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Moscow does not want to be a raw materials supplier for Beijing

The Year of China in Russia has been overshadowed by strained relations between the two countries in terms of trade and the economy.

Moscow, unhappy with its worsening balance of trade and role as a source of raw materials and an outlet for Chinese goods, has clamped new restrictions on Chinese businessmen and toughened its stand on energy supplies.

The CNPC state-owned oil and gas corporation is seriously worried by statements from top Gazprom managers that construction of the Altai gas pipeline might be postponed.
The pipeline is expected to begin delivering several dozen billion cubic meters of gas to China in 2011.
The Economic Development and Trade Ministry and the Industry and Power Ministry have announced a decision not to allow Chinese cars to be assembled in Russia. The decision threatens four projects at once, costing $400 million.

But what concerns Moscow the most was made public a month ago by State Duma speaker Boris Gryzlov when he addressed the opening meeting of the Russian-Chinese parliamentary commission.
He said that Russian exports "not only mostly contain, but continue to increasingly include raw materials and primary conversion products, such as crude oil, round timber, fish, chemicals, and non-ferrous metals." Conversely, the export share of high technology products is dwindling.
However, even despite the current bias in the balance of trade, experts believe that the situation is not entirely hopeless for Russia.

Sergei Pravosudov, director of the National Energy Institute, said that a program recently approved by the government to develop East Siberia and the Far East stipulates the construction of a number of gas processing and gas chemical production units to be sited right at the fields.
"It will become possible not only to pipe the gas, but also to produce costlier helium, propane, butane, etc. from it, manufacture polypropylene, all kinds of plastics and so on," the expert said. "Isn't that a way of remedying the commodity imbalance?"

Yevgeny Yasin, research director at the Higher School of Economics, said that Russia will have to learn to make high-quality products.

"Things in this field are bad for the time being, if we exclude armaments," the analyst said.

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