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Economies of Russia and China

Russia and China provide two of the most compelling investment opportunities of the present day. Strong economic fundamentals in both countries have captured the attention of investors worldwide. Their performance has led to an increased awareness of the importance of a bilateral economic relationship between the two countries. With government backing and deep familiarity with the local markets in both countries, the Russia-China Investment Fund is well positioned to make key investments in the most promising areas of growth.

 
foreign
exchange
reserves
exceeding
$550bn

Solid Fundamentals: Russia has one of the lowest levels of public debt and was ranked 93rd out of 200 countries in 2020. Russia successfully adjusted its government budget to the US$42/bbl oil price (in 2020 US dollars) after introducing the new “fiscal rule” and cut its fiscal breakeven oil price to US$40-50/bbl. Russia’s foreign exchange reserves approached US$550 billion in 2020 and will continue growing in coming years due to the “fiscal rule”. Russia’s monetary policy is extremely prudent aimed at keeping 4% inflation and the RUB has been a free-floating currency since 2014.

Russia

One of the Largest Economies: One of the largest economies in the world: Russia is the 6th largest economy in the world with a GDP (PPP) of US$4.1 trillion in 2020. It is the largest among the BRICS countries. The government faces the challenge of successfully overcoming the aftermath of the coronavirus and bringing GDP to US$5.5 trillion to become the 5th largest economy globally.

Government Support for Investment: The Russian government is committed to increasing competitiveness and making Russia a more attractive investment destination. With a flat personal income tax rate of 13% for residents, corporate tax rate of 20%, and VAT rate of 20%, Russia has one of the most generous non-offshore tax regimes in the world. Russia has been ranked 28th in the World Bank’s Doing Business survey outperforming some other major economies.

China

Expanding Economy: Since 2014 China has been the world’s largest economy with GDP (PPP) of US$24.1 trillion in 2020, i.e. nearly 15% bigger than the 2nd largest US economy. Annual GDP growth averaged 7.4% over 2009-2020. China’s foreign exchange reserves are by far the world’s largest at US$3.3 trillion as of March 2020.

Huge Domestic Market: China became the world’s largest energy consumer in 2010 and is expected to generate about 25% of the projected increase in global energy demand until 2040. As one of the indicators, China surpassed the United States as the largest automobile market in the world in 2009 with private car ownership growing to 450 million in 2020. China is the fourth-most-visited country in the world, with about 66 million international visitors in 2019 largely due to increasing global business contacts and cultural exchange.

Industrial Powerhouse: China is the world’s largest exporter and leading industrial power. It has been a member of the WTO since 2001 with a total international trade value of US $4.7 trillion in 2020, including US $2.6 trillion in exports. Its output of major industrial products including crude steel, coal, electricity, cement, fertilizer and woven cotton fabrics is the highest in the world.

Stability and Reforms: China has enjoyed relative social and political stability for decades thanks to the steadily-high economic growth and prudent policy mix. Its unemployment rate has been declining consistently over years and hit a new all-time low of 3.6% in 2019, growing to 4.2% in 2020 during the COVID-19 pandemic. However, this indicator is projected to stabilize at 3.6% starting in 2021.Several years ago the government shifted its attention to various reforms aimed at changing the economic model from the export to domestic demand-driven one while still prioritizing the pro-growth agenda and economic stability.

 
total
international
trade
value of
$4.7tn