In a December 10, 2020 article, titled "Why Is The Russian Economy Sluggish?" Chinese professor Qiao Xinsheng, of the Zhongnan University of Economics and Law, described Russia as a country in socioeconomic decline that can no longer call itself an influential international power. The article was published by the China Review News Agency.
Qiao wrote that Russia's rapidly shrinking population is the main reason for Russia's "economic slump," but that additional factors include Russia's cold climate, domestic contradictions, bureaucracy, and xenophobic mentality, in addition to its use of force "in unexpected ways," and more.
Stating that Russia lacks the "spirit of contract," Qiao accused it of often reneging on its word when it comes to cooperation with China. He wrote: "Russia refuses to sell advanced weapons to China as a precaution. In terms of oil and gas cooperation, Russia has put forward a series of harsh conditions, so that China has to open up new energy import channels. Russia wants to jointly produce large aircrafts with China, but at the same time it also hopes to take this opportunity to sell Russian-made aircraft engines to China. China wants to buy Ukrainian-made aircraft engines or develop its own for the sake of safeguarding its national interests, but Russia refuses to provide China with relevant technology."
He concluded the article by stating that Russia is a major economy, but no longer an economic power.
It is worth noting that the China Review News Agency publication is backed by the Chinese government and billed as "the first digital 24/7 media." Based in Hong Kong, Beijing, and Guangzhou, it is known to be one of the Chinese media outlets used by the government to test reactions to policies that it is not yet ready to openly adopt.
The following is Qiao's article, "Why Is The Russian Economy Sluggish?":[1]
(Source: Facebook.com)
Russia Has Long Had A Sluggish Economy
"As the world's largest country by land area, Russia has long had a sluggish economy. Some economists analyze many reasons for this phenomenon. In the 1990s, shock therapy led to an economic recession. The first decade of this century was mired in the energy curse, with a single economic structure built on oil and gas exports. In the second decade, the decline in international energy prices and fiscal revenue, combined with the annexation of Crimea and Western sanctions, made the Russian economy even worse. This kind of historical observation and analysis is well in place. But it must be pointed out that the root cause of Russia's predicament is internal.
"First, Russia's rapidly shrinking population is the main reason for the country's economic slump. The economic downturn has caused a large number of the elite to leave Russia. The cold weather has led to a negative population growth in Russia. Many cities in Siberia are desolate, some villages are overgrown with weeds, young people migrate to western regions such as Moscow, and the Far East is sparsely populated and incapable of development. Although Russia has deployed military equipment in the Kuril Islands to increase its influence in the Pacific region, the territory it controls has in effect been turned into a military base due to the mass population migration.
"Second, Russia is in a cold zone, where production and living costs are high. Natural gas has been found in northern part of Russia, but it cannot be exploited on a large scale, depending on Russia's own capabilities. Russia has invited bids from the international community, and many countries, including China, have participated in the development of natural gas in the northern part of Russia, from which China has already secured a share. Although Russia is rich in mineral deposits, lack of sufficient manpower means that Russia has to preserve the natural heritage of its ancestors rather than turn it into real wealth.
"Third, Russia is a relatively closed country. Although Russia hopes to maintain economic ties with all countries in the world, its relatively weak industrial and agricultural production capacity, especially the backward position of light industry, makes it impossible for Russia to export its goods to other countries. The Russian president has personally promoted ice cream made in Russia, but so far sales in some countries, such as China, have been limited.
On June 15, 2019, before the start of the Conference on Interaction and Confidence Building Measures in Asia (CICA) plenary session, President of Russia Vladimir Putin went to the residence of the President of China Xi Jinping to wish him a happy birthday. Vladimir Putin gave Xi Jinping Russian ice cream as a birthday present. (Source: Kremlin.ru)
"Fourth, Russia's domestic contradictions deter foreign investors from around the world. Russia is a country with a huge gap between rich and poor. Although the Russian government has established a complete social security system, basic social security benefits are provided to Russian citizens free of charge. But, as we know, after privatization, fundamental changes have taken place in the income distribution structure in Russia, a handful of wealthy class people have a relatively narrow circle of life, they purchase goods from abroad, not driving domestic consumption, and the vast majority of the working class income is relatively low, there is no ability in consumption, therefore, Russia is a country with relatively narrow market.
"Fifth, Russia's bureaucracy and xenophobic mentality have led to a lack of development opportunities. In the early days of the establishment of Russian Federation, a large number of Chinese businessmen entered Russia in an attempt to rebuild the Russian business system. They soon discovered, however, that Russia was not a market economy country at all, but a crony capitalist state that traded power and money. Many Chinese businessmen used all their assets to buy goods, trying to expand their market share in Russia. However, almost overnight, Russian tax authorities and customs departments ransacked all their stored products, and the Russian government legally plundered the wealth of Chinese businessmen by amending laws or strictly enforcing laws, thus making Chinese business operators lose all their money.
China Is An Important Friendly Neighbor Of Russia… But Russia Often Reneges On Its Word When It Comes To Cooperation With China
"During Russia's privatization reforms in the 1990s, massive amount of foreign capital poured into the country, These foreign capital holders colluded with Russian officials to buy up privatized state-owned enterprises and become the world's super-rich. But when Russian President Vladimir Putin took office, he sent Russia's oil and gas magnates to prison by cracking down on tax crimes, and banned foreign capital from exploiting Russia's oil fields in the name of environmental protection. As a result, foreign investors had to leave the country. Russia's bureaucracy and state capitalism have pushed out all foreign investors.
"Sixth, Russia is a country that advocates power and force. In order to maintain its international status, Russia often uses force in unexpected ways, which makes the Russian financial system overwhelmed. Russia sent troops to Syria in support of the Syrian government under the mediation of a top general in Iran's Islamic Revolutionary Guard Corps. Russia's army is winning battles in Syria, but its economy is moribund at home. The fundamental reason for this phenomenon is that, on the surface, the Russian army's expenditure on the Syrian battlefield is limited, however, in order to support the expeditionary force, the Russian finance has to mobilize resources from all aspects, resulting in the inability of Russia to develop its economy.
"Seventh, Russia lacks the spirit of contract and its cooperation with other countries suffers from gains and losses. China is an important friendly neighbor of Russia and the two countries have established strategic cooperative partnership. But Russia often reneges on its word when it comes to cooperation with China.
"Russia refuses to sell advanced weapons to China as a precaution. In terms of oil and gas cooperation, Russia has put forward a series of harsh conditions, so that China has to open up new energy import channels. Russia wants to jointly produce large aircrafts with China, but at the same time it also hopes to take this opportunity to sell Russian-made aircraft engines to China. China wants to buy Ukrainian-made aircraft engines or develop its own for the sake of safeguarding its national interests, but Russia refuses to provide China with relevant technology. Weighing the pros and cons, China has had to research and develop large aircraft independently, and the cooperation project between China and Russia on large aircraft was forced to shelve. Russia wants to introduce China's high-speed railways, but proposes that the high-speed trains must reach 400 kilometers per hour. At present, China has greatly improved the operation speed of China's high-speed railway by relying on technological innovation in accordance with Russia's requirements. Trains with an average speed of 400 kilometers per hour have been produced. This type of train is entirely designed to meet the needs of Russian railway transportation, and the trains with an average speed of 400 kilometers per hour can run on different tracks. It is unclear whether Russia will formally sign a contract to buy Chinese high-speed rail technology and equipment, as agreed in a letter of intent.
"Eighth, Russia's co-operation with the West has been stumbling. Russia wants to get on well with the West, so it is building natural gas pipelines to Germany. But the agreement between Germany and Russia could not be carried out on schedule because of obstructions by the US government. Companies from Some European countries, including Switzerland, have pulled out of the project under pressure from the United States. The German government is resisting pressure to complete the pre-pipeline project as quickly as possible. As things stand, though, the German government has good intentions, but it is unclear whether the gas project with Russia will be completed smoothly.
"That is because Germany's relations with Russia are at the mercy of the US and the rest of the EU. If the United States continues to strengthen sanctions against Russia and the rest of the European Union refuses to cooperate with Russia, Germany will come under enormous pressure to continue strengthening its economic ties with Russia. Russia wants Germany to act as a mediator, or as an agent between Russia and European countries, but as things stand, Germany is not unwary of Russia. Germany is waiting for big concessions from Russia, at least on gas prices. If Russia does not see the situation clearly and haggles with Germany in the process of cooperation, then Russia risks losing the important market of the European Union.
Russia Is No Longer An Economic Power
"Russia is a major economy, but no longer an economic power. The reason why Russia has come to where it is today is entirely on its own. Russia does not look like a market economy nation, nor does it look like a planned economy nation. Russia is truly a country in economic transition. In more than 20 years of development, Russia is still in a transitional period and has not established a complete economic system. Although Russia has advanced strategic weapons production systems, it is almost impossible for Russia to develop its economy by relying on arms exports because its arms exports are far less than those of the United States. Now that America has supplied arms to India, Russia's biggest customer, and has decided to move its production of fighter jets to India, the aim is to prevent India from continuing to co-operate with Russia in the military sphere. The loss of an important military partner, India, would have a serious impact on Russia's arms business.
"The Russian president is not ignorant of the situation facing his country. But the Russian president could do nothing. With its population decimated, Russia has lost most of its power to develop its economy. For an industrial country, if there is no reproduction of the population, then the reproduction of the economy is empty talk. With strict immigration restrictions and a population that lacks the fertility and aspirations of its citizens, Russia is in effect in demographic decline. Although the Russian president has repeatedly stressed that Russia remains an influential international power, it would be nothing without war. If a war were waged, then the population of Russia would be even smaller. The United States can change its immigration policy by taking turns on governing from one party to another. Will Russia change its immigration policy, accept large numbers of immigrants and solve the problem of under-population?
"Russia's problems today may be the other countries' problems tomorrow. If we do not solve the problem of population reproduction, then, all grand blueprints will not be realized. Only by speeding up population production and improving population quality can the whole country be prosperous and developed. There must be no hesitation on the question of population. A firm determination must be made to increase the population, because only in this way can we ensure the prosperity of the whole country."
[1] Bj.crntt.com/doc/1059/5/2/6/105952606.html?coluid=1&kindid=0&docid=105952606&mdate=1210000113, December 10, 2020.
