i mean in the in my two other guests here but take a look at russia's turn to the east. this month the russian city of lot of us talk hosted the apec summit for the first time since russia joined the group fifteen years ago there were a lot of us stuck some meta was an opportunity for russia to diversify its tight throughout the asia pacific rim curan clee europe accounts for around the heart of russia's foreign trade well trade stands at about a quarter but that is sad to change but media. trade with europe accounts for fifty one percent of the whole world its trade with the asia pacific region makes up twenty four percent however with economic growth in the asia pacific summit russia's trade with this region will also increase this doesn't mean that we should stay idle and just watch as things unfold we understand these processes and should adapt to them are we preparing for this yes we are how we are expanding infrastructure capabilities this sun we also resulted in

a number of new investment projects such as the launch of them as assembly line in florida will start a hyundai engine plant and many others asia pacific companies have already penetrated the russian economy and their products and services are in high demand we suppose there is a huge demand in russia in japan a solution. when we came here we found that unfortunately cables take the technology is not developed here so they found out for us to be huge fear to develop at the moment right involved in several projects such as construction of the mystery dome and said it better to be build by world cup two thousand and eighteen as well as we are providing engineering solutions for construction and so our shoe polish because if the goal is achieved then many more asian business is done through russia the government says this would not happen at the expense of the country's european partners nonetheless as the euro crisis drags on. countries like russia have reason to be that it's great used right that it's

undermining our. simon i'm going to go to you now. lot of us thought they say they want to turn to the east but most of russia's trade is to the west the european union how realistic and what timeframe we looking at turning to the east where absolutely right i mean at least fifty percent of russian trade it is through to the but europe is being going through absolute turmoil over the past few years and the looks like it continue for the super foreseeable future growth rate asia office a substantial opportunity and it's one of the few growing regions in the in on in the world. is going it's going to have an enormous amount of infrastructure cost associated with that but i mean it's just it is the natural natural route for russian trade and it is the most obvious one ok ben it's a natural route i agree but the cost is immense ok let's remind our viewers pipelines don't you can't twist them around and move them in

a different direction or to build a new one ok the coast is in for tests and more compared to mount of money we're talking about with trade i mean i think we have to put this all into context you know the much vaunted globalization place they were at the very beginning of the process. goldman sachs to report that total global trade was worth thirty percent of g.d.p. global g.d.p. ten years ago now it's hard it will be eighty percent in the next decade and we're talking about hundreds of trillions of dollars and so in that context russia to actually focus on trade this is going to be the enormous tectonic change that's going on in the world and it's exactly right and what you need to do you need to put the infrastructure into place but once you've done that you're going to see enormous volumes of money goods i think and lot of us like i saw a lot of infrastructure there but i think it's not there's not even a question of volved here i mean the west is the past. east the east is the future

i mean it sounds like a bit now latino but i've been saying so for the last decade or so russia has got to look east if it wants to keep up with the global development also the air force they're going to keep this in perspective though in apec russia is a member of apec it is accounts for one point five percent of apec trade i mean projects going there's a lot to do here there's a lot to do and a lot of the infrastructure is going to be financed with asian money the chinese are you know overwhelmed with dollar reserves they don't know what to do with their reserves and in numerous countries they are prefunding all sorts of export projects they're doing it in argentina they do it in brazil they do it in the ukraine so the chinese under proper conditions will certainly finance a lot of the means which will bring them what they're looking for and. it's the synergy made in heaven between china and russia to look at the russians have the

roots and they have the rovers the raw materials and the chinese have the money and the demand over to the line was you know using going to the country and simon let me go to you i mean russia over the last twenty years has finally attained its economic sovereignty is it willing to go into such broad partnerships with other countries and china has more money than god right now i mean but they have certain ways of doing business their own workers their own ideas on trade and what direction i mean there's an opportunity here but there are some kind of risks as well yeah i mean it certainly has more money than god but at the same time it has severe lack of natural resources when i mean bennett mentioned the natural resource and natural gas in japan and south korea is something like four times the cost that it is and it is in the us it's nearly sixty percent higher than it is in europe so i mean there are the absolute advantages for russia forging ahead with the infrastructure projects and trying to push out its energy energy resources i mean that makes absolute sense and the real problem i think is more psychological and politike. the economic economic economically it's

a no brainer the problem is that both both sides there's a certain distrust there is a history of misunderstandings between the soviet union and china the russians still are a bit afraid of the yellow peril the chinese aren't too sure what governments are going to be dealing with so it's taking time to build the bridges and there's been working assiduously at this for a number of years and we're beginning to see the fruits of that now i mean russian trade with china has gone from a fast growing and in significant two thousand growing now very significant it's russia's largest trading partner is the russian government doing the right thing for a private enterprise to get involved in this. it's still a lot of work to do i mean you know with the infrastructure it's hard to do business however i mean increasingly like eric said i mean this is not a natural marriage of love between these two countries but increasingly we're seeing a pragmatism coming in i mean the whole lot of our stock event was the showcase the

russians put their flag in the ground and said this is. the we want to well you know you bring up a point i think it's very interesting i mean is this just some also a little bit of grandstanding. there dissatisfaction with what's going on in the eurozone because you know whatever happens in the euro zone hits this country very strong it's a fundamental part of russian foreign policy and they said from the beginning that they wanted a multi-polar relations to govern the world and not this uni polar in other words the states. we've progressed to the point where this sort of political ideology is being manifest on the ground in terms of building bridges and roads and rails and i ceased tying these economies together and so it's in the russian industry it's not so much the turning away from the west it's just the opportunity lies the east and we're going to build that out and i think the west has answered scored a spectacular own goal they have been antagonizing russia for the last fifteen years and russia basically threatens no one except itself occasionally if the problem is. if there is going to be

a threat to the dominance of the west it is not from russia it is from china russia is a status quo power china is a rapidly growing power which is seeking to extend its influence and they have forced russia into closer and closer political alliance with china and that he's been saying so i'm going to give you the last word before we go to the break go ahead. i'm in complete agreement with mr grimes that i mean you know that the coming together of these two is it's the chinese the chinese growth is phenomenal and it's how it's had the relationship between russia and china and it's always been fractured and sometimes not exactly friendly in the slightest the evolution of that will be interesting to say the least i'm sure that the u.s. politicians are watching this with with fear in many ways ok all right john i'm going to jump in here after a short break we'll continue our discussion on russia's economy and much more stay dark.

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to meet. such. you know how sometimes you see a story and it seems so you think you understand it and then you glimpse something else you hear or see some other part of it and realize everything you thought you knew you don't know i'm tom harpur welcome to the big picture. and won't go into the place to shop for some. gird you can catch both of the premier maritime aviation show of the summer check out a whole family of russian engineering feats of the let ships truly fly or just go

with the flow and take in the view of the bay below but there could be turbulence on board the plane it's only gen powered in p.b.'s plane. with the world's most powerful choppers and you've got it ready to douse any. technology here on r.g.p. we've got the future. to . welcome back to on the money on people about a minute we're talking about russia's trade reorientation all right ben if i go back to you i mean i was invited us like i was an ape i was extremely impressed and what they've done i mean it's vast they have built

a whole new city here ok but it's a bike a baseball field will they come i mean what are they going to what do foreign investors looking for i mean you could be looking at the joint ventures there because a lot of us uk doesn't have a lot of really modern facilities. where they're trying to build they're trying to build capital the asian capital i mean this is a huge chunk of the territories in asia and that he must have a say sort of that and the investors will come if there's opportunity i mean there's a market their manufacturing base is a possibility and so to the whole pacific rim certainly it's time transport hub i mean you'll see it's one of the most amazing ports you could ever imagine it's that it happens to be placed in the midst of the world's largest trade. highway at basically the. advantage countries which of the debts the developing countries which have done best are those where they are placed physically geographically in the midst of the high trade floats this is where

a lot of africans of south america it's been left behind because they're out of the physical flow vladivostok is right in the middle of it and blitz very far away from scale so i mean what kind of opportunity you think foreign investors will be looking at if we look at the third the third capital of russia of lot of our stock well one of the most important things that there's there's a labor force it's highly educated obviously the university has been set up that twenty five thousand students one of the key things will be fine because the population of likely thought of lot of value slot stock fell from a million to six hundred thousand key is having a highly trained and skilled workforce and that's one of the primary things that and the fact that i mean obviously russia skolkovo project will probably have a far east and a far eastern wing into it and i would be there make the most logical sense i sort of mentioned that the russians of reopen the so-called northern routes this is the shipping route that goes not round africa to asia but it goes over the top and it's like two thirds of the distance and so it's faster and cheaper and that's already

started because of the ice breakers nuclear powered icebreakers and those trade flows that way they only increases voted on stocks importance you know if you're sending goods from asia to europe and so you know. global warming and benefits at least one country in the world right yeah i mean if putin said moscow with palm trees what's so bad about that. change gears a little bit take a look at russian perspective here simon how is russia doing it compared to its emerging market peers ok because we still have a lot of turbulence out there yeah absolutely i mean russia's highly impacted by the commodity prices it's brazil and its base had actually fallen off a cliff and india is doing very badly. i mean we're having rolling blackouts across india china i mean china we haven't you know between seven point two and seven point five percent growth i was talking to a construction bank of china and they said that that feels. an absolute recession thank you imagine a seven it's a growth recession a great i mean a seven a half percent is just i mean our profit friends in western europe would die for that. seventy five percent but it fails very very bad and that's not it's not

a great thing so rusher in comparison is doing now we've had a slowdown but where if you know would run for four percent you can still see that the consumer spending here russia and i think ben you pointed out earlier i mean we look i want to know the employment in moscow is at an all time low five point two percent. the economy is running at full capacity and. russia has basically you know the several fives we're looking at about five percent inflation we're looking about five percent unemployment that we were looking at five percent growth maybe four percent growth now plus a budget surplus or at least no deficit russia is extremely dead it has the best macros of any country almost any country in the world right now maybe except for norway think that's because india and you know we're all old hands you think that's because of the one nine hundred ninety s. because of they have really because of it was actually measurable there's that disparity don't you miserable experience the the meltdown and all that it left them extremely fearful of becoming in that the way the germans are scared of inflation

the russians are now scared of the debt so they've been hyper conservative also because we have a political system which is in a work in process the government has not had to buy support from the populace until now so they have been able to limit their spending whereas the europeans have just been having to you know keep buying the support of the lower middle classes and you see with it eventually it could be the reform project i mean it i mean we've been watching it for quite a long time now with this turbulence how do you how and putin doing with his reforms because you have these two things you have to balance all of the time the first thing to say is the russian government's never been good at doing everything at once. so they focus in on the areas topics big given the you know the vertical so much capital but on the things that they're working on for an exam. well the capital markets that's about to be transformed russia will be hooked up to euro clear and you can buy russians of in bonds from your chair in london and that could be transformational i mean the the amount of money going into sovereign debt here

will triple in the first few months just as people rebound and you know people are suddenly that you know ben brings up a very good point i mean it's more globalization of finance but you know there's a lot of contained in out there i mean this is something of thing the russians have to worry about yeah i mean absolutely i mean if the markets take a turn for the worst and an honest sovereign crisis in europe and still completely explode that will have an absolutely detrimental effect on russia unfortunately i mean the world is so into combined fifty percent of trade that we said b.p. said it before with europe europe takes a nosedive into a serious recession russia will suffer on fortunately. for the. yeah we have to differentiate between financial flows and trade and russia also has a very deep internal market russia is increasingly producing things for russians everybody talks about oil what they're missing is the i think the most important story maybe agriculture right now russia the soviet union was the world's great

agricultural importer and now russia is becoming a major force first in grains now they're going to be exporting chicken fairly soon and they're basically going to become self-sufficient in beef so russia can feed itself it can feed asia and there's just going to have to be a transformation of the economy you know because it's only paint it's one of the interesting things during the soviet period almost everything people in the soviet union used and bought was made in the soviet union some stuff from eastern europe east german stuff today you go to stores what is made in in russia for for russians i mean my mind it's coming up but i mean it's still pretty spotty i mean it's been difficult in some senses and because of the increases in wages and per capita the cost of labor is going up and up and so that stage when they could have invested in line manufacturing and made things for themselves because they were excluded from w.t. it didn't really happen and now people are actually too rich and too expensive in order to make it worthwhile investing into that kind of thing when you can go to

ukraine or kazakstan or somewhere else so russia's got a bit of a problem there but then that's why the governments focused on high tech and really that is the only solution they have to do the high value added things and they're pouring money into the other problem is china has sort of blocked the first run on the latter countries used to go from making cheap transistor radios to making computer disk drives to making jet fighters the chinese and asia in general has occupied the light manufacture now if you go to the shop here most of your fast moving consumer goods are made in russia right you foodstuffs because a lot of companies they could be for frequently foreign companies don't know want and the like. but. they're producing in russia the automobile sector is most almost entirely made in russia under foreign marques anything that contrasts with a long distance like food is made here because things because no cause but then that's been there and that's another place where the reform process has worked very well and very well and the state has encouraged and pushed that and everybody doubling tripling quadrupling their production so i mean we're doing one automobile

plant per year in russia if you like always russia and the like with my russian cars ok simon let me go back to you i mean ben made the point do you think that the russians have to jump into the high tech and words more value added yeah i mean that it makes absolute sense i mean you know the days of a lot of code dominating the eastern europe are gone and i think russia has thank goodness three yeah absolutely you know the truth and maybe not but. you know i actually think that that the push into high tech and you know acquiring silicon valley type skills russia has some highly highly educated engineers and software engineers i think it's a four it's a move forward step forward and who knows where innovation will come from that science i mean there was a survey just out last week saying russia has the best educated population in the world i mean there's problems in the academic education sector but the population remains best educated and the other hand the biz the way business operates in russia is just not up to scratch there are some small businesses which are doing brilliantly well there are some wonderful stories but by and large

a lot has got to be done to improve the business climate so that russian invention inventions can be developed can be commercialized can be manufactured in russia we're still a long way sir simon last time we did this program or in between time my group went on vacation and we went to a lot of our stock there was one story that dominated the the papers and the internet that was pussy riot and and then there's what we've been talking about here where is russia's political risk because that's the only story we heard for about what six weeks or so as russia's political risk changed whatsoever because of that or what i would call russia's kone two thousand and twelve i mean i think there's a. the hypocrisy of a sore sore in the western press. in the u.k. where there were riots during the summer a couple years ago and we had instant instant courts and cameron saying that we must put these people in prison and yet with where we are with russia you know i know all of a sudden i would push the right everybody condemning the verdict the girls were very stupid there probably wasn't the best choice of place but it was

a western western plot where the western press just went a little bit ballistic ok eric while they were you wrote a little bit about this basically this was god's gift to the kremlin puts you right because the russian every man i mean the guy who works in an automobile factory the woman who sells food in the shop and they don't talk to western journalists by the way to them now the russian opposition is associated with people who defy all the holiest hate place in russian religion and who carried out a series of extremely obscene acts and then broadcast them on the internet in some sort of a weird political protest and this is in many ways unfortunate because russia needs an opposition every country needs an opposition ben last word you have to put it in context i mean the west made a big deal out of it in russia eighty percent of russians consider themselves to be orthodox and people were genuinely shocked about the desecration of the cathedral and the poll say more than half russians think because you've got what they

deserved and that's the context of the story here which is totally different from what any reporter soundly stupid because if you're trying to arrange the russian people up against the putin regime you don't start by attacking their fundamental belief structure it's done on that point many thanks to my guests and thanks to our viewers for watching on the money see you next time on our team.

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all you need is your mobile device to watch our team any time and. you know how sometimes you see a story and it seems so for lengthly you think you understand it and then you glimpse something else and you hear or see some other part of it and realize everything you thought you knew you don't know i'm tom harpur welcome to the big picture.