DIgest
The Russian Government’s Imaginary Bridge to the Future
June 6, 2023
Nikolai Petrov
Independent scholar
Nikolai Petrov analyzes the recent visit to China by a Russian government delegation and Moscow’s latest plans for technological sovereignty. He deems the former disappointing and the latter unattainable.
Chinese President Хi Jinping shakes hands with Russian Prime Minister Mikhail Mishustin during a Russian government visit to China in May. Russia sought to attract Chinese investment and gain access to Chinese technology, but the results of the visit fell short of expectations. Source: VK
The visit of a huge Russian delegation to China, headed by Prime Minister Mikhail Mishustin, coincided with the approval of the Concept of Technological Development until 2030. Both events demonstrate the groundlessness, both in theory and in practice, of hopes for the development of the Russian economy amid the war in Ukraine and the tough confrontation with the West.
Long march to China
The talks headed up by Mishustin were devoted to the practical implementation of the agreements reached in March between Putin and Xi Jinping.
In addition, the delegation was to take part in the Russia-China Business Forum in Shanghai. Together with Mishustin, four deputy prime ministers and several ministers attended, as well as the heads of Sberbank and VTB German Gref and Andrey Kostin, respectively, VEB.RF chief Igor Shuvalov and billionaires Alexei Mordashov (Severstal) and Andrei Guryev (Phosagro).
The delegation also included heads of Russia’s regions, though the list was different from what one might expect. In particular, there were no governors from Far East regions; instead, it was governors of large industrial regions, which are seemingly hoping to attract Chinese investment. For example, the head of Tatarstan Rustam Minnikhanov was lobbying on behalf of KAMAZ and the Alabuga Special Economic Zone (there were as many as 40 people from Tatarstan). In addition, in September Tatarstan will hold the first «Rostki» Russia-China forum. Meanwhile, the presence in the delegation of the governor of Murmansk Region owed to the fact that Murmansk is the core port for the Northern Sea Route, for which there are hopes of developing joint logistics with China. The Russia-China Expo will be held in Yekaterinburg in July.
The representation of the Chinese side was much more modest, including Vice Premier He Lifen (finance and economy portfolio), Commerce Minister Wang Wentao and Vice President of the food processing company COFCO Zhu Ze.
After the forum, Mishustin met with Chairman Xi and Premier Li Qiang in Beijing. According to Mishustin, the parties considered “the widest range of areas for cooperation,” including the “development of the Northern Sea Route” and “the establishment of an independent system of financial settlements,” “talked in detail” about ensuring food security, and “discussed projects” in the energy sector, industry and agriculture, with “a number of bilateral documents signed.”
Here is a list of them: two protocols on phytosanitary requirements – for millet exports from Russia and medicinal plant raw materials for Chinese medicine exports from China; a memorandum of understanding between Russia’s Ministry of Economic Development and China’s Ministry of Commerce on strengthening investment cooperation in services trade; a memorandum of friendship and cooperation in the field of sports; and a joint statement of intent to renew a pilot fast-track patent processing program.
It looks like the mountain gave birth to a mouse. However, there are at least two reasons why information about the visit of the Russian delegation to Shanghai and Beijing cannot be seen as complete and objective.
One is Moscow’s desire to show off a big success. The other is Beijing’s fears of secondary sanctions, while the Russian side, in turn, does not want its ways of circumventing sanctions found out.
On top of Russia’s public failure to attract Chinese investment and gain access to Chinese technology, Reuters reported on China’s plans to prioritize a gas pipeline from Turkmenistan over the Power of Siberia 2 pipeline, which Russia had been promoting for more than seven years. Reuters cites experts’ predictions that the new Turkmenistan Line D, the fourth line of the Central Asia-China Gas Pipeline, could start flowing around 2028, while Power of Siberia 2, designed at 50 billion cubic meters (bcm) a year and sourcing gas from West Siberia, could start operating in the early 2030s. Reuters quotes an energy industry source as saying that “China National Petroleum Corporation could use the Russian proposals to bargain for a better price for Line D while taking its time to discuss new Russian supplies.”
Long march to China
The talks headed up by Mishustin were devoted to the practical implementation of the agreements reached in March between Putin and Xi Jinping.
In addition, the delegation was to take part in the Russia-China Business Forum in Shanghai. Together with Mishustin, four deputy prime ministers and several ministers attended, as well as the heads of Sberbank and VTB German Gref and Andrey Kostin, respectively, VEB.RF chief Igor Shuvalov and billionaires Alexei Mordashov (Severstal) and Andrei Guryev (Phosagro).
The delegation also included heads of Russia’s regions, though the list was different from what one might expect. In particular, there were no governors from Far East regions; instead, it was governors of large industrial regions, which are seemingly hoping to attract Chinese investment. For example, the head of Tatarstan Rustam Minnikhanov was lobbying on behalf of KAMAZ and the Alabuga Special Economic Zone (there were as many as 40 people from Tatarstan). In addition, in September Tatarstan will hold the first «Rostki» Russia-China forum. Meanwhile, the presence in the delegation of the governor of Murmansk Region owed to the fact that Murmansk is the core port for the Northern Sea Route, for which there are hopes of developing joint logistics with China. The Russia-China Expo will be held in Yekaterinburg in July.
The representation of the Chinese side was much more modest, including Vice Premier He Lifen (finance and economy portfolio), Commerce Minister Wang Wentao and Vice President of the food processing company COFCO Zhu Ze.
After the forum, Mishustin met with Chairman Xi and Premier Li Qiang in Beijing. According to Mishustin, the parties considered “the widest range of areas for cooperation,” including the “development of the Northern Sea Route” and “the establishment of an independent system of financial settlements,” “talked in detail” about ensuring food security, and “discussed projects” in the energy sector, industry and agriculture, with “a number of bilateral documents signed.”
Here is a list of them: two protocols on phytosanitary requirements – for millet exports from Russia and medicinal plant raw materials for Chinese medicine exports from China; a memorandum of understanding between Russia’s Ministry of Economic Development and China’s Ministry of Commerce on strengthening investment cooperation in services trade; a memorandum of friendship and cooperation in the field of sports; and a joint statement of intent to renew a pilot fast-track patent processing program.
It looks like the mountain gave birth to a mouse. However, there are at least two reasons why information about the visit of the Russian delegation to Shanghai and Beijing cannot be seen as complete and objective.
One is Moscow’s desire to show off a big success. The other is Beijing’s fears of secondary sanctions, while the Russian side, in turn, does not want its ways of circumventing sanctions found out.
On top of Russia’s public failure to attract Chinese investment and gain access to Chinese technology, Reuters reported on China’s plans to prioritize a gas pipeline from Turkmenistan over the Power of Siberia 2 pipeline, which Russia had been promoting for more than seven years. Reuters cites experts’ predictions that the new Turkmenistan Line D, the fourth line of the Central Asia-China Gas Pipeline, could start flowing around 2028, while Power of Siberia 2, designed at 50 billion cubic meters (bcm) a year and sourcing gas from West Siberia, could start operating in the early 2030s. Reuters quotes an energy industry source as saying that “China National Petroleum Corporation could use the Russian proposals to bargain for a better price for Line D while taking its time to discuss new Russian supplies.”
“After the government delegation’s visit to China, it became definitively clear that Russia will be almost entirely on its own to pursue technological sovereignty.”
It was after this that the government released the aforementioned Concept of Technological Development, which had been approved even before the trip to China.
To the future, maybe
The Concept was developed by First Deputy Prime Minister Andrey Belousov, who was tasked with it by Putin in September 2022 following a meeting of the Council for Strategic Development and National Projects. This 60-page document is essentially a description of an imaginary bridge from the present to a bright future. The situation currently and how it should look in 2030 is described in some detail, though how to get there is not.
The concept is preceded by an extensive glossary that includes end-to-end technologies and megaprojects. The first 10 megaprojects with RUB 100 billion of investment have already been approved by the government. They target localization of the production of necessary medicines, medical devices, equipment, the production of machine tools, electronic and radio electronic products, ships and ship equipment, as well as with the development of unmanned aerial vehicles. Platforms for industrial poultry farming, as well as for construction and roads, are also in the pipeline.
The level of end-to-end technologies – one of the main indicators – still needs to be worked out, the Concept honestly says (“the development of a methodology for calculating the indicator is needed”). Meanwhile, the available, more traditional indicators make it possible both to compare Russia with other countries and to understand the ambitiousness of the targets formulated in the Concept.
The coefficient of technological dependence for Russia, which is forced to rely on its own resources, is today 68.7%, while over the next seven years, it is expected to be reduced by two and a half times to 27.3%. In China, the figure is now 23.0%, while for the US, which does not have to worry about losing international partners, it is 51.9%.
In terms of business innovation activities, Russia lags most of the leading developed countries: in 2021, the indicator was at 11.9%, versus 79.3% for Canada, 68.8% for Germany, 64.7% for the US and 40.8% for China. The Concept targets a doubling to 27% in seven years.
Based on the Concept, Russia thus lags substantially on both indicators, though the text of the Concept does not mention any source for this data or how either of the two indicators is calculated.
Note that a year ago the government put out a program for the development of the air transportation industry until 2030, which can be considered the first step taken toward pursuing technological sovereignty. Its cost is upwards of RUB 770 billion, part of which has already been spent on subsidizing domestic flights.
The program pencils in growth in the share of domestic aircraft from the current 33% to 81% by 2030, though there has been no progress yet – the necessary technologies, equipment, materials and personnel are absent. Moreover, there are serious problems with just maintaining the existing fleet of domestic aircraft. As for repairing the French engines of the SSJ-100 Superjet, all hope is on Iranian technical centers, where, according to an industry source, there is “40 years of built up experience with foreign engines”.
It is hard to imagine that there are people sitting in the government who do not understand that, in a country with an average level of development, it is impossible to build up all the technological diversity that exists and is developing in the rest of the world by “relying on your own resources” – the officials are anything but stupid. Still, they continue to design this imaginary bridge to the future. Within the rules of the game dictated by Putin today, such a strategy is safer than trying to explain that the targets are unattainable. In addition, for members of the government, the seven-year planning horizon is far beyond what they are dealing with today.
To the future, maybe
The Concept was developed by First Deputy Prime Minister Andrey Belousov, who was tasked with it by Putin in September 2022 following a meeting of the Council for Strategic Development and National Projects. This 60-page document is essentially a description of an imaginary bridge from the present to a bright future. The situation currently and how it should look in 2030 is described in some detail, though how to get there is not.
The concept is preceded by an extensive glossary that includes end-to-end technologies and megaprojects. The first 10 megaprojects with RUB 100 billion of investment have already been approved by the government. They target localization of the production of necessary medicines, medical devices, equipment, the production of machine tools, electronic and radio electronic products, ships and ship equipment, as well as with the development of unmanned aerial vehicles. Platforms for industrial poultry farming, as well as for construction and roads, are also in the pipeline.
The level of end-to-end technologies – one of the main indicators – still needs to be worked out, the Concept honestly says (“the development of a methodology for calculating the indicator is needed”). Meanwhile, the available, more traditional indicators make it possible both to compare Russia with other countries and to understand the ambitiousness of the targets formulated in the Concept.
The coefficient of technological dependence for Russia, which is forced to rely on its own resources, is today 68.7%, while over the next seven years, it is expected to be reduced by two and a half times to 27.3%. In China, the figure is now 23.0%, while for the US, which does not have to worry about losing international partners, it is 51.9%.
In terms of business innovation activities, Russia lags most of the leading developed countries: in 2021, the indicator was at 11.9%, versus 79.3% for Canada, 68.8% for Germany, 64.7% for the US and 40.8% for China. The Concept targets a doubling to 27% in seven years.
Based on the Concept, Russia thus lags substantially on both indicators, though the text of the Concept does not mention any source for this data or how either of the two indicators is calculated.
Note that a year ago the government put out a program for the development of the air transportation industry until 2030, which can be considered the first step taken toward pursuing technological sovereignty. Its cost is upwards of RUB 770 billion, part of which has already been spent on subsidizing domestic flights.
The program pencils in growth in the share of domestic aircraft from the current 33% to 81% by 2030, though there has been no progress yet – the necessary technologies, equipment, materials and personnel are absent. Moreover, there are serious problems with just maintaining the existing fleet of domestic aircraft. As for repairing the French engines of the SSJ-100 Superjet, all hope is on Iranian technical centers, where, according to an industry source, there is “40 years of built up experience with foreign engines”.
It is hard to imagine that there are people sitting in the government who do not understand that, in a country with an average level of development, it is impossible to build up all the technological diversity that exists and is developing in the rest of the world by “relying on your own resources” – the officials are anything but stupid. Still, they continue to design this imaginary bridge to the future. Within the rules of the game dictated by Putin today, such a strategy is safer than trying to explain that the targets are unattainable. In addition, for members of the government, the seven-year planning horizon is far beyond what they are dealing with today.
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