2022 Russian Exports To Mexico Increase 20%

Opportunities in new markets for Russian exporters

Russia’s exports of goods to Mexico increased by more than 20% during the first six months of the current year. It is according to the latest figures released by the Bank of Mexico. In monetary terms, Mexican imports from Russia amounted to US$1.193 billion. In June, Mexican purchases of Russian goods exceeded US$275 million. That is the second-highest figure in the two countries bilateral trade history.

Russia is a key international supplier of fertilizers to Mexico. It is accounting for nearly a quarter of all Mexican imports of nitrogen and mixed nitrogen, phosphorus and potash fertilizers. Rolled steel, aluminium, and synthetic rubber are among the country’s other important imports from Russia.

With Russian non-energy exports to the European Union undergoing a significant decline due to sanctions and related political upheavals, Russian exporters and entrepreneurs have been busy finding alternative markets. Mexico has close relations with Russia and was a participant in its Sputnik V covid vaccine scheme. Mexico’s main exports to Russia include tequila, beer, beef, and automobiles. Mexico is Russia’s third biggest trading partner in Latin America.

Russian multinational companies such as Power Machines operate in Mexico. Mexican multinational companies such as Grupo Omnilife, Grupo Maseca, Nemak, Cemex, Mabe, Katcon, Metalsa and Gruma operate in Russia.

Mexico is not participating in any economic sanctions against Russia

Mexican President Andrés Manuel López Obrador announced in March that Mexico would not be participating in any economic sanctions against Russia. He criticized the overseas censorship of Russian state media. There has been some talk of a Mexican free trade agreement with the Eurasian Economic Union. However, this would probably be a step too far for the neighboring United States, with the US being Mexico’s largest trade partner.

However, Russian entrepreneurs have been busy in Latin America with bilateral trade booming in other countries such as Argentina, Brazil, Chile, and Uruguay. An interesting component of this has been Russian sourcing of EU-style products from Latin America. This is because they are now difficult to source in Russia, or to manufacture without years of experience. This includes items such as Parmigiana cheese, absolutely necessary in Italian cuisine. With Argentina having a huge Italian diaspora who still retain that knowhow, Argentinian Parmigiana is now on sale in Russian supermarkets.

Increased bilateral trade also means increased opportunities for Mexican exporters to sell to Russia.

Russia sourcing products from Latin America

How Russian Importers Have Turned To The European Diaspora In Latin America To Provide Alternative Consumer Products From The European Union?

By Chris Devonshire-Ellis

Many EU nationals refuse to comprehend that Russian consumers are able to survive without them.

In fact, many of the consumer sanctions imposed on Russia date back to 2014. Whole eight years ago! That gave Russia plenty of time to adapt, absorb, and establish new supply chains now already in situ.

In this article I focus on cheese as a consumer item. Not least because it is relatively easy to examine – just requiring a trip to my local supermarket, which is situated 45km southeast of Moscow on the road to Smolensk and the border with Belorussia. That may sound bland, even irrelevant in the grander scheme of things. However bear with me. The findings are somewhat extraordinary, quite apart from possessing other supply chain and trade development implications.

The Linked In thread

The Linked In thread contained accusations from the (mainly EU based) comments that the theme of the piece was irrelevant because the supermarkets I had chosen were in too affluent a region, and the products I referred to (salmon, fruit, and vegetables) too expensive for normal Russian tastes. The implications were that the majority of Russians ‘could not afford them’ and ‘bought vegetables from horse and cart rather than supermarkets’, which is both inaccurate and way out of date to an almost laughable degree – other than then fact that these beliefs persist. It is, after all very hard to defeat a rival without fully understanding their strengths and weaknesses – a concept dating way back to Sun Zhu’s ‘Art of War’. Yet the EU naivety about Russia remains.

Back to cheese

But back to cheese. While it is true that cheese as a product in Russia could be considered an inconsequential upper to middle class consumer item, one should consider that Russia has its own long established dairy industry and cheese has been made in the country for centuries – it’s just that not much of it, to be frank, has been especially tasty. Come the collapse of the Soviet Union in 1991, and the subsequent market reforms in Russia that eventually lead it back to reach the Bilateral Partnership and Cooperation Agreement (PCA)trade agreement with the European Union in 1997, things have changed.

Cheese has developed to become a popular imported consumer item throughout Russia. That taste was encouraged by the huge rise in Russian nationals travelling to the EU over the past 25 years. A figure that by 2019 alone saw 4.1 million Russians apply for Schengen visas.

This means tens of millions of Russians since 1997 have travelled to the EU. It resulted in a huge appreciation for European culture, food, and drink. As from 2014, that began to change with the first suspensions of various EU imported food items. A situation that has become even more extreme over the course of 2022 – and continues too. But it does mean that items such as European wines and cheeses, together with processed meats and other consumables, have found a market within Russia itself. They are not ‘elitist’ – they have entered the Russian middle-class mainstream. They can be found in stores throughout the country, with the exception of some of Russia’s more remote areas.

Domestic replacement for EU imports

However, since 2014, Russia has had to find ways to either manufacture these products themselves – a situation encouraged by various EU producers, who barred from the Russian market, moved to Russia, set up JV’s and began showing the Russians how to manufacture the produce in Russia. The other option was to find alternative sources.

Why has this occurred? Because the Russian middle-class market represents about 30% of the population at about 50 million. To put that into context, that is larger than the middle-class population of the United Kingdom. Furthermore, the Russian middle-class is fairly concentrated. Meaning they are relatively easy to reach. Moscow and St. Petersburg dominate in terms of population. Another 13 cities across Russia, easily accessible via rail, have populations in excess of 1 million. Getting middle-class products to them is not an issue, and the market is there.

I have chosen cheese to illustrate the changing supply chains Russia is developing as it is a relatively inexpensive consumer item to purchase, and supermarkets are easy to find. With the EU supplies cut off, what has happened to replace it?

While 100g of the product may not be expensive, it’s not an inexpensive question. In 2013, the year before such products were barred from export to Russia, according to the European Commision, the European Union exported US$3 billion worth of dairy products to Russia. Cheese amounted to 50% – an export market worth US$1.5 billion. Again, to compare, that is larger than the value of cheese exported to the UK in 2020 at about US$1.2 billion – and the Brits do like their cheese.

Swiss, Russian and Latin American cheese

Examining the contents of my local Russian cheese counter, products are broadly, and equally divided into three: Russian, Swiss, and interestingly, Latin American. The loss of the EU’s cheese export market to Russia has been absorbed by their Swiss neighbors. Swiss are not bound by EU trade terms or sanctions. Swiss dairy farmers are now an estimated US$500 million better off than they were in 2014 in taking on exports to Russia of Swiss made varieties.

The surprise has been the strength of Latin American cheeses now appearing on Russian shelves.

The reason for this is the historic migration of Europeans to Latin America. Ethnic Italians make up 65% of the total Argentinian population. Chile has significant and established German, Austrian, and Spanish (Basque) populations. Uruguay is well known for its European ancestry – an estimated 88% of Uruguayans are of European stock, largely from Germany, Italy, and France. Migrations to these countries occurred in the mid-1800’s during colonialism and at the end of WWII as many fled their political past and the destruction of Europe at that time. Naturally, they bought with them their cultures and skills.

Cheese exports to Russia appears to be a growing export market worth about US$500 million to the Latin American economies. This is not small money. That is why these products are now turning up in Russian markets thousands of kilometers distant. Close facsimiles of Italian Parmigiana are now being sourced from Mendoza. Germany’s Cambozola blue cheese comes from Montevideo. Spain’s famous Manchego cheese comes from Santiago.

European wines begin to disappear

Naturally, as Russia’s stocks of European wines begin to disappear, these countries will also see their wine exports to Russia increase. And, along with the various European style traditional processed meats. It is a boom time for Latin American producers looking for new export markets.

Russia imported US$1.09 billion of wine in 2020, primarily from Italy, France, and Spain with transshipments of other EU wines (such as German) being exported to Russia from Latvia and Lithuania. Georgia is also a major wine exporter to Russia, but the bulk – until now – has been from the EU. Russia is the world’s ninth largest importer – a nice market to have, and the market has been growing too. Those EU exports are also likely to gravitate to Latin America. Wine bars with cheese dishes on the menu in Moscow and St. Petersburg’s trend setting scene are going to be taking on a decidedly Latin flavour.

Brazil is instrumental in this

Brazil has been instrumental in this, being part of the BRICS grouping along with Russia. Several Latin American countries have been keen to get on board. Argentina has expressed interest in joining the BRICS group. Ecuador. is negotiating an FTA with the EAEU. One can almost guarantee that other Latin American countries will be taking the developing trade potential with Russia very seriously. The reason Mercosur turned down Ukrainian President Zelinsky’s recent attempts to talk about the Ukraine conflict with them. They just don’t want to know and have already assessed Ukraine has nothing to offer but complaints and harassment when matched against Russia’s trade capabilities. That extend way beyond cheese and into areas such as nuclear energy and the building of nuclear power plants.

Cheese is an insignificant product in the larger scheme of Russia’s import requirements. These extend far beyond consumables and into technical mechanical and engineering needs such as semi-conductors and aircraft parts.

What it does show is that Russia can be most inventive when it comes to finding alternative sources to what it wants. The semi-conductor manufacturing market for example is often cited as being under US control. In fact, China’s manufacturing of semi-conductors is at roughly the same level as America’s.

In terms of aircraft parts, Brazil, China, and a fast-growing India are all developing while Russia has its own internal industry. Product and component shortages will be alleviated over time by increasing cooperation among these countries. Just as we are seeing between Russia and Mercosur and the cheese scenario. Collaborative surprises may well be in stor

Why The Russian Economy Isn’t Collapsing?

Western leaders undervalued the size and global reach of the Russian economy

Headlines concerning the collapse of the Russian economy under sanctions have been many and varied, although more recently observations have been made that sanctions imposed by the West aren’t working to the extent intended.

Writing this from Moscow, I can observe that supermarkets are full, there are no shortages, and gasoline is US$3.1 a gallon. That compares with Washington at US$4.99, London at US$8.16, Berlin at US$6.73 and Rome at US$7.31.

Why has the effect of sanctions upon Russia been so widely misunderstood? It’s a complicated question yet comes with a simple answer: politicians aren’t economists.

The French economist Jacques Sapir has recently explained the mistakes politicians have made when assessing Russia, with the United States constantly stating the Russian economy as being insignificant when compared to the US and being about the same size of Italy’s. That is a miscalculation.

According to Sapir, the reason for this disparity is exchange rates. If you simply convert Russia’s GDP from rubles to dollars for comparison, it would be seen as an economy as large as Italy’s. However, such comparisons are meaningless without adjusting for purchasing power parities, (PPP) which account for productivity and living standards, and thus per capita welfare and resource use. In fact, PPP is the preferred measure of most international institutions, from the IMF to the OECD.

So what happens when the PPP methodology is used to compare the actual size of the Russian economy?

Doing so reveals a much larger and significant beast – it becomes clear that Russia’s economy is rather more similar to the German economy at about US$4.4 trillion versus Germany’s US$4.6 trillion.

This means that the West’s politicians has grossly under estimated Russia’s economy as being a small, somewhat sickly European economy to being close to the largest in Europe and one of the largest in the world.

Concerning Russia, Sapir also asks: “What is the share of the services sector compared to the share of the products and industry sector?” In his view, today’s services sector is grossly overvalued compared with the industrial sector and commodities such as oil, gas, copper, and agricultural commodities, all of which Russia possesses in massive amounts.

If we reduce the importance of services as a proportion of the global economy, Sapir says, “Russia’s economy is much bigger than Germany’s, and accounts for up to 5-6% of the world economic output.”

That puts Russia on a par with Japan rather than Italy.

This makes intuitive sense. When times are tough, it is common knowledge that it is more valuable to provide people with the things they need, such as food and energy, rather than intangibles such as entertainment or financial services.

Netflix or Nestle?

When a company like Netflix trades at a price-to-earnings ratio three times higher than Nestle, the world’s largest food company, that is more likely a reflection of frothy markets than actual reality. Netflix is a great service company, but as long as some 800 million people in the world are undernourished, Nestle still offers more value. And Netflix shares and earnings have indeed begun to slide post covid as consumers concentrate on the essentials. (Netflix also recently exited the Russian market).

There are lessons to be learned from this – the current situation in Ukraine helps to clarify values on what have been regarded as “archaic” aspects of the modern economy, such as industry and commodities, but whose prices have soared this year; compared with overvalued services and “technology” whose value has recently diminished, such as Netflix and Facebook.

There is more. The size and importance of the Russian economy has been further distorted by ignoring global trade flows, which Sapir estimates Russia’s portion “may account for 15%”.

For example, while Russia is not the world’s largest oil producer, it has been the largest oil exporter, surpassing even Saudi Arabia. The same is true of many other basic products, such as wheat, the world’s most important food crop, of which Russia controls about 19.5% of global exports, as well as nickel (20.4%), semi-finished iron (18.8%), platinum (16.6%) and frozen fish (11.2%).

Russia is in fact a key part of the globalized supply chain

This means that Russia has such an important position in the production of so many basic commodities, that along with several other countries, is in fact a key part of the globalized supply chain.

The United States has largely failed to acknowledge this and persuaded the European Union to follow the same thinking over sanctions while grossly underestimating both the size of the Russian economy and the role Russia has in global trade. The US has had success in imposing “maximum sanctions” on countries like Iran and Venezuela but trying to cut Russia off from world markets has resulted in and will continue to bring about a huge restructuring of the global economy that may take several years to absorb.

In fact, by controlling large sections of the oil, gas, food and other global commodities, the sanctions pain bought to bear upon Russia by the United States and its Allies has shifted to the originators of these – and their own populations.

Can Australia achieve economic growth without China?

By Stan Grant

China, India, Indonesia, Russia, Brazil: What do these five countries have in common?

They are the future. Our future depends on them. They are not the West.

Collectively, they will account for more than half of all global growth through to 2024, according to figures from the International Monetary Fund. Think again about that: five countries, 50 per cent of growth.

The giant among the five is, of course, China. It has already surpassed the United States as the biggest engine of global economic growth — 28 per cent annually between 2013 and 2018.

By the end of this decade, China is expected to overtake America as the single biggest economy in the world. And of the other four countries — Brazil, Russia, Indonesia, India — each lists China as its biggest trading partner.

The IMF says there is no way the global economy can grow unless these countries also grow. Yet in this week’s budget, did we hear mention of any of them?

No. We did not even hear mention of China. Incredible, given China is Australia’s biggest trading partner, too.

How is Australia handling this hinge point of history?

Australia’s trade with China dwarfs its trade with any other country: more than $90 billion, an enormous 43 per cent of all our exports. For comparison, the next biggest market is Japan, at $19 billion.

Trade is equivalent to 45 per cent of Australian GDP and one in every five jobs in the country.

Treasurer Josh Frydenberg has said this budget is about stimulating, spending and creating jobs. How do we seriously achieve that when our political leaders cannot speak to their counterparts in Beijing? 

In the meantime, we hear increasing talk of the “drumbeats of war”. How can we achieve economic growth and boost jobs when the Treasurer, in his budget speech, cannot mention China by name and instead makes allusions about a more dangerous world (read: China threat) and commits to ever more spending on our military?

This isn’t to deny that we live in a more perilous age or that an authoritarian China does not present a threat — or that we need to keep our defence force ready and equipped for any eventuality. But there are serious questions about how our political leaders are handling this hinge point of history.

China is an indispensable nation; our future depends on it. Our future depends on those other countries that make up half the world’s growth — countries we rarely even talk about.

This is not 1992. We have not just emerged from the Cold War; America is not the predominant or sole power in the world; this is not the end of history. We can no longer say, as Western political leaders did then, that China is on the wrong side of history.

The world is turning, history is turning

In its report The World in 2050, international professional services company PwC lists what will be the top 10 economies in the world:

1.China

2.India

3.US

4.Indonesia

5.Brazil

6.Russia

7.Mexico

8.Japan

9.Germany

10.UK

Where did the West go? The report says simply: today’s developing markets will be tomorrow’s economic superpowers.

Outside of the top 10, Vietnam, the Philippines and Nigeria will be the biggest movers in the rankings.

The report compares the E7 (emerging economies) with the G7. In 1995, the E7 were half the size of the G7; by 2015, the E7 had drawn level; by 2040, the E7 could be double the size of the G7.

A Rip Van Winkle “go to sleep and dream away the future” approach won’t work.

The West has been battered by war, growing inequality, stagnant wages, terrorism, economic collapse, declining democracy and rising political populism.

America — the so-called leader of the free world — is a country damaged by unending crisis.

President Joe Biden talks a good game about “America is back” and rebuilding alliances. But how does America lead a world where economic power has so dramatically shifted?

Betting against America

In his recent speech to Congress to mark the first 100 days of his presidency, Joe Biden said it was never a good idea to bet against America. But that’s precisely what many countries are doing.

China’s massive Belt and Road Initiative — one of the largest infrastructure and investment projects in history, covering 70 countries, 65 per cent of the world’s population and 40 per cent of gross domestic product — is a bet against America.

It is part of Xi’s China Dream of a rejuvenated nation, returned to the apex of global power.

Australia is caught in the crosshairs of this global historical turn. We are still a European outpost in Asia, a country with historical ties to Britain and all in with the US. 

It has served us well, but that world is passing. The geopolitical, economic and military plates are shifting as the world walks ever more treacherous fault lines.

But this isn’t the discussion we have been having post-budget.

Instead, we are talking about debt and deficit and vaccine rollout and possible election dates. Journalists are engaging in the usual round of predictable “gotcha” questions, and politicians are looking to score tit-for-tat political points.

All around us, the world we knew is giving way to the world we don’t truly understand, let alone are truly equipped for.

China, our biggest trading partner, is now a global Voldemort — he who cannot be named.

But call it what we will — or won’t — China looms over our world and it is dragging those other emerging economic giants along with it.

To stay with the movie analogy, for the West, there is no back to the future.


Source: ABC

Iran wants to join Eurasian Economic Union

Will Russia allow it?

There are some good reasons for Moscow’s lukewarm response to the possibility of Tehran’s admission to the EAEU. What are factors for and against Iran joining Eurasian Economic Union from Russian point of view?

By NIKOLA MIKOVIC

The Russia-dominated Eurasian Economic Union might soon be acquiring a new member: Iran. Boxed in because of its rivalry with other states in the Middle East, and laboring under US-imposed sanctions, Tehran believes it needs to strengthen ties with such neighbors as might be willing to accept it.

Iran appears to think that membership in the EAEU is a done deal. That is despite officials of the bloc denying they had received any formal request. When Mohammad Baqer Qalibaf, Speaker of the Iranian parliament, visited Moscow on February 10, he declared Iran would “permanently join the EAEU in two weeks.” Apart from the fact that the date has passed, such optimism is extremely premature.

The response from Mikhail Myasnikovich, chairman of the board of the Eurasian Economic Commission, was telling. The Eurasian union wants Iran to have “a special view on cooperation with Eurasia,” he said. It hardly sounds like a warm welcome. Other EAEU officials have stressed that Iran must formally apply for membership. A veiled warning, perhaps, that Iran cannot expect to bypass procedures.

On the face of it, there are reasons for Tehran and Moscow to support Iran’s inclusion into the bloc. The economic area is an integrated market of 180 million people with a combined GDP of more than US$5 trillion. It encourages the free movement of goods and services and can formulate common policy in key areas such as energy, agriculture, transport, customs, and foreign trade and investment.

Iran already has had a free-trade agreement with the Eurasian union since 2018. In 2020, trade turnover between Iran and the EAEU increased by 2%, exceeding $2 billion.

Mutual benefits

Food products and agricultural raw materials accounted for most of that trade in both directions. 80% of the goods that the EAEU supplied to Iran and 68% of what Iran sent to the EAEU.

Joining the EAEU would improve Iran’s economic and political position globally and help to offset, at least partly, the cost of US sanctions.

On the Russian side, Moscow wants another pathway to the markets of the Middle East. That is why the Kremlin strongly supports the construction of the Nakhchivan corridor. It is a land route connecting not only Azerbaijan to its Nakhchivan exclave between Turkey and Armenia, but also Russia and Turkey and – crucially – Russia and Iran.

A future rail link between Russia and Iran, passing though Azerbaijan and Armenia, will undoubtedly enhance economic ties between the two countries as well as Iran’s trading relations with other Eurasian union member states.

However, how receptive Arab Middle East states would be to Russian goods transiting through Iran is another question altogether. This might be a reason for Moscow’s distinctly lukewarm response to the possibility of Tehran’s admission to the bloc.

In fact, there are several large questions hanging over inducting a new member into the bloc. Bloc consists of Armenia, Belarus, Kazakhstan and Kyrgyzstan, in addition to Russia. Uzbekistan, Moldova and Cuba have observer status.

Impact on Russian relationship with Israel and Arab States

It is not improbable that closer economic ties would lead to stronger military ones. The UN Security Council embargo on conventional arms shipments to Iran expired in October. It is no secret that Iran is interested in purchasing Russia’s S-400 anti-aircraft system. As well as Su-30 fighter jets. But such a deal would almost certainly ramp up tensions between Moscow and Washington and raise alarm bells in Gulf Arab states.

Then there is Russia’s relationship with Iran’s arch-enemy, Israel. The Russians have not prevented Israel from striking at Iranian targets in Syria, despite operating S-400 units in the area. Russia was the mediator in a prisoner exchange between its ally, Syria, and Israel that took place this month and there are rumors of further ongoing negotiations on humanitarian issues and even on wider geopolitical matters.

Speculation aside, what is known is that Israeli Prime Minister Benjamin Netanyahu and Russian President Vladimir Putin discussed continued coordination between their two countries in light of developments in regional security. Was Iran also on the agenda?

Moscow, after all, must maintain its own delicate balancing act and guard its geopolitical interests. The normalization of ties between Israel and the United Arab Emirates and other Arab states has changed interest-dynamics in the region, tilting the balance further toward the Arab Gulf region’s anti-Iran alliance. How does Russia profit from the new Middle East?

Some other countries are already in the queue to join

Finally, there is the fact that there are others ahead of Iran in the queue to join the Eurasian union. Syria is one of them; 40 other countries also have stated their wish to develop trade and economic cooperation with the bloc.

As well as declaring that Iran would soon join the EAEU, Qalibaf said he had brought “a very important message” from Supreme Leader Ali Khamenei. It may well be that Moscow is composing its own, equally important message to send back to Tehran.

NIKOLA MIKOVIC

Nikola Mikovic is a political analyst in Serbia. His work focuses mostly on the foreign policies of Russia, Belarus and Ukraine, with special attention on energy and “pipeline politics.” 

More by Nikola Mikovic

CHINA’S GLOBAL LEADERSHIP LIST – CHARTS AND FACTS

A vast majority of Americans have absolutely no clue how advanced China has become. Look at the social media comments, and it’s clear that too many Americans – especially Trump supporters – are filled with misinformation and prejudice. “China is 100 years behind” … “All Chinese products are crap” … “China can’t innovate” … “It’s a communist, poor, polluted country” … and, of course, the most popular theme is “China’s economy is about to collapse.” It’s hard to change these opinions, since those people reinforce their biases by gleefully consuming and sharing only anti-China articles. Anything remotely positive about China is attacked as “Chinese propaganda.”

This potent mix of ignorance and hubris is also precisely why western corporations gladly and voluntarily shared their intellectual property (IP) with their Chinese joint-venture partners. The term “forced technology transfer” was invented retroactively only after Chinese corporations started threatening western profits — for example: Huawei has overtaken Apple, Nokia and Ericsson in smartphones, 5G and telecom infrastructure; BYD manufactures more electric vehicles than Tesla; Alibaba and Tencent process 50x more mobile payments than the US; and the most valuable (ByteDance) and the most innovative (Meituan) startups are Chinese.

While it’s true that China as whole has a long way to go in GDP-per-capita, many big cities in China are essentially “developed economies.” Plus, China has surpassed the US in many areas and is catching up in others.

If you don’t know your competitor, you’re certain to lose the game. So here are some quick statistics on China’s global leadership:

Economy, Manufacturing, Trade

=> #1 in PPP GDP (been so since 2014 when it surpassed the US)

=> #2 in nominal GDP ($13.5 trillion in 2018 and $14.4 trillion in 2019). And it’s as big as the next 4 countries combined!

=> #1 in exports (been so since 2009 when it overtook Germany)

=> #1 in container traffic (40% of global market). 7 out of the Top 10 busiest seaports are in China

=> #2 importer ($2.1 trillion)

=> #1 in manufacturing value added (been so since 2010 when China took the crown from the US, which had been #1 for the previous 110 years). The chart below is based on data from the World Bank

In spite of coronavirus/COVID-19, China’s manufacturing continues to grow and accounts for28% of global manufacturing. In fact, China is as big as the US, Japan and Germany combined.

=> #1 in foreign exchange reserves (>$3 trillion)

=> #1/#2 holder of US debt (>$1 trillion)

=> #1 banking system (twice the size of the US, in terms of assets). Surpassed the EU in 2016.

=> #1 trade partner for 130 countries (trade = exports + imports). And for 37 countries, China is their #1 export destination (meaning, they sell the most goods to China).

=> #1 in contribution to global GDP growth for the past decade (25-35%, which is twice that of the US). That is, if the world GDP grows by $100, then $25-$35 comes from China.

=> #1 in steel, cement, aluminum production (linklinklink). In three years (2012 – 2015), China used more cement than the US did in the entire 20th (link)

=> #1 in electricity generation (link)

=> #1 importer of crude oil (link)

=> #1 in purchase of industrial robots, accounting for almost 40% of global market in 2018 (link)

=> #1 in manufacturing of conventional cars (>26 million per year)

=> #2 in hi-tech manufacturing (Yeah, China isn’t just making t-shirts anymore)

=> #2 in billionaires (415 billionaires as of 2020)

=> #2 in millionaires (5 million millionaires)

=> #2 stock market, by market cap (overtook Japan in 2014)

=> #2 bond market, worth $16 trillion (link)

=> #1 in representation in Global Fortune 500 companies. (surpassed the USA in 2020). The chart below is from 2019. By mid-2020, mainland China had 124 and the US had 121 companies.

=> #1 in production of rice, wheat, potato, beer(!), tea, apple, strawberry, grapes and numerous other grains, vegetables and fruits. (link)

=> #1 in Middle Class population (350 million in 2018; and it overtook the US in 2015)

=> #1 country in the wealthiest Top 10% of global households (overtook USA). Now there are 100 million Chinese worth $110K or more.

=> #1 in poverty elimination (800 million lifted out of extreme poverty). Extreme poverty will be practically 0% in 2020.

=> #1 in online/e-commerce retail sales (3x the US)

=> #1 in personal luxury goods sales (35% of global market)

=> #1 retail market in the world by 2019 or by 2020 ($5.6 trillion) ($5 trillion)

=> #1 in international tourism spending (In 2010, Chinese tourists spent half as much as Americans; and by 2017, China was spending twice as much as the US)

Technology Superpower
=> #1 in Internet users (China had only 2 million internet users in 1998. It then grew to 300 million by 2008 and 900 million by early 2020).

=> #2 in Unicorns (startup companies worth more than $1 billion). 142 in China versus 175 in US. In 2020, the number of Unicorns are 227 in China versus 233 in the USA). Interestingly, 16 Unicorns in the US were founded by Chinese immigrants or Chinese Americans.

=> #2 in venture capital funding ($100 billion of new venture capital funding for about 2,900 startups last year )

=> #1 in e-commerce (42% of world market)

=> #1 in 4G mobile network (2 billion users)

=> #1 in Internet users (830 million people) and fiber-optic broadband users (320 million)

=> #1 in smartphones (Chinese brands have 50% of the global market)

=> #1 in solar, wind and hydroelectric power (link)

=> #1 in electric cars – manufacturing and sales (link)

=> #1 in consumer drones (70% of global market)

=> #1 in supercomputers (227 out of the 500 supercomputers are Chinese)

=> #1 in mobile payments (50x larger than the US)

Infrastructure Giant

=> #1 in skyscrapers – more than half of all skyscrapers are in China (link)

=> #1 in global infrastructure projects. China’s Belt and Road Initiative (BRI) involves 152 countries and international organizations. (link)

=> #1 in patents — accounting for almost half of all patents in the world!

=> #1 in international patents – according to WIPO. The US had been #1 since 1978 when WIPO/PCT was established. China had 58,990 international patents in 2019. Here’s an infographics

from WIPO:

=> #1 in science, technology, engineering and math (STEM) college graduates (4x as many as the US)

=> #1 in scientific publications since 2016. And also catching up on the Top 10% and Top 1% of these papers/articles. (link)

=> #1 in the world in math, science and reading proficiency among high school students

=> #1 in 5G (China owns about 40% of 5G patents, and the world’s leading 5G vendor and patent holder is none other than Huawei)

=> #1 in Artificial Intelligence (AI) funding, startups and publications (linklink)

=> #1 in R&D spending in 2019 – according to US National Science Board; here’s an updated article for 2020. In the chart below, brown = USA and purple = China. The chart shows only up to 2017.

=> #2 in number of satellites in orbit/space (280 satellites as of 2018). In 2018, China became the first country to land on the far side of the moon. In both 2018 and 2019, China was #1 in rocket launches.

What should the US do? Try to “contain” China? Start World War III to maintain global hegemony? Become depressed and paranoid? Thankfully, the answer to all those questions is, “NO.” There are constructive things that America can and should do to prepare for the future.


-Chris Kanthan

Originally published on WORLD AFFAIRS

How the New Silk Roads are merging into Greater Eurasia

Russia is keen to push economic integration with parts of Asia and this fits in with China’s Belt and Road Initiative

By PEPE ESCOBAR

The concept of Greater Eurasia has been discussed at the highest levels of Russian academia and policy-making for some time. This week the policy was presented at the Council of Ministers and looks set to be enshrined, without fanfare, as the main guideline of Russian foreign policy for the foreseeable future.

President Putin is unconditionally engaged to make it a success. Already at the St Petersburg International Economic Forum in 2016, Putin referred to an emerging “Eurasian partnership”.

I was privileged over the past week to engage in excellent discussions in Moscow with some of the top Russian analysts and policymakers involved in advancing Greater Eurasia.

Three particularly stand out: Yaroslav Lissovolik, program director of the Valdai Discussion Club and an expert on the politics and economics of the Global South; Glenn Diesen, author of the seminal Russia’s Geoeconomic Strategy for a Greater Eurasia; and the legendary Professor Sergey Karaganov, dean of the Faculty of World Economy and International Affairs at the National Research University Higher School of Economics and honorary chairman of the Presidium of the Council on Foreign and Defense Policy, who received me in his office for an off-the-record conversation.

The framework for Great Eurasia has been dissected in detail by the indispensable Valdai Discussion Club, particularly on Rediscovering the Identity, the sixth part of a series called Toward the Great Ocean, published last September, and authored by an academic who’s who on the Russian Far East, led by Leonid Blyakher of the Pacific National University in Khabarovsk and coordinated by Karaganov, director of the project.

The conceptual heart of Greater Eurasia is Russia’s Turn to the East, or pivot to Asia, home of the economic and technological markets of the future. This implies Greater Eurasia proceeding in symbiosis with China’s New Silk Roads, or Belt and Road Initiative (BRI). And yet this advanced stage of the Russia-China strategic partnership does not mean Moscow will neglect its myriad close ties to Europe.

Russian Far East experts are very much aware of the “Eurocentrism of a considerable portion of Russian elites.” They know how almost the entire economic, demographic and ideological environment in Russia has been closely intertwined with Europe for three centuries. They recognize that Russia has borrowed Europe’s high culture and its system of military organization. But now, they argue, it’s time, as a great Eurasian power, to profit from “an original and self-sustained fusion of many civilizations”; Russia not just as a trade or connectivity point, but as a “civilizational bridge”.

Legacy of Genghis Khan 

What my conversations, especially with Lissovolik, Diesen and Karaganov, have revealed is something absolutely groundbreaking – and virtually ignored across the West; Russia is aiming to establish a new paradigm not only in geopolitics and geoeconomics, but also on a cultural and ideological level.

Conditions are certainly ripe for it. Northeast Asia is immersed in a power vacuum. The Trump administration’s priority – as well as the US National Security Strategy’s – is containment of China. Both Japan and South Korea, slowly but surely, are getting closer to Russia.

Culturally, retracing Russia’s past, Greater Eurasia analysts may puzzle misinformed Western eyes. ‘Towards the Great Ocean’, the Valdai report supervised by Karaganov, notes the influence of Byzantium, which “preserved classical culture and made it embrace the best of the Orient culture at a time when Europe was sinking into the Dark Ages.” Byzantium inspired Russia to adopt Orthodox Christianity.

It also stresses the role of the Mongols over Russia’s political system. “The political traditions of most Asian countries are based on the legacy of the Mongols. Arguably, both Russia and China are rooted in Genghis Khan’s empire,” it says.

If the current Russian political system may be deemed authoritarian – or, as claimed in Paris and Berlin, an exponent of “illiberalism” – top Russian academics argue that a market economy protected by lean, mean military power performs way more efficiently than crisis-ridden Western liberal democracy.

As China heads West in myriad forms, Greater Eurasia and the Belt and Road Initiative are bound to merge. Eurasia is crisscrossed by mighty mountain ranges such as the Pamirs and deserts like the Taklamakan and the Karakum. The best ground route runs via Russia or via Kazakhstan to Russia. In crucial soft power terms, Russian remains the lingua franca in Mongolia, Central Asia and the Caucasus.

And that leads us to the utmost importance of an upgraded Trans-Siberian railway – Eurasia’s current connectivity core. In parallel, the transportation systems of the Central Asian “stans” are closely integrated with the Russian network of roads; all that is bound to be enhanced in the near future by Chinese-built high-speed rail.

Iran and Turkey are conducting their own versions of a pivot to Asia. A free-trade agreement between Iran and the Eurasia Economic Union (EAEU) was approved in early December. Iran and India are also bound to strike a free-trade agreement. Iran is a big player in the International North-South Transport Corridor (INSTC), which is essential in driving closer economic integration between Russia and India.

The Caspian Sea, after a recent deal between its five littoral states, is re-emerging as a major trading post in Central Eurasia. Russia and Iran are involved in a joint project to build a gas pipeline to India.

Kazakhstan shows how Greater Eurasia and BRI are complementary; Astana is both a member of BRI and the EAEU. The same applies to gateway Vladivostok, Eurasia’s entry point for both South Korea and Japan, as well as Russia’s entry point to Northeast Asia.

Ultimately, Russia’s regional aim is to connect China’s northern provinces with Eurasia via the Trans-Siberian and the Chinese Eastern Railway – with Chita in China and Khabarovsk in Russia totally inter-connected.

And all across the spectrum, Moscow aims at maximizing return on the crown jewels of the Russian Far East; agriculture, water resources, minerals, lumber, oil and gas. Construction of liquefied natural gas (LNG) plants in Yamal vastly benefits China, Japan and South Korea.

Community spirit

Eurasianism, as initially conceptualized in the early 20th century by the geographer PN Savitsky, the geopolitician GV Vernadsky and the cultural historian VN Ilyn, among others, regarded Russian culture as a unique, complex combination of East and West, and the Russian people as belonging to “a fully original Eurasian community”.

That certainly still applies. But as Valdai Club analysts argue, the upgraded concept of Greater Eurasia “is not targeted against Europe or the West”; it aims to include at least a significant part of the EU.

The Chinese leadership describes BRI not only as connectivity corridors, but also as a “community”. Russians use a similar term applied to Greater Eurasia; sobornost (“community spirit”).

As Alexander Lukin of the Higher School of Economics and an expert on the SCO has constantly stressed, including in his book China and Russia: The New Rapprochement, this is all about the interconnection of Greater Eurasia, BRI, EAEU, SCO, INSTC, BRICS, BRICS Plus and ASEAN.

The cream of the crop of Russian intellectuals – at the Valdai Club and the Higher School of Economics – as well as top Chinese analysts, are in sync. Karaganov himself constantly reiterates that the concept of Greater Eurasia was arrived at, “jointly and officially”, by the Russia-China partnership; “a common space for economic, logistic and information cooperation, peace and security from Shanghai to Lisbon and New Delhi to Murmansk”.

The concept of Greater Eurasia is, of course, a work in progress. What my conversations in Moscow revealed is its extraordinary ambition; positioning Russia as a key geoeconomic and geopolitical crossroads linking the economic systems of North Eurasia, Central and Southwest Asia.

As Diesen notes, Russia and China have become inevitable allies because of their “shared objective of restructuring global value-chains and developing a multipolar world”. It’s no wonder Beijing’s drive to develop state-of-the-art national technological platforms is provoking so much anger in Washington. And in terms of the big picture, it makes perfect sense for BRI to be harmonized with Russia’s economic connectivity drive for Greater Eurasia.

That’s irreversible. The dogs of demonization, containment, sanctions and even war may bark all they want, but the Eurasia integration caravan keeps moving along.