Interview of Minister of Industry and Trade of the Russian Federation

Minister of Industry and Trade of the Russian Federation Denis Manturov [File photo]

The APEC meeting held between November 10 and 11 in Beijing was a key event for APR business community and allows to extend collaboration with the benchmark companies of the region. In the run-up to the meeting, the Minister of Industry and Trade of the Russian Federation (MIT) Denis Manturov told us about the development of trade and economic collaboration with APR countries in an interview with the Moscow Office of China News Service.

– Denis Valentinovich, in October you arrived in Indonesia on a business visit. What are the results of this trip? What plans do MIT have in relation to collaboration with APR countries and, in particular, with China?

Over the last years Russia began transition to a fundamentally new stage of the trade and economic relations with APR countries. In the industrial sphere the cooperation is mainly implemented in such areas as civil aircraft engineering, automobile production, mechanical engineering and metallurgy. But it does not expose the available potential of cooperation in full. In future it is important to extend cooperation in the light, chemical and pharmaceutical industries.

The business forum, which took place in Singapore in September 2014, proved a readiness of our Asian partners for collaboration in the agricultural and transport industries. There have been negotiations carried out on intensification of integration with India, and we expect to increase trade and economic turnover up to 20 billion US dollars with this country by 2015. In Vietnam we plan to participate in helicopter equipment delivery and creation of multifunctional regional service center based on JV "Helitecho" with the assistance of the company "Helicopters of Russia".

Following the results of the Indonesia visit in October 2014, we are planning to increase the volume of trade and economic turnover between our countries 1.5 times as many - up to 5 bln US dollars by 2016. The declared number can be even bigger at the expense of realization of some investment projects in oil production, pharmaceutical, metallurgy, mechanical engineering, transport and aircraft construction areas both in Indonesia and in Russia. Realization of the big joint projects in Indonesia – construction of the bauxite-alumina production in the West Kalimantan, construction of ferronickel complex in Sulawesi using unique Russian technological solutions providing high-efficiency economic performances, and start-up of KAMAZ automobiles production – are on a priority basis.

As to Russia-China relationship, an ambitious task faces us – to bring bilateral trade to 100 bln US dollars by 2015, and to 200 bln US dollars by 2020. The stated task is not easy, and in order to achieve this purpose, it is necessary not only to support and develop cooperation in traditional sectors, but also search new points of the trade and economic collaboration increase.

– The fifth meeting of the heads of PRC and RF will take place within the scope of the 2014 APEC meeting. What is the significance of this meeting in your opinion? What kind of bilateral agreements in the trade and economic areas, as well as in other ones, can be signed in the course of Vladimir Putin visit to China?

This is a critical meeting, where we will work through the formerly planned projects and preagreed intentions. In general, legal and regulatory framework in the industrial sphere is already organized. As far back as in 2012, the Memorandum of Understanding, particularly provided for the joint steps on bilateral trade structure's improvement by means of innovative and high-tech products' share increase, as well as by efforts to attract companies and respective industry associations into participation in exhibition-fair arrangements in the territory of two countries, was signed by the Minister of Commerce of PRC. At this time, within the framework of Intergovernmental Commission, work in aircraft and forest industries was coordinated, and issue on creation of the Working Group for collaboration in aluminum industry has been developed.

I would remind you that over 30 agreements, the majority of which required thorough improvements and details agreement, were signed in course of the 19th regular meeting of the heads of governments of Russia and China on the 13th of October 2014. The Memorandum of Understanding between the Federal Space Agency and Chinese GPS Commission concerning collaboration in global positioning system area was signed.

At the same time, the parties concluded a number of Agreements: concerning cooperation between the State Corporation Rostec and Chinese Aerospace Science and Engineering Corporation; and strategic partnership between FSUE RI "Voskhod" and Inspur Group Cp., Ltd in IT-security sphere.

Also, a framework contract on realization of the capital investment project on timber and chemical complex construction was concluded between LLC "Sibirsky Les" and CAMC Engineering.

– As far as we know, you will be included into the Russian delegation in the 2014 APEC meeting too. Did you plan any business meetings with the heads of Chinese relevant ministries and departments? If yes, with whom and on what point are you planning to speak?

Besides my participation in the business meetings of the President Vladimir Putin with the President of PRC Xi Jinping, I have a business launch with the Minister of Industry and Information Technology of China Miao Wei. The heads and representatives of a number of benchmark Russian companies will participate in this meeting. Consequently, this will concern some joint projects with participation of Russian companies.

– It is known that a number of large-scale projects have been realized in different industrial areas within the scope of China and Russia collaboration. What kind of progress is in this sphere? Are there any new joint projects planned, and if yes – what kind of projects?

Industrial cooperation can be rightfully considered as a locomotive of Russia-China collaboration. At this time the work on a number of projects, which cover a few primary industries, is really carried out actively.

The most actual subject concerning industrial cooperation in the aviation industry is a creation of the new high-tech product – wide-body long-range aircraft (WBLRA). We repeatedly talked over this project and today we can state that the work is going under the plan. In June of this year a development phase of cooperation was finished, and the participators of the program proceeded to the second phase implementation – development of the preliminary design. In September 2014 OJSC "OAC" and КОМАК finally completed and submitted business conception of this project to MIT and Chinese party. We expect that the final variant of the project business conception will permit us to make a decision about a full-scale start of the program.

Project on joint development of a promising heavy civil helicopter has been still discussed. Collaboration on this project is carried out between "Vertolety Rossii" (Rostec) and Chinese helicopter company "Avicopter". In September in course of the visit of the Chairman of AVIC Mr. Lin Zuoming and Executive Vice-President Li Fan Yun to Russia the parties came to an agreement about strategic partnership.

Collaboration of Russia and China has been intensified in the shipbuilding industry. Thus, in January 2013 FSUE "Krylovsky gosudarstveny nauchny tsentr" concluded the contract on development of the conceptual project of the large-capacity arctic vessel with a capacity of 110 thousand tons with Chinese international shipbuilding and marine facilities company. This vessel is intended for the crude oil transportation from the port of Murmansk to the eastern ports of China along the Northern Sea Route during the period of summer-autumn shipping season.

An agreement concerning cooperation in the mechanical engineering was signed between OJSC "NPK "Uralvagonzavod", OJSC "VTB Leasing" and Chinese company Honghua Group Limited. This cooperation plans production of the heavy echelon rigs in the territory of Russian Federation, as well as implies localization of up to 100% of the metal supporting structures and up to 50% of the component structures in the territory of our country.

Agreement on realization of the project on construction of "Great Wall" automobiles production plant in the Tula Region was signed. Chinese company is planning to invest up to 18 bln. Roubles into this project.

Company "Grouppa GAZ" is cooperating with PRC automobile companies in the sphere of LCV components production, LV distribution organization and FAW truck's joint manufacturing. The parties already came to an agreement about development of the additional possibilities on the project localization degree increase and examination of the opportunity of FAW assemblies and units application in the products of the company "Grouppa GAZ".

In the metallurgy area it is worthwhile to note an active dialogue in the aluminium industry between "UC RUSAL" and Chinese companies. In addition, now there is negotiated a possibility of completion of Taishet Aluminium Plant with China Aluminium Corporation Limited (Chalco).

In 2015 VI Holding is planning to complete construction and commission of the plant in Henan Province on hot-rolled and cold-rolled stock production made from aluminum alloys with a capacity equal to 600 thousand and 400 thousand tons per year respectively, which will be used for the subsequent launch of the specific production. Volume of the project investments is equal to 1 bln. US dollars.

Over 10 years "VSMPO-AVISMA" Corporation (Rostec) has been collaborating with different Chinese corporations by delivering titanic billets for stamping for the aircraft manufacturing programs of Airbus Corporation, titanic semi-finished goods and stampings for the long-range C-919 and regional ARJ-21 airplanes, titanic welded pipes for the power plants, including nuclear power plants, construction.

China is the major chemical goods export partner of Russia. In 2014 OJSC "Uralkali" concluded the contract with the consumers' consortium headed by China National Agricultural Means of Production Group Corporation (CNAMPGC), whereunder 700 thousand tons of potassium chloride will be delivered to PRC.

Collaboration in pharmaceutical sphere is realized by OJSC "Biomed named after I.I. Mechnikov" (subsidiary of OJSC "Farmstandard") and Chinese company "Valvax Biotechnolodgy Co. Ltd.". This project presupposes transfer of the polyvalent vaccine production technology for pneumococcal infection prophylaxis to Russia.

– Factor of uncertainty if typical for the worldwide economics. In this regard, what can be a mower for economic and industrial and trade cooperation of Russia and China?

The basic difficulties depend on the fact of our economics' depending on the external market factors. This dependence can be decreased or overcome only by following one of the main trends of economic policy of the developed countries in recent years – reindustrialization. Raw and virtual economic models are no more capable of creating crucial competitiveness. First of all, economic policy should be oriented on the real sector development.

China has a huge production basis in many industries, and we are open for any new ideas, including creation of the joint enterprises in the territory of Russia and technology transfer. We, in its turn, realize a number of activities on the industry support and development, including subsidy of the part of the costs of the raw material purchase credits, technical re-equipment of production and R&D.

We will realize these steps within the frame of the Interdepartmental Memorandum on strengthening of cooperation in industrial sphere signed by the Ministry of Industry and Information Technologies of RPC. This document stipulates strengthening of collaboration on priority areas of industrial cooperation.

Conducting of the foreign exchange operations for export settlements in roubles and yuans takes a special significance here. Not only Chinese investors but also Russian businessmen are interested in this idea.

Cooperation in the exhibition sphere is examined as a mover of Russia-China collaboration development in industrial sphere. Thus, China will acts as the official partner of the 6th International Industrial Exhibition "INNOPROM-2015", which will take place within the period from 8th to 11th of July 2015 in Ekaterinburg with support of MIT of Russian Federation.

Due to the agreements reached in respect of the partnership, we plan to conduct five subject exhibitions at once under the single brand name at "INNOPROM-2015": mechanical engineering, power efficiency, technologies for the cities, optics and lasers, and industrial automation.

I believe that this will be a serious stimulus for Chinese manufacturers, which are interested in Russian market development and production localization in the territory of our country.