Poles apart

MOSCOW – The world is entering the second decade of the 21st century. The main Western countries are still mired in the global financial and economic crisis, e.g. the countries of the eurozone are expected to show only minimal GDP growth, or even none at all. Just like in previous years, the world’s “locomotive” is China, whose GDP, according to the preliminary data for 2010, grew by just less than by 10 percent.

Now many experts are wondering if the Chinese economy’s growth rates will remain at their usual level of 10 percent and more or if they will decrease to 9 percent. All the other countries wish to have a similar dilemma: 9 or 10 percent of the economic growth!

For example, in 2010 the Russian economy was supposed to show “almost 4 percent growth,” as recently announced by top government representatives. However, according to the latest official data, growth will not exceed 3.8 percent. This means that, firstly, Russia is far from even the precrisis level of its raw material economy of 2008. Secondly, the fourfold gap between the Russian and Chinese GDP, recorded at the end of 2009, increased over the last year. That is why the continuing propaganda attempts by Russian politicians, political scientists and TV presenters to bring Russia in closer not even to China, but at least to the shadow of its rapid growth, by signing into BRIC, are absolutely groundless. Moreover, they are just ridiculous.

It is not even about the growth rates. The difference between the quality of the Russian and Chinese economies is felt in all their branches. For example, in 2010 Russia became even less attractive for foreign investors regardless of all the invocations from the top and the attempts to persuade society to the opposite. Here are the facts. In the international “Ease of doing business” index, which describes the conditions for business activity, Russia lost seven positions last year and is now on the 123rd place out of 183. The international community estimated the problem of corruption in Russia even worse: in this ranking the country went down to the bottom of the list — to the 154th position out of 178. It means that Russia found itself among the most corrupt countries in the world. Some experts hardly exaggerate when saying that Russia has reached “the corruption bottom.”

It is not surprising that as a result, according to experts from the Bank of Moscow, in the combined ranking of global competitiveness Russia has moved to the 51st place, down from the 43rd that it took in 2007.

All of this means that Russia remains an extremely unfavorable place for serious foreign investments. As we can see, foreign investors are more impressed by the amount of stealing, corruption, banditry and even terrorist rule that have captured the country than by the constant public propaganda campaigns trying to assure the international community about the “construction of a democratic society” in Russia, etc.

Meanwhile, in socialist China, where the governing Communist party is not going to lose its directive role as guaranteed by the Constitution, nothing frightens foreign investors. The political stability in this enormous country, the thriving market, the improvement of the people’s well-being, and, accordingly, the increase in the purchasing power of hundreds of millions inhabitants are much more important for them. That is why it is absolutely natural that in 2010 China took the first place in the world ranking of investment attractiveness.

According to preliminary data, this past year the Chinese investment record exceeded 100 billion dollars. This amount of direct foreign investments — the most needed kind for the development of the real sector — was attracted to the Chinese economy during the last year. (Compare with Russia where the situation is opposite. According to the Bank of Russia, in the first 11 months of 2010 the recorded flight of capital was 29 billion dollars.)

The real sector of any economy is in transport, modern communication facilities, agriculture and, of course, the main sphere of the whole of economy — industry. That is why it is not surprising that Chinese industrial export is growing and its structure is being improved at the same time. Russian-Chinese bilateral trade clearly shows this. According to the incomplete data for 2010, the lion’s share of Russian exports to China consisted of raw oil and oil products, ores and scrap metal. Moreover, taking into account the new contracts for oil, gas and ore export to China, signed in 2010, experts believe that the share of raw materials in Russian export will only increase in the nearest future. Really, today’s Russia increasingly demonstrates its position of raw materials appendage to the superpower neighbor, and it is unable to play any other role as of now.

Conversely, during the last year high-tech exports of Chinese machinery and electronic goods to Russia almost doubled, not to mention more labor-intensive products (such as clothes or shoes). It is one more weighty proof of the fact that today Chinese and Russian development paths are in opposite direction. No ephemeral BRIC organization can improve the international image of Russia.