China and Russia are neighbors and strategic partners. In short, among the priority goals for the development of the two countries is the commitment to a socially oriented model of the economy and the priority of technological development. Russia is also close to the concept of «Community with a Common Destiny for Humanity», proposed by General Secretary Xi Jinping in 2012. Its essence is to create a world in which “universal security, common prosperity, openness and tolerance, purity and beauty” are established.
Dr. Wang Wen,
Executive Dean of the Chongyang Institute for Financial Studies, Renmin University of China, Professor
Dr. Sergei Dmitrievich Bodrunov,
President of the VEO of Russia, President of the International Union of Economists, Corresponding Member of the Russian Academy of Sciences
Professor Wang Wen is Vice Dean of the Silk Road Institute of Renmin University of China, Secretary General of the China Green Finance Committee, and Executive Director of the Sino-American Humanitarian Exchange Research Center under the Chinese Ministry of Education. Wang Wen is co-chairman of the Expert and Business Council of the International Union of Economists and the VEO of Russia on issues of Russian-Chinese cooperation. Winner of the Special Prize for Political Studies of the Renmin University of China, National Thousand Talent Award, recognized as one of the top 10 employees of the China Think Tank. Author of over 30 books.
Bodrunov: Let us talk today about the results of the XX Congress of the Communist Party of China, where the priorities for the development of this huge country, our neighbor and partner, were set. Dear professor, please comment on the economic results of the congress. How do you see the prospects for the development of the PRC in the light of the decisions made?
Wang Wen: Thank you for your comment and questions on Party congress. Last month we just held the XX National Congress of the Communist Party of China. I think this Congress conference meeting is very important. It is very significant for China’s development.
The most important point is to propose the essential task of the Communist party of China in the next 30 years to 2049. That is a comprehensive task to build a powerful, modern, socialist country and to achieve this goal by promoting the greatest nation of China nation through China-style modernization.
And you ask what is China-style modernization? I think in the Congress report, it assures five categories or five features of the Chinese model of modernization.
It is the modernization of a huge population, the modernization of common prosperity for all the people, the modernization of harmonic material civilization and spiritual civilization, modernization of harmonic coexistence between men and nature and the modernization of peaceful development.
It establishes the prospect of China development, which enables 1.4 billion people to realize modernization together and become richer and richer.
This is not only about to be rich on the material level, but also about to be rich on the spiritual level. More importantly, it is necessary to achieve low carbon emissions and green development without repeating the path of so-called “rising by wars in the world”.
In other words, I think, the Communist party of China will lead China to achieve this rise in the next 30 years, which is a process of rising with a huge population, benefits development, green environmental protection and peaceful cooperation.
That’s how I want to answer your question.
Bodrunov: The basis of the Chinese technological miracle is the realization of the country’s innovative potential, and China is one of the world leaders in this area, and this is the key to the rapid growth of the country’s economy. However, innovative development is cyclical, and hence the question: what cycle is China currently in? Is it possible to estimate in numbers the share of productive forces, for example, of the fifth technological order, how much is accounted for by the sixth technological order?
Wang Wen: Your question on the innovation cycle, I think it’s a very important, very significant question because so-called “innovation cycle theory” in which the famous economist Joseph Schumpeter in 1939 summarized the law or rule of technological innovation based on the comprehensive analysis of production factors and production conditions.
From China’s perspective, the innovation cycle is on the rise in terms of investment policy, population, enterprises, market and many other conditions.
China adopts the development strategy of technological innovation and encourages more and more to be invested in innovations. In China in the next 30 years there will be another 300 hundred million middle class supporting a huge consumer market for innovative products.
More importantly, the world markets are opening up to Chinese innovative products. For example, I’ll give you an example. Let’s take chips or semiconductors as an example.
China needed to pay 380 billion US dollars to import the chips and semiconductors in 2020. I mean in the last two years, 2 years ago.
Which is higher than the energy imports. If China adopts local substitution, it will save a lot of cost, which will form a huge innovation stimulus. In the past 30 years from household applications to aerospace technologies, to large aircraft, to 5G products China’s next road of local innovation products will be chips and semiconductors.
On the other hand, China’s 5G products and new energy products are also rapidly expanding in the global market.
From this perspective, China’s innovative development still has a lot to do for improvement. That is my understanding.
Bodrunov: President Xi Jinping, speaking at the congress, called one of the most important achievements of China, and it is hard to disagree with this, the elimination of absolute poverty in 10 years. What opportunities do you see for improving the well-being of the population and further combating poverty in the light of the decisions of the 20th Congress of the Communist Party. And what opportunities do you see for economic growth by increasing the incomes of the population?
Wang Wen: Yes, you’ve mentioned the poverty issue. I think over the past 10 years one hundred million people in China have been lifted out of poverty fulfilling UMSGT 2030 package 10 years ahead of schedule accounting for more than 70% of the world’s people out of poverty
At the same time in the report of XXth National Congress of the Communist Party of China we acknowledge that there’s still a large gap between urban and rural development and income distribution.
China’s capital GDP is only 18 trillion US dollars which is still less than one fifth of that of the United States. So, from this perspective, China’s development tasks are still very heavy.
Therefore, by 2035 one of the overall goals of China’s development is economic strengthening, scientific and technological strengthening and comprehensive national strengthening, to jump significantly. Capital GDP is to reach a new level which means the level of a developed country.
People’s lives are happier and better, and the capital income has reached a new level, the proportion of the middle-income group has increased significantly and so on.
The officials said a lot of sentences about our new targets and new goals by 2035. From the perspective of the income level, as long as the current basis is increased by 4% China’s economic aggregate can be equal to that of the United States.
So, if it came (далее неразборчиво), and average (неразборчиво) of 4.7% in 2035, China’s GDP will double to 36 trillion US dollars, which is 1.5 times that of the current United States.
So, I think, the target, the goal, is fully achievable. I trust.
Bodrunov: Dear Professor, you have been to Russia more than once, conducted a study on the socio-economic development of our country, in connection with the Eastern economy. That is, in general, they know our country well. If we talk about Russian-Chinese relations: what today limits, from our point of view, the possibilities of economic cooperation between the countries. What decisions have been made to develop our relations?
Wang Wen: You mentioned Russian and China relations. As you may know I’ve stayed in Russia for 2 months this autumn and visited 21 cities. All Russian friends were very friendly to me, but their understanding of China, honestly, is very-very limited.
And China-Russia economic relations have developed rapidly in recent years, because as we know in 2021 China-Russia trade reached 145 billion US dollars, a record high. In 2022 it will be close to 200 billion US dollars; I think it is pretty amazing progress.
But, the problem in my opinion is maybe in the near future. 200 billion or even higher US dollars is also possible for our bilateral trade. How come?
I think there are at least 3 possible conditions. First one is to stimulate trade, because in 2023 China will be the largest consumer market in the world importing 2.5 trillion US dollars to the world every year.
But the problem is that only 3 percent comes from Russia. Even for oil or natural gas China is not the largest import destination. Right? We can improve it by further stimulating the trade.
The second is open opportunities for investments. China has become the world’s largest foreign investor with annual foreign investments of more than 150 billion US dollars.
But the problem is that 1 % of it goes to Russia. If Russia opens its market and improves its business environment it can attract more investments from China, many more investments from China.
The last but not the least is to enhance personal exchange, people exchange, because in the post-pandemic era both Russia and China should strengthen their understanding, their mutual understanding and strengthen their cooperation in arms, fuel, culture, technologies and academics.
And so, as to create the model of major countries’ relations, these are my sincerest suggestions.
Bodrunov: More than 20 years ago, Chinese President Jiang Zemin and Russian President Vladimir Putin signed an agreement on good neighborliness, friendship and cooperation between our countries. Since then, the level of bilateral relations has been increasing every year. China and Russia have a common vision of the long-term prospects for reasonable, fair social development. Our approaches to solving global and regional problems are similar. But if we want to increase the level of economic cooperation, we need to solve current problems. At large, China needs to rediscover Russia for itself, and Russia needs to rediscover China.