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In Vladivostok, Russia, people walk on the campus of the Far Eastern Federal University. Photo taken by Xinhua News Agency reporter Cao Yang.

On October 12th, the launch of the "Research on Russia's Economic Development (2022-2023)" (hereinafter referred to as the "Report") and the seminar on the economic situation in Russia were held at Renmin University of China. Guests at the meeting conducted an in-depth discussion on the current economic situation in Russia and the future trends of China-Russia cooperation, offering suggestions for the development of China-Russia relations.

The report pointed out that after the outbreak of the Russia-Ukraine conflict in February 2022, the US and Europe imposed the most severe large-scale extreme sanctions on Russia in history. In this severe external environment, facing the current large-scale sanctions imposed by the US and Europe, the Russian economy has shown unexpected resilience and strong vitality. In 2022, Russia's investment growth rate increased against the trend, with a growth rate of 5.9% in the first nine months; driven by the increase in investment, the gross domestic product (GDP) only decreased by 2.1%, significantly less than the predicted decline by institutions such as the International Monetary Fund and the World Bank. In 2023, Russia's economic development continued to maintain good momentum, asset investment continued to grow at an accelerated pace, and the fiscal situation gradually improved due to economic growth and the expansion of non-oil and gas sectors, with the GDP growth rate reaching 3.6%.

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"Russia has abundant resources for survival and development, with prominent advantages in food and energy security resources. Coupled with the early implementation of the import substitution strategy by the Russian Federation government, it can replace many foreign suppliers who have withdrawn from the Russian market in fields such as the food industry, heavy machinery, and shipbuilding," said Zhang Yuyan, a member of the Chinese Academy of Social Sciences and former director of the Institute of World Economics and Politics. The federal government and local governments of Russia have implemented a large number of stimulating economic policies, accelerated the promotion of several large investment projects, supplemented the space left by the withdrawal of Western investment, and to some extent stimulated more active private investment.

"Looking at the situation in the first three quarters of 2024, the Russian government continued to maintain a high level of investment expenditure," said Li Jianmin, a researcher at the Institute of Russian, East European, and Central Asian Studies of the Chinese Academy of Social Sciences. These investments have created new job opportunities and driven the growth of consumer demand, expanding the vitality of the Russian domestic market. Data shows that in the second quarter of this year, the actual disposable cash income of Russian residents increased by 9.6% year-on-year, which is also the highest record since Russia changed its statistical method in 2014. In the first half of this year, Russia's GDP grew by 4.6%, industrial production grew by 4.4%, and retail trade grew by 8.8%. Among them, the sales volume of Russia's fast-moving consumer goods market surged by 16.5%, far exceeding the 7.9% of the same period last year.

"In addition, the overall rise in energy prices has gradually restored the declining oil and gas revenues to a recovery growth, and has also stabilized Russia's fiscal situation in 2024," Li Jianmin said. The latest report released by the Russian Ministry of Economy shows that Russia's expectations for oil and gas export revenues in 2024 have been increased by $17.4 billion, expected to reach $239.7 billion. Among them, it is expected that the export volume of crude oil in 2024 will increase from 23.83 billion tons in 2023 to 23.99 billion tons, which is about 4.8 million barrels/day; it is expected that the average price of oil exports will rise to $70 per barrel, higher than the $64.5 per barrel in 2023.

The report also points out that in the long term, Russia's new growth paradigm of "investment promotion - consumption driven" faces challenges. The rapid growth of investment is limited by the shortage of imported investment goods and labor, leading to intensified fluctuations in the ruble exchange rate and an accelerated rise in inflation rate. In addition, the expansion of the defense industry and related industries under the background of the Russia-Ukraine conflict is only the initial driving force. In the long-term optimization of the economic structure, the wealth dissipation of military goods production is an important reason for the unsustainable economic growth.

Sun Zhuangzhi, the director of the Institute of Russian, East European, and Central Asian Studies of the Chinese Academy of Social Sciences, said that at present, Russia's economic transformation has not been successful, and the economic structure is still relatively single, mainly relying on the export of resource-based products such as natural gas, oil, and grain. The ability for diversified development and internal growth momentum needs to be further strengthened.

"Faced with external environmental restrictions, Russia's integration into the international economy and free trade is hindered. While maintaining the sovereignty of the country, technology, culture, information, and focusing on 'self-reliance', how Russia can achieve technological innovation and sustainable development will be a challenge that must be faced," said Ding Xiaoxing, the director of the Eurasian Institute of the China Institute of Contemporary International Relations.

"At present, Russia is using diplomacy to break the economic deadlock," Sun Zhuangzhi said. Faced with the isolation of the United States and the West, Russia is actively turning to the Asia-Pacific and the Middle East, such as cooperating with countries like Turkey to find new energy export hubs and increasing exports to BRICS countries.Chen Xiaoqin, a professor at the School of International Relations at Renmin University of China, stated that the current engine capacity of the Eurasian Economic Union has been somewhat damaged by sanctions from the United States and Europe. In the future, Russia will also take the joint construction of the "Belt and Road" initiative and the Eurasian Economic Union as an important direction for development, by promoting the "turning to the East" of the Eurasian Economic Union, to find new cooperation spaces in areas such as automotive, digital, pharmaceutical, and technology sectors.

Zhang Yuyan indicated that Russia is actively promoting the reform of the cross-border payment system among BRICS countries, to build a barrier against sanctions for its own economy. In addition to the reform of the payment system, the plan also includes the establishment of mutual trade centers for bulk commodities such as oil, natural gas, grain, and gold, to further promote economic cooperation among BRICS countries.

Guan Xueling, director of the Center for Russian Studies at Renmin University of China - St. Petersburg State University, said that in the face of a century of changes and geopolitical games, the China-Russia relationship, under the leadership of the two countries' heads of state, has become increasingly mature and resilient, and is in the best period of history. In 2023, bilateral trade reached $240.11 billion, achieving the trade target set by the two heads of state ahead of schedule. In the future, both sides will cultivate new growth points in areas such as the digital economy, the development of the Far East, and the Northern Sea Route, injecting positive energy and stability into the complex international situation.

This event was jointly hosted by the National Development and Strategy Research Institute of Renmin University of China and the Center for Russian Studies at Renmin University of China - St. Petersburg State University. The report is a series of annual reports jointly written by economic scholars from Renmin University of China and St. Petersburg State University, and other universities, including 11 papers by well-known scholars from China and Russia, focusing on themes such as fiscal and financial issues and regional development in Russia's economic development.