Information Bulletin of the BRICS Trade Union Forum
Issue 6.2022
2022.02.07 — 2022.02.13
International relations
Foreign policy in the context of BRICS
Ties Between China, Brazil to Be Boosted If Lula Wins, Says Ex-Foreign Minister (Связи между Китаем и Бразилией будут укрепляться в случае победы Лулы, заявил экс-министр иностранных дел) / New Zealand, February, 2022
Keywords: expert_opinion, political_issues
New Zealand

The presidential election in Brazil is underway and there are implications on who takes office in October, one of them being how each candidate will affect the relations between China and Brazil. The relations between the two countries will surely improve if Luiz Inácio Lula da Silva is elected in October, according to one of the leftist aides in the Lula administration.

Prior to his election, current president Jair Bolsonaro had made comments causing tensions with China, saying that, "China is not buying in Brazil, it is buying Brazil. Are we going to leave Brazil in the hands of the Chinese?" However, Bolsonaro's policy toward China had not caused any confrontation between the two powers. China still remains the largest investor and trade partner with Brazil, and it appears that president Bolsonaro is taking a more pragmatic approach in foreign policies towards China.

The Lula administration (2003-2010) was instrumental in cultivating a strong bilateral relationship between Brazil and China, largely due to a combination of extraordinary growth in trading and investments between the two powers. Brazil is a steady supplier of raw materials and agricultural produce for China and former President Lula considers China to be "Brazil's most promising business partner and a strategic ally" due to China's rapidly rising demand for such resources.

China has a fast-growing economy and certainly has the potential to have the most powerful economy in the world. Over the last decade, Chinese companies have invested more than $66 billion in projects such as infrastructure and technology all across Brazil. Under current president Bolsonaro, the state of the economy in Brazil has been stagnant and anemic. Its economy had fallen into a recession due to the combination of extreme weather conditions, COVID-19, high interest rates, and inflation. Lula believes it is in Brazil's best interests to reinforce its relationship with China to achieve further economic growth.

One of the ways Brazil can do so is by engaging more frequently with the BRICS bloc, which includes partnerships with other countries such as Russia, India, and South Africa in order to address global affairs of mutual interest. "China is important to us in the scientific, technological and in the commodities point of view. China is important in all aspects because China can transform this polarized world where more players can take part in global decisions," Lula said in an interview with CGTN America. For Lula, it is critical for Brazil to showcase its importance in the world so that it may take on a greater role in the world system. If Lula is selected for president in the upcoming election, we will likely see a more promising relationship between China and Brazil.

The Organisation for World Peace

The views in the article are the author's own and do not necessarily reflect the editorial policy of InfoBRICS.

China, Russia to bolster ties in coming years (Китай и Россия будут укреплять отношения в ближайшие годы) / China, February, 2022
Keywords: trade_relations

Trade partners working together across various sectors of industry

China-Russia bilateral trade is expected to experience high-speed growth in the coming years, as both countries are actively reinforcing business ties in cross-border e-commerce, green low-carbon businesses, biomedicine and other emerging fields, said commerce officials and experts.

They made the remarks as the total trade turnover between China and Russia, two of the world's major countries, soared 35.8 percent on a yearly basis to $146.9 billion in 2021, exceeding the threshold of $140 million for the first time, the Ministry of Commerce announced in mid-January.

China has been Russia's top trading partner for 12 consecutive years, said Gao Feng, the ministry's spokesman, adding that both sides have been consolidating the trade of bulk commodities including energy, minerals, agriculture and forestry, and expanding new growth points in the digital economy and biomedicine, as well as cross-border e-commerce and trade in services.

Metals, crude oil, natural gas, pharmaceuticals, medical equipment and agricultural and chemical products are Russia's main shipments to China.

China exports mainly construction machinery, manufacturing equipment, steel, electronics, textiles, garments and household appliances to Russia.

Chinese-made passenger vehicles have also become popular in Russia in recent years, according to information released by China's General Administration of Customs.

Despite the pandemic, all-around practical cooperation between China and Russia has continued to flourish.

Major projects have played a key role in energizing the overall cooperation conducted by the two countries, said Gao.

For example, construction began on the No 7 and No 8 units of the Tianwan nuclear power plant in Lianyungang, Jiangsu province, and the No 3 and No 4 units of the Xudapu nuclear power plant in Huludao, Liaoning province, in the second half of last year.

Apart from putting more bridges and roads into use in northeastern China's Heilongjiang province last year, the official said that cooperation has also been progressing between China and Russia in major strategic projects in fields such as energy, aviation and aerospace.

The two nations are in active negotiations in an intergovernmental agreement on cooperation in constructing an international lunar research station.

Confronting a torrent of global challenges including a pandemic of epic proportions and resurgent protectionism and hegemonism, China and Russia have been holding hands even tighter to enrich their business ties, jointly more growth impetus to the world's economic recovery and shore up multilateralism and free trade, said Wei Jianguo, vice-chairman of Beijing-based China Center for International Economic Exchanges.

It is also worth noting that the value of newly signed engineering contracts by China in Russia has exceeded $5 billion for three consecutive years, and the completed turnover reached a record to $5.6 billion in 2021, data from the Ministry of Commerce showed.

"The partnership between the two nations in the fields of energy and minerals, agriculture and forestry development, trade and logistics and industrial manufacturing has been solidly boosted, and their industrial chains have been continuously extended," said Wei.

For China, Russia is the second-largest source of oil imports. China is Russia's top trading partner and a key source of investment in its energy projects, including the Yamal liquefied natural gas plant in the Arctic Circle and the Power of Siberia pipeline at $55 billion, the biggest gas project in Russia.

The China-Russia trading structure has improved and new business forms are booming, said Chen Chao, deputy director-general of the Department of International Trade and Economic Affairs at the Ministry of Commerce.

He said that cross-border e-commerce cooperation between the two countries has developed rapidly, with the construction of warehouses and e-commerce platforms in Russia making steady progress to contribute to the sustained growth of bilateral trade.

Ma Yu, a researcher at the Chinese Academy of International Trade and Economic Cooperation in Beijing, predicted that China will continue to work closely with Russia to consolidate the trade of bulk commodities such as energy, minerals, agriculture and forestry, and expand new growth points in the digital economy, biomedicine, as well as cross-border e-commerce and services trade.

"Because most import between China and Russia are complementary. Therefore, it isn't direct competition," he said.

As the world is undergoing profound changes rarely seen in a century, a stable China-Russia relationship that has emerged from all kinds of tests with new vigor is needed.

Ma noted that it is natural for the two countries to continue to roll out new measures to optimize trade structure and cultivate new drivers for trade growth, so that the momentum can be maintained.

To build sustainable business ties with Russia, China's Ministry of Commerce and its Russian counterpart have joined forces to complete a roadmap on high-quality development in goods and services trade, signed a memorandum on investment cooperation in the digital economy, and are looking into the feasibility of updating their bilateral investment treaty, which took effect in 2009, to provide better institutional support for the two nations' investment cooperation, according to China's Ministry of Commerce.

The two sides have signed a memorandum on multilateral and regional economic cooperation, enhanced coordination and cooperation within multilateral frameworks such as the World Trade Organization, BRICS, and the Shanghai Cooperation Organization, and actively promoted the cooperation between the Belt and Road Initiative and the growth of the Eurasian Economic Union. BRICS is an acronym for the five major emerging countries of Brazil, Russia, India, China and South Africa, which together represent about 42 percent of the global population, 24 percent of global GDP, 18 percent of global trade and 25 percent of the world's foreign investment on an annual basis, data from Beijing-headquartered China Council for the Promotion of International Trade showed.

"Chinese investors have strong experience of building various large-scale infrastructure projects in Africa, South America and the Middle East, and it is the time for them to secure more cross-border infrastructure projects that unite Russia's Far East and Northeast China," said Ren Hongpeng, vice-president of China Railway Group, a Beijing-headquartered State-owned construction contractor.

He said large-scale infrastructure projects-including energy and resource exploration, manufacturing, aviation, nuclear power and shipbuilding-offer great potential due to long-term and strategic significance to Chinese companies, which are keen to expand their presence through both the 21st Century Maritime Silk Road and the Silk Road Economic Belt.

The two neighbors have also accelerated their pace and efforts to set up an independent trade network.

According to Russian Presidential Aide Yury Ushakov, the two nations have paid special attention to speeding up the formation of an independent financial infrastructure for servicing trading operations between Russia and China.

The two countries also welcomed a growth in the number of deals settled in the yuan and the rouble as well as efforts to improve access to stock markets for investors from both countries, Ushakov said.

The yuan accounted for more than 17 percent of bilateral trade settlements between the two countries and more than 12 percent of Russia's international reserves in 2020, according to Russia's central bank.

Investment and Finance
Investment and finance in BRICS
China's economic cooperation with Russia set to intensify (Экономическое сотрудничество Китая с Россией будет активизироваться) / China, February, 2022
Keywords: expert_opinion, trade_relations

Editor's note: Decision Makers is a global platform for influential leaders to share their insights on events shaping today's world. Yaroslav Lissovolik is the program director with the Valdai Discussion Club. This article reflects the author's opinions and not necessarily those of CGTN.

The joint initiatives and statements delivered by China and Russia in the context of the meeting between the leaders of the two countries reveals the tremendous potential that China and Russia have in boosting bilateral cooperation as well as in providing greater support for the world economy.

The range of issues covered by these statements is impressive and covers international and bilateral trade as well as the system of global governance and the countries' cooperation in international organizations and groupings.

In the economic sphere, Russia values its cooperation with China given the size of its market for Russian agricultural goods, exports of services, manufactured products as well as oil and gas resources. Also important may be China's role as an investor in Russia's economy in view of the sizeable decline in investment flows from the West.

For China, Russia offers an important pillar in the evolving economic architecture of Eurasia, including in terms of "East-West" connectivity, trade and investment. Russia is also a major reliable source of energy resources for China and an important gateway into the broader Commonwealth of Independent States (CIS) region.

On the geopolitical front, China and Russia are crucial allies in advancing a multipolar world order that broadens the possibilities for new reserve currencies, new international development institutions and other elements of global economic architecture that render globalization more inclusive for emerging markets.

A key barometer of the bilateral economic relations between China and Russia is the dynamics of mutual trade turnover. In 2021, the trade turnover between China and Russia reached a record level of $140 billion and both countries are making notable headway in reaching the goal of increasing mutual trade to $200 billion.

In this respect, the declarations made by Russian President Vladimir Putin that Russia would expand exports of gas to China highlight Russia's capability to diversify its gas supplies away from the West and towards the East. With the West seeking gas supply sources as alternative to Russia, China in particular and Asia in general are becoming a key focus in Russia's energy strategy.

Boosting cooperation in the gas sector will enable the two countries to raise the ambition for mutual trade to new highs and reach the goal of $200 billion. Other areas of mutual trade cooperation may include the services sector, including tourism as well as high-tech sector development.

There are also ambitious goals in the investment sphere – according to Putin, the portfolio of investment projects of the inter-governmental committee on investment cooperation exceeds $120 billion, covering 65 investment projects in such sectors as infrastructure construction, extraction and processing of raw materials and agriculture.

Of particular importance is the declaration that China and Russia would step up cooperation in bringing closer together China's Belt and Road Initiative (BRI) and the Eurasian Economic Union (EAEU). This is one of the areas that may deliver tangible benefits in terms of expanding the Russia-China investment cooperation, most notably in the sphere of transportation connectivity.

The key focus of the cooperation between China and Russia currently centers on the integration of China's BRI and the EAEU. This cooperative effort, referred to as "integration of integrations," is meant to supply greater connectivity to the Eurasian economic space via infrastructure development.

Another crucial area of the China-Russia investment cooperation is likely to be "green development" and the advancement of the environmental agenda – both countries made important strides in this area last year and the formation of a joint "green investment portfolio" among the development institutions of Russia/EAEU and China could be a significant further step forward.

The facilities of China-Russia East-Route natural gas pipeline in Heihe, Heilongjiang Province, China, August 12, 2021. /CFP

The important point is that in dealing with the challenges faced by landlocked economies in Eurasia, the BRI and the EAEU projects complement and reinforce each other – a stronger Eurasian Union becomes more competitive as the main connecting line between Europe and Asia while the advancement of the BRI reinforces the connectivity and integration among the member countries of the EAEU.

In the end, it is through regional economic integration that developing landlocked countries in Eurasia can transform geography from what is perceived as a handicap into strength as greater integration allows Eurasian countries to be more competitive in intermediating the flow of investment and trade between the East and the West in such integration projects as the BRI or the EAEU.

One of the key references in the joint China-Russia statement was made with respect to Russia's support for China's BRICS chairmanship this year. Both sides underscored their support for deepening the BRICS+ format of cooperation among the regional integration arrangements of developing economies.

This regional format for the "BRICS+" framework is perhaps the first time that such a format has been advanced explicitly and supported by China and Russia on the global level. It opens opportunities to exploit the so-called "integration of integrations" in order to broaden the communication lines and venues for cooperation across the economies of the Global South.

Accordingly, China's chairmanship in the BRICS grouping in 2022 is likely to provide a strong impulse to the BRICS+ initiative launched in 2017 at the the ninth BRICS summit in Xiamen. Recent developments in the global economy (including the pandemic and the economic downturn in 2020) have rekindled the need for BRICS countries to reach out to the Global South economies and to forge ahead with their vision of a more balanced global governance.

In this respect, the BRICS+ format may serve as a crucial platform for launching and coordinating anti-crisis measures across the Global South. These stimulus measures may be supported by joint projects undertaken by regional development institutions (including development banks and regional financing arrangements) where BRICS countries are members.

The value of the BRICS+ concept is not in extending the BRICS countries' outer ambitions – it is about a qualitative change in the pattern of economic development in the Global South. Rather than competing one by one to edge closer to the model of advanced Western economies, the BRICS+ paradigm focuses BRICS countries' efforts towards cooperating in building ties with their regional partners and building a common platform for the integration of developing nations into the global economy.

Another important advantage of the BRICS+ framework is greater scope for connectivity projects – something that is currently pursued via the creation of BRICS New Development Bank (NDB) regional centers and the expansion of BRICS NDB membership to include BRICS regional neighbors such as Bangladesh and Uruguay. There is notably less scope for such connectivity to be pursued in the more narrow and geographically more separated BRICS space.

The BRICS+ also increases the optionality and the scope of alliances that may be pursued by BRICS countries across the Global South economic space. Moreover, BRICS+ may be the only viable and coherent format for BRICS and their allies to advance common initiatives in the sphere of economic integration, since the majority of BRICS countries conduct their trade policy only on the basis of their respective regional integration arrangements.

This is the case in particular with Brazil (MERCOSUR), Russia (EAEU), South Africa (SADC/SACU). The role of regionalism is also increasing for China after the creation of the Regional Comprehensive Economic Partnership (RCEP) and the notable progress exhibited in the implementation of the BRI.

Perhaps most importantly, the regional BRICS+ model appears to be the only feasible format for economic integration among the BRICS countries and their partners from the Global South. It is imperative then for BRICS to transition to a consistent regional format of cooperation that could widen the possibilities for a new level of alliances across the economic terrain of the developing world.

In this respect, the reference in the joint statement to ASEAN and its role in East Asia is noteworthy as ASEAN could become one of the crucial elements in the joint BRICS+ circle of regional integration arrangements from the developing world.

Furthermore, ASEAN could expand its cooperation with the EAEU significantly in areas pertaining to connectivity and trade given the significant logistical and economic complementarity between the largely land-locked economic block (EAEU) and the more coastal ASEAN block. The important role to be performed by ASEAN is enhanced by its neutrality and focus on economic cooperation rather than political interventionism.

In recent periods, Russia together with its partners from the EAEU have actively pursued closer economic links with Singapore, including via preferential trade accords. A promising venue for further cooperation could be digital accords between Russia/EAEU, China and ASEAN partners – at this stage, Singapore is the world's leader in the advancement of the digital economic accords (DEAs).

Overall, the level of ambition in the statements marks a new phase in Sino-Russian economic relations – a phase that will be characterized by greater coordination between the two countries in international organizations and a more synchronized cooperation in advancing a more open model of multilateralism and global governance.

At this crucial juncture for the world economy, the China-Russia economic cooperation has the potential to transform the global economic architecture towards greater openness, inclusivity and sustainability.

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