Wang Junwen, commercial counsellor of the Chinese Embassy in Russia, said he expects Sino-Russian trade to reach a new high this year, pushed by increasing bilateral investment.

Trade and investment between China and Russia have increased rapidly in the last few years thanks to the renewed incentives and support provided by both governments, he said.

Bilateral trade reached record heights each year for the last two years. Last year, it increased 33.3 per cent to US$10.67 billion, with China's exports rising 21.4 per cent to US$2.71 billion and imports climbing 37.9 per cent to US$7.96 billion, according to Chinese customs statistics.

China's exports to Russia mainly include textiles and food. Imports largely consist of raw materials and energy. Firms in the two countries should do more to diversify their commodities and further explore the markets to tap the rapid economic development, said Wang.

"It is especially urgent for Chinese companies to try to expand exports to Russia to bridge China's widening trade deficit with the country," he told China Daily.

China has an accumulated trade deficit of US$27.4 billion from 1992 to March 2002, according to Chinese customs statistics.

Russia has the largest territory of any country and has cheap resources and fuel, which is a major attraction to foreign investors, Wang said.

He urged Chinese companies to do more to develop the market of 145 million people and noted that Russia is less competitive than developed Western countries due to reduced domestic production in recent years.

In the past, cheap Chinese commodities did a great deal to help the everyday lives of ordinary Russian people, many of whom have low incomes. But Wang warned that Chinese companies should pay more attention to the quality and brand image of their products to accommodate Russian people's increasing income.

"This is very important because Russia is applying to be a member of the European Union. Untill then, the EU will ask Russia to put its market in order, and cheap Chinese products will likely face anti-dumping charges," he said.

Wang also urged trade service companies, such as banks and insurance firms, from the two countries to co-operate closely to facilitate trade.

Tian Wei - president of Bank of China (Eluosi), a subsidiary of Bank of China - said his bank was one of the first foreign banks in Russia and, seeing the abundant business opportunities in the country, is dedicated to serving bilateral trade and the Russian market with professionals who know the Russian market, language and business.

But Tian said the bank has also taken on high risks in Russia due to the country's incomplete policies, laws and rules, heavy taxation and rampant crime.

(China Daily July 16, 2002)