Russian customers talk in front of a FAW truck at a car show in Heihe, Northeast China's Heilongjiang Province. Qiu Qilong

Trade between China and Russia is expected to remain on a fast track in the coming years, but officials and experts also warned of bottlenecks.

"After eight years of fast growth, Sino-Russian trade has entered a period of correction," said Chinese Vice-Commerce Minister Yu Guangzhou, adding that a certain amount of fluctuation in the growth rate is normal.

Two-way trade between the countries has grown at a pace of over 30 percent every year from 1999 to 2005, jumping 15 percent in the last year, according to customs.

Yu said the neighboring countries should not only increase trade volume, but also "improve trade quality".

China is expected to enlarge its imports of machinery and electronic equipment from Russia, in a bid to restructure bilateral trade.

The Chinese government has made every effort to boost Russia's machinery and electronic exports to China, added Liu Guchang, the Chinese ambassador to Russia.

"China encourages domestic firms to buy products from Russia and helps Russian exporters showcase their products to Chinese firms," he said.

The two governments have also encouraged large companies from both sides to get involved in bilateral trade exchanges and to get their brands onto the markets.

Officials and researchers expected bilateral trade between the two countries would double last year's figure to hit $60 billion to $80 billion in 2010, but they warned there were still bottlenecks in trade development.

"Disorderly trade has become the key barrier in Sino-Russian business," said Liu Huaqin, a researcher with the research institute under the commerce ministry.

Complicated clearance procedures in cross-boarder trade with Russia have seen many Chinese businesspeople consulting illegal "one-stop" clearance services.

The so-called grey clearance covers consumer goods such as textiles and footwear, machinery, and electronic products.

"If these products (that entered the Russian market without legal clearance) are not qualified, they will become a potential danger to consumers and will hurt the reputation of Chinese exporters as well," she said.

Governments from both sides have set up a panel to look into the issue.

In addition, Yu predicted Russia's accession to the World Trade Organization would help strengthen its economic ties with China and Russia, as Russia is expected to complete negotiations for the accession this year.

He said Russia would further facilitate the economic and trade exchanges between the two countries after its entry to the WTO.

Increasing investment

Compared to the fast-growing trade figures, growth in bilateral investment has been slow in recent years.

According to statistics from the commerce ministry, China had invested a total of $1 billion in over 700 projects in Russia by the end of last year. Russia also invested $70 million in China. Those projects involved energy and resources exploitation, timber processing, home appliance making, telecommunications and building materials.

Liu with the research institute suggested Chinese enterprises try the processing trade in Russia.

Most Chinese exporters of machinery and electronics currently sell to Russia through local distributors.

"Our experience shows that bilateral investment ensures steady growth in the machinery and electronics trade," Liu said. "Products from joint ventures could either be sold in both countries or exported."

The Russian government expected Chinese businesses to invest in Russia to boost local manufacturing.

China also encourages investment in Russia. It expected China's accumulated investment in Russia to total $12 billion in 2020.

China will set up cooperation areas in Russia to help enterprises invest in the country.

(China Daily 03/16/2007 page15)