The Central Bank of the Russian Federation released foreign direct investment (FDI) data in December that revealed shrinking investment figures from China.
According to the data, Chinese investment reached $3.18 billion as of June 30, 2018, 1 billion less than the $4.2 billion mark by the end of 2017.
As the US intensifies Russian sanctions and wages a trade war against China, this latest report reveals an abnormal phenomenon in China-Russia economic cooperation.
However, some Russian media agencies have played up China’s lowered investment in Russia. Some reports claimed that Chinese investment had cooled down while Chinese investment had increased worldwide during the same period.
This latest round of Russian media sentiment needs attention. It has been the consensus of both countries that their comprehensive strategic collaborative partnership remains persistent.
With this in mind, the dip in Chinese investment in Russia is to be viewed rationally. Capital flow will always behave naturally, and cross-border investment fluctuations are actually normal.
FDI in Russia from countries like Germany, Singapore, Poland, and Japan has remained stable, with some experiencing growth. The reason for this can be traced to an improved structure that has provided investment safety in Russia.
The abnormal change in Chinese investment is merely a signal that China is restructuring its current investment strategy. There is no need whatsoever for Russian media to panic.
Adjusting the investment structure could come from both sides – the Chinese investor or Russian recipient. Both investment management bodies need to increase facilitation efforts during this restructuring period, since US sanctions against Russia are quite comprehensive.
Chinese investment will have to better position itself, targeting similar industries and enterprises with countries like Germany in order to secure investment safety and return. This change will take time.
Another set of data revealed that Chinese investment in Russia had increased from $2.76 billion in January 2015 to $4.2 billion in 2018. The investment soared against the backdrop of Western economic sanctions imposed on Russia after the Crimea crisis. The data justified that China firmly and clearly encourages Chinese investment in Russia. As long as the investment is mutually beneficial, Chinese investment in Russia will continue to go upward.
Creating suspicion over sound bilateral relations solely based on a slight retreat from Chinese investment is senseless. According to Russia’s Central Bank, foreign investment is carried out in terms of US dollars, so of course, many Chinese investors would have to take US sanctions into consideration.
Now, China-Russia bilateral relations enjoy a solid political foundation. Their comprehensive strategic collaborative partnership has withstood multiple tests and will likely experience some challenges in the future.
Due to the current circumstances, bilateral relations will need increased efforts. As both sides face similar global challenges and risks, through goodwill and patient efforts, they should reach good resolutions.