Russia and China

The world financial crisis undoubtedly facilitated the convergence of the Russian and Chinese visions on how to reform the global financial and currency architecture. This shared vision is based on the commitment by these countries to the idea of a multi-polar world. The crisis vividly demonstrated that in conditions of global interdependence, the accumulation of unacceptable risks in any one of national economies, moreover with one of the dominating reserve currencies, imposes a real threat to the sustainable development of all countries.

The steps taken in the international arena by Russia and China, suggest, in our view, that their vision of overcoming the crisis and its prevention in the future coincide at least in the following ways.

Both countries wish for collectiveand cohesive decisions at aninternational level, aimed at the development of a system of governance of globalisation. This is reflected in their continuous support for the efforts on strengthening the role of the United Nations, active engagement in G-20 and Financial Stability Forum activities.

Russia and China have largely similar positions on reforming institutions such as the International Monetary Fund and the World Bank. In the first instance, this stance is related to the redistribution of votes in favour of developing economies and developing markets.

Both countries have a similar understanding of the importance of strengthening the sustainability of the global financial architecture by means of a differentiated system of reserve currencies and financial centres. Moscow and Beijing are both taking specific steps in this direction. Thus, the agreement between Russia, Belarus and Kazakhstan on the establishment of a single economic space (Tajikistan and Kyrgyzstan have announced the irintentions to join this in the future) will eventually lead to a single currency union. China, during the crisis period, expanded trade with its neighbours in Chinese Yuan.

Both countries support the idea of establishing regional funds and mechanisms of financing economic development and overcoming crisises. Russia, in particular, initiated the establishment of the Eurasian Economic Community Anticrisis Fund (apart from Russia, the members of the Fund are Belarus, Kazakhstan, Kyrgyzstan,Tajikistan and Armenia). At the same time, China puts emphasis on providing assistance to its neighbours on a bilateral basis.

When considering the regional aspect of the interaction between Russiaand China, one must note the cooperation of the two countries in the framework of Shanghai Cooperation Organisation (the members of the SCO are Russia, China, Kazakhstan, Tajikistan, Kyrgyzstan, Uzbekistan, with Iran,India, Pakistan and Mongolia havingobserver status). While thisorganization primarily focuses on the issues of regional security, lately, especially in the crisis period, an economic aspect is gaining prominence. The SCO Interbank Consortium plays an enabling role.

BRIC summits provide yet another forum for Russia and China to harmonise their approaches toward the global financial system reform. The first meeting in the BRIC format took place in summer 2008, in Japan. At that time, however, the meeting was more of a aside to the main G-8Summit events.
The first fully-fledged BRIC summit took place on June 16, 2009, inYekaterinburg, Russia. In a joint communiqué BRIC leaders expressed their support for the G-20 and United Nations efforts in overcoming the crisis and emphasised their commitment to promoting the reform of international financial institutions reform reflecting changes in the global economy. They also stressed the importance of a stable, predictable and better differentiated currency system.

Russia and China, as well as other countries, differ substantially owing to cultural and historical heritage, differences in the structure of their national economies and their positions in the global division of labour, and these distinctions will be sustained over time. Nevertheless, it is obvious that their role in the globale conomy will be steadily increasing, as well as their shared aspirations of a more democratic and fairer multi-polar world.