УДК 339

Discuss the financial cooperation model between China and Russia under the “One Belt, One Road” initiative

Ван Сяодань – бакалавр, в стадии получения степени магистра программы «Мировая экономика и финансы» Московского государственного университета им. М.В. Ломоносова

Abstract: The financial cooperation model between China and Russia under the “One Belt, One Road” initiative has always attracted much attention. This cooperation has injected new vitality into the economic partnership between the two countries. This cooperation model is based on the common interests and strategic goals of both countries and aims to promote trade, infrastructure construction and financial development. Through the construction of the "Belt and Road" project, China has not only released its accumulated huge economic potential, but also successfully transformed its strong economic strength into significant influence on the international stage. Effective financial cooperation is a key support for the construction of the “One Belt, One Road” project, and strengthening the development of financial cooperation between China and Russia needs to start with the establishment of a more institutionalized cooperation framework. Within the framework of the Belt and Road Initiative, China and Russia, as early partners, have participated in a wide range of fields and diversified projects, and have accumulated rich practical experience and valuable lessons. This provides a solid foundation for both parties to deepen cooperation. Therefore, studying the Sino-Russian financial cooperation mechanism within the framework of the “Belt and Road” not only has practical significance in promoting bilateral economic, trade and financial cooperation between China and Russia, but also provides an important demonstration for stimulating financial cooperation between China and other countries along the “Belt and Road” and leadership role.

Keywords: Sino-Russian cooperation, financial development, One Belt, One Road, cooperation model, international finance.

China and Russia have established a bilateral currency swap mechanism under the "Belt and Road" (hereinafter referred to as the Initiative) initiative, making trade more convenient. This mechanism helps avoid the use of third country currencies, reduces transaction costs, and enhances the sustainability of bilateral trade. In addition, the two countries have also cooperated in financial supervision, tax policy and financial market access to create an environment more conducive to investment and financial cooperation (hereinafter referred to as FС). Secondly, Chinese and Russian financial institutions (hereinafter referred to as FI).are quite active in investing in the projects of the Initiative under study. Financial institutions such as China's China Development Bank and China Export-Import Bank and Russia's State Savings Bank have provided a large amount of financial support in infrastructure construction, energy fields and cross-border trade. Active cooperation between the above-mentioned financial institutions contributes to the implementation of the Initiative project and significantly strengthens the interaction between the two countries under study.

The current development status of FС between China and Russia

The two states under study have made significant progress in FС mechanisms. The cooperative relationship between the two countries under the Initiative has gradually deepened. As a consequence, this creates a number of additional opportunities for China and Russia, and beyond that, for regional economic cooperation (hereinafter referred to as EC) in general.

From China

  1. RMB internationalization: Through FС with Russia, China has successfully expanded the scope and scale of the use of RMB in settlement international payments. RMB settlement in bilateral trade has become the norm, which actively promotes China's RMB internationalization strategy.
  2. Support from FI. FI such as China’s China Development Bank and China Export-Import Bank have been quite active in financing the projects of the Initiative. More specifically, these financial institutions provide substantial financial support for project construction. It is worth noting that the financial participation of these FI contributes to the effective development of infrastructure and trade.
  3. Financial regulatory cooperation: The financial regulatory agencies of China and Russia maintain close contact to jointly respond to risks and challenges. Consequently, it contributes to the effective maintenance of the stability of the financial system as a whole, and also contributes to the growth of FC stability between the states under study.

From Russia

  1. Capital flows: Russia sees FC with China as an opportunity to attract Chinese capital into Russia. This has a positive impact on Russia’s economic development, especially in the energy sector.
  2. Trade growth: Financial cooperation promotes bilateral trade between China and Russia. The currency swap mechanism established by both parties has reduced transaction costs, strengthened trade relations, and promoted closer economic ties between the two countries.
  3. Multilateral cooperation: Russia supports the reform of the International Monetary Fund, which is in line with Russia’s international financial interests and helps improve the status of emerging market countries in global financial governance.

Cooperation prospects in the development process of China-Russia FC mechanism

The development of China-Russia FC mechanism will help deepen the EC between the two sides. By establishing bilateral currency swap mechanisms and financial support projects, the two countries have strengthened trade and investment cooperation and provided more financing channels for enterprises. This close cooperation not only promotes the growth of bilateral trade, but also strengthens the economic ties between the two countries and provides solid support for their respective economic development.

Sino-Russian FC also provides examples and reference for countries along the Initiative. As an early partner of the Initiative, interaction and cooperation between the two countries has accumulated rich practical experience in multiple fields. A number of other States that are actively participating in the Initiative, can draw lessons from this experience and learn from the FC model, which was established by both sides to effectively promote cooperation with China and other states in the economic sphere.

Sino-Russian cooperation helps strengthen regional stability. The two countries, while actively deepening economic ties, not only work closely together in the economic sphere, but also establish closer cooperation in areas such as politics and security. Such regional cooperation can help reduce potential tensions and promote common development.

In the context of the Initiative, China and Russia are actively exploring innovation and improvement of FC mechanisms to deepen bilateral cooperation

Under the framework of the Initiative, the Sino-Russian FC mechanism is moving towards an innovative future direction, providing new opportunities and prospects for promoting EC. The future direction of this FC is mainly focused on the following key areas: First, the expansion and deepening of the currency swap mechanism will be one of the important directions. The continuous expansion and deepening of the currency swap agreement between China and Russia will help further promote bilateral trade and investment, reduce transaction costs, and enhance the competitiveness of the two countries' currencies in the international market. Secondly, cooperation between FI will be further strengthened. Chinese and Russian FI will continue to actively participate in the financing and investment of Initiative projects, especially in the fields of infrastructure, energy and high technology. This will help drive project implementation and regional development. Third, financial innovation and the application of digital technology will become the key to the future. The two parties will explore cooperation opportunities in financial technology, blockchain, digital payments and other fields to improve the efficiency and security of financial services while promoting the modernization of the financial system. In addition, strengthening financial supervision and risk management will also be one of the future directions. As the scale of cooperation expands, more stringent regulatory measures are needed to ensure the stability of the financial system while addressing potential risks and challenges.

In general, the future direction of the Sino-Russian FC mechanism under the Initiative framework includes the expansion of currency swap mechanisms, deepening cooperation between FI, the application of financial innovation and digital technology, and the strengthening of financial supervision and risk management. These directions will help further promote Sino-Russian bilateral FC and provide more opportunities for the sustainable development of the regional and global economies. The continuous development of China-Russia FC mechanisms has injected new vitality into bilateral EC and regional stability. The close cooperation between the two parties in the financial field will continue to deepen, bringing broader opportunities and more benefits to the EC between China, Russia and countries along the Initiative. This cooperation will continue to play an important role on the international stage and make positive contributions to regional and global prosperity.


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