Current State and Prospects of Russia – China Trade Development in the BRICS Format

Abstract

Motivation: The substantiation of the scientific problem and the practical value of the study are determined by the enhanced cooperation of the BRICS countries, in particular the growing weight of Russia and China on the world stage. The main objective of the study: is to analyze the problems of the development of bilateral trade between China and Russia and to provide a statistically proven forecast for this trade for 2019-2020, as well as to develop recommendations for the improvement of bilateral trade relations. Novelty: The author's statistical model was developed and its testing was presented through confirming the 24-month forecast of bilateral trade between Russia and China. The model involves solving various problems of bilateral trade. Recommendations for improvement of bilateral trade relations are proposed through formation of an investment and innovation model of bilateral trade.

Methodology and Methods: The work used the method of forecasting time series, which suggested the use of a model to predict future values based on previously observed values. To evaluate the modern prospects of the trade between the countries, the authors produced a forecast of the goods turnover trend for 2019-2020. The forecast was issued via the software tool Statgraphics Centurion 18. A reasonable model of the 24-month forecast based on the statistical model Random Walk is developed. The adequacy of the proposed forecast model was subjected to statistical tests. To verify the statistical adequacy of the model the relevant tests were done to determine the compliance of the model with the informational criteria ME (Mean Error), MSE (Mean Squared Error), ÐœÐЕ (Mean Absolute Error), ÐœÐРЕ (Mean Absolute Percentage Error), МРЕ (Mean Percentage Error). However, it should be noted that the forecast was issued in accordance with the trends which had been identified in the preceding periods. Data and empirical analysis: The factors influencing bilateral trade are analyzed, as well as examples of implemented projects of international cooperation between Russia and China are presented. The current dynamics of sales turnover between Russia and China for the period of 2010-2018 with the use of various statistical and analytical methods is studied, and a reasonable model of the 24-month forecast based on the statistical model Random Walk is developed. The adequacy of the proposed forecast model was subjected to statistical tests. The basic hypothesis is suggested for the upward trend based on reference time series. Policy considerations: It can be said with certainty that the level of technological development of BRICS countries will help Russia and China to start building their cooperation in many fields at a completely new level, taking into account their joint experience in overcoming global crises and Western sanctions. International cooperation between Russia and China in the innovation field will help them unite their efforts and achieve significant synergy. Coordination of countries on this issue will help to reduce production costs, cooperation of production, joint research and development, as well as increase bilateral trade turnover.