEAU I love you! Let's flood KR and JP markets with cheap(er) but better made Chinese products! Outcompete them on their own turfs...

P.S. I can write paragraphs on why Chinese products are better made than Japanese ones at a fraction of the cost b/c I've owned both.

 

[nang2]

good idea. make it happen. free market is cold hearted, especially to those vested interests. such a challenge is the main driving force to higher productivity and competitiveness.

 

[qwerrty]

FTA with China would be the most stupid thing Russia can do. Their products simply aren't competitive enough. Look at Greece and learn your lesson.

agreed. it's not fair. all greece has is begging bowl and russia is just like africa, all they can do is dig oil and metals for china

 

[Zhu Rong Zheng Yang]

I am sorry.
IMO, the above insulting joke is totally uncalled for.
High ethical and wise Chinese will NEVER INSULT Russia and Russians even jokingly and privately.

 

[qwerrty]

russia just need chinese money. they stole large chunk of chinese lands and using mongolia as buffer zone. russian media bashing china left and right daily before economic sanctions. now acting all nicey and nicey all the sudden. don't be fooled thinking they are friends. just take advatage of 'em while you still can lol

 

[TaiShang]

FTA with China would be the most stupid thing Russia can do. Their products simply aren't competitive enough. Look at Greece and learn your lesson.

Russia and China are doing fine. But I wish nothing to be done with respect to Turkey. In fact, you just got lucky that you are not even remotely related to this emerging Eurasian super-region that lies across Russia, Central Asia, Eastern and Northern Europe.

***

 

[KediKesenFare3]

Russia and China are doing fine. But I wish nothing to be done with respect to Turkey. In fact, you just got lucky that you are not even remotely related to this emerging Eurasian super-region that lies across Russia, Central Asia, Eastern and Northern Europe.

***

Blablabla...don't get on my nerves. You know better than me that I'm right. Putin won't allow you to flood the Russian market with cheap Chinese products. That's the hole story. Deal with it. Bye.

 

[GeraltofRivia]

Arguably a key issue that Russia has over the last 2 decades was their over reliance on energy expert and failed to revive their once mighty industrial power. What happened over the last couple of years has shown them energy export based economy was quite fragile.

however, the current situation may have provided a good motivation to Russia to get out of comfort and remodel their country into a balanced economy with industry in the core. be mindful that Russia has put together agreat reform to industrialize in the late19 century and they are good at learning from other nations and catching up from behind.

They has growingly realized China is a capable partner and a great source of expertise in building industry. Equally China can benefit greatly from working and learning from Russia, which still owes many areas that we are keen to catch up. I see a great working partnership here.

 

[TaiShang]

An Opportunity Not to Be Missed: Eurasia Is Integrating at Breathtaking Speed

Know thy markets and know thyself, and a thousand opportunities shall be yours

Paul Goncharoff
Mon, Oct 10, 2016 |



The author is Chairman, Disciplinary Committee, National Association of Corporate Directors, Russia

Eurasia covers around 55,000,000 square kilometers (21,000,000 sq. mi), or around 36.2% of the Earth's total land area. The landmass contains approximately 70% of the human population.

Tacitly accepting all that is said and written by mainstream pundits and talking heads when describing the geopolitical and economic ebbs and flows worldwide, you could miss seeing the forest for the trees.

So, what does this have to do with Russia and business horizons? When reporting focuses on shifting populist perceptions, it is often at the cost of inadequately appreciating key game changing shifts. One such shift is the de facto merge between the romantic sounding “Silk Road” initiative long envisioned by China, and Russia’s vision for a Eurasian Economic Union. Over the past few years, this trade vision has assumed shape, depth and infrastructure as a means to bring together and integrate trade throughout Eurasia, especially from the Black Sea and east to the Pacific Ocean. It is similar to the once representationally successful concept of the European Economic Union before it politicized and became the EU.

During this year’s International Economic Forum in St. Petersburg, and the Shanghai Cooperation Organization summit in Tashkent, and during his recent visit to China, Vladimir Putin proposed a new vision of economic cooperation in Eurasia. It would involve the creation of a network of bi- and multilateral trade agreements between the Eurasian Economic Union, China, member states of the Shanghai Cooperation Organization and ASEAN, as well as the European Union. Initially, these agreements would involve the simplification and unification of regulations regarding cooperation in specific areas of commerce. Later, the agreements would involve the lowering of tariffs, and ultimately the creation of a free trade zone.

China now renamed this Eurasian concept the “New Silk Roads”. It calls for the creation, integration and continued development of high-speed rail, roads, ports, fiber optics and connected pipelines. When seen as a whole, Russia and its many contiguous international borders becomes a major geographic hub for these New Silk Roads of interconnectivity, directly enhancing access and trade with economies serving two-thirds of earths population. Russia has international borders with 16 sovereign countries, including two with maritime boundaries (US, Japan). Its land border runs 20,241 kilometers (12,577 mi) in total.

The two key players, China with its One Belt, One Road (OBOR) and Russia with its Eurasian Economic Union (EEU) are already implementing parts of this broad territorial connectivity, which is now evolving. The costs, speed and improvement of efficiencies for transporting goods and services are clearly positive and in the interests of all participants.

One component is already fully operational, the free of duty Trans-Eurasia railway running between Chongqing across Kazakhstan, Russia, and Belarus through to Duisburg in Germany. One future idea under consideration is a Eurasian Canal from the Caspian to the Black Sea, thus linking to the Mediterranean. Rail linkages from China with the Trans-Siberian rail system and BAM are in final stages of completion.

Eurasian integration makes business sense among the nations comprising Eurasia, and the process is progressing at a steadily quickening pace with Germany, Britain, Australia and South Korea also being to one or another degree party to it. The US is notably absent from this trade integration initiative as it firmly placed its bets on TPP as its key program for the Asia-Pacific regions. Now the US looks to be out of the picture as the Eurasian project mandates free and open trade between member countries. In addition, efforts to delink this Eurasian economic zone from the US Dollar in favor of a more representative basket of currencies to finance such trade are underway. That in itself is not a minor shift and has geopolitical ramifications, which will no doubt play out in time one way or another. After all, money is power at its most liquid. Cui Prodest?

This is an opportunity for internationally focused businesses to participate in and benefit from by being physically present and operational in Russia. Supporting the Eurasian New Silk Roads and the associated broad infrastructure developments would require a wide range of varied businesses and services across large territories. Previously ignored lands and routes will steadily become economically viable, connected to cost effective means of access to many markets. The rest is the normal business development process of interest, presence, effort, expertise and work.

The first step in productively engaging is to know your market, like anywhere else. Opening a representative office, branch office, or a wholly owned Russia subsidiary is a good way to start, and investing the necessary funds, be they large or small, to research and set up stimulates expectations of positive activity and sharpens focus.

Opening an office in the Russian market requires a bit of adaptation. You should understand both the flavor and legal requirements of this market to create the management and reporting systems that will meet the interests of both your foreign head office as well as the Russian office. The main challenge for companies is the parallel maintenance of accounting, management and tax accounting. Even Russian resident companies must deal with the complexities of parallel accounting and tax accounting. A foreign company’s Russia office faces additional challenges because it also must meet the accounting standards of the parent — either European IFRS or U.S. GAAP. The difference essentially is that Russian standards developed with tax monitoring in mind while GAAP and IFRS standards for investors.

Until 2015, this was a costly, involved and labor-intensive aspect of doing business in Russia, detracting from concentrating on core business and adding to overhead load. Today, the Central Bank allowed the transfer of supportive business operations, including accounting, financial reporting and disclosure, to specialized firms performing on an outsourced basis. This has greatly simplified what used to be an unwieldy and expensive affair. Adjusting global standards to local requirements if done in-house is often a larger project than originally envisioned, often resulting in spiraling costs and time investments. There are firms in Russia who can advise and guide you, especially those with expatriate advisors who have the experience doing just that in Russia, and at the same time competently aware of the reporting realities required in your home country.

Whatever path is more appealing I strongly urge personally performing a very hands-on due diligence investigation in Russia itself. Additionally, and depending on the type of business you are involved in, make the investment of time to visit and learn about the several regions of Russia where the Eurasian project will have immediate commercial benefits. Cities like Irkutsk, Khabarovsk, Birobidjan, Blagoveschensk, Vladivostok and others. Such due diligence will also serve as a reality check on the social, political and economic actualities in Russia. I would venture to say that many if not most currently popular tales describing living and doing business in this “evil empire” will be safely put to rest and relegated to the dustbin for useless outdated things.

***

I have always argued that Russia is the key nation in OBOR's Eurasian expansion. Now, this has been confirmed by authorities as high up as President Putin. There are various factors that boost such Russian centrality and China-Russia cooperation, but this is the topic of my upcoming publication.

Nonetheless, we will see a deeper integration between China and Russia across Eurasia with the ultimate aim of creating a Eurasian supercontinent in which all cooperative secular actors are welcome except rogue sponsors of terrorism and separatism like Turkey government and Qatar which are kept out.

@terranMarine , @Dungeness , @BRICSFTW , @Zhu Rong Zheng Yang , @AndrewJin

 

[chauism]

Hmm, is this what Premiere Li is trying to accomplish with Japan and Korea? I knew something was fishy when China tried ever so hard to economically get closer to KR and JP despite all the political differences. Anyways about face! NEAU I love you! Let's flood KR and JP markets with cheap(er) but better made Chinese products! Outcompete them on their own turfs...

P.S. I can write paragraphs on why Chinese products are better made than Japanese ones at a fraction of the cost b/c I've owned both.

Only in your dreams, In Korea Japan even have a hard time try to penetrate its market with their superior products, in Japan even American products find it very hard to have a place in its market. Chinese products has its place in those markets, but they won't be competing with Japanese or Korean brands at all in their respective market, it will be only as a supplement to their existing ones.

 

[Dungeness]

***

I have always argued that Russia is the key nation in OBOR's Eurasian expansion. Now, this has been confirmed by authorities as high up as President Putin. There are various factors that boost such Russian centrality and China-Russia cooperation, but this is the topic of my upcoming publication.

Nonetheless, we will see a deeper integration between China and Russia across Eurasia with the ultimate aim of creating a Eurasian supercontinent in which all cooperative secular actors are welcome except rogue sponsors of terrorism and separatism like Turkey government and Qatar which are kept out.

@terranMarine , @Dungeness , @BRICSFTW , @Zhu Rong Zheng Yang , @AndrewJin

Hillary Clinton is not going to sit idle to see that happen. For China and Russia, the rough time is ahead. I just hope that XDD is prepared with contingency plan B, C, D. Indonesia is just a beginning.