From November 5 to 10, the 14th international business conference "Russia and China: Expectations, Risks, Perspectives" was held in Shanghai and Beijing, organized by the Russian Information Agency RBC. Stepan Sergeyev, a Kommersant-Dengi correspondent, dedicated his time to finding answers to the title agenda together with the conference participants, political and business representatives from both countries. He didn't confine himself to looking only within the conference lobbies and halls, but ventured out into the streets of one of the biggest Asian cities in search of answers.

To witness the Chinese economic wonder that has been the subject of conversations and articles as numerous as the great nation's own population, requires spending the better part of a day flying there, setting the clock back by a good five hours. From the airport, the next step is a ride on the 432 km/h Maglev (magnetic levitation train) to Shanghai, rather than hailing a taxi with a driver conversant only in his native dialect of Chinese. Speeding up and slowing down immediately is all it takes to cover the 40 km distance to the city of 18 million.

There are some figures of interest giving insight into the scale of China's present-day economy. China's GDP has been growing at a rate of 9.9 percent a year (according to 2005 results it reached $2.25 trillion). Foreign trade has been increasing by 23 percent a year with exports ($760bn) exceeding imports, resulting in the country's trade surplus at $100bn. It's no surprise that China is heavily investing in foreign economies, including Russia: currently, direct investment in Russia amounts to $700m. Putting this number into perspective, however, requires only mentioning that this amount accounts for merely 5 percent of all Chinese direct investment in the world.

Counter investment into China is also well underway. The role Russia plays in this process is defined by statistics for one city: 43,000 entities have been created in the so-called Big Shanghai during the last 20 years with foreign money, 3,500 of which have been sponsored by Russia, quite an accomplishment by any standard.

Trade between the two countries has been increasing 30 percent annually over the last seven years. The dynamics are impressive and have finally offset the negative trend in the Russian economy that dominated the 1990s.

The USSR mainly exported heavy and medium industry products as the advanced technologies guide for its agricultural neighbor; but today's Russia is simply a provider of raw materials for the now highly technologically developed China. The more scientific and R&D projects China develops, the more evident the discrepancy in the business relationship between the two countries becomes: the People's Republic of China is only interested in wood and energy resources from Russia. Even the increased electricity supplies Mikhail Fradkov proudly mentioned in his November visit to Beijing China wants to buy at prices even lower than the Russian domestic average selling price.

Local officials and businessmen display such obstinacy in all aspects of mutual trade. Many Russian businessmen dealing with large-scale Chinese companies note that doing business with the Chinese is tough, as the latter are persistent and prudent negotiators. Their Russian counterparts attribute this attitude to the Chinese being well aware of the problems and glitches of the Russian economy and well-informed about the potential a region or a production has and they know exactly what, and how much, they want.

Undoubtedly, figures presented in some export contracts clash with this point of view, but it's typical of large Chinese businesses. From my experience, small-scale businesses are made of different stuff.

It should be noted that the small business is a powerful economic force in China. Unlike the 13-15 percent of the GDP that are accounted for by Russian small businesses, in China they make up 55 percent of their country's GDP.

These folks will bargain till they drop and cut their prices drastically. Of course, products are overpriced to begin with, but a European person is happy with a 20-30 percent discount and this is their mistake as a negotiator. Correct bargain-driving ends with a 70-80 percent cut; evidently, as the Chinese fall for such dealing, they still walk away with a profit.

The cost of Chinese products is extremely low, mostly due to the significant factor of unlimited cheap labor almost incomprehensible by Europeans.

To my mind, profits gained by such trading methods are channeled towards infrastructure development of the whole country, not individual well being. If you need evidence, simply look at the highways with multi-level interchanges or the central shopping street of Shanghai, whose skyscrapers and chic stores easily overshadow those of any European capital.

Pudong, for example, a recently built extensive business center of Shanghai, is an expanse of straight, wide and surprisingly empty avenues lined with glass-and-concrete banks, hotels, and expensive apartment blocks. However, these seemingly massive architectural giants are dwarfed by the 88-storey skyscraper Jin Мао. Even the futuristic TV tower that is in the photo album of every visitor to Shanghai finds itself in the shadow of the world's tallest hotel.

Testament to Shanghai's seemingly endless development, the days of the Jin Mao's unsurpassed vertical dominance over the city skyline are likely to be numbered, as only a few meters away, the tower of World Finance Center is growing at the prodigious rate of two stories every five days. It is poised to take its place as the tallest of high rises of the world, that is, until Moscow completes the 630m Russia Tower.

Alongside the glitz and glamor of glass-and-concrete skyscrapers, vast districts cover the very center of the city, prompting the Russian interpretation of the word 'Shanghai' to mean 'dirty slums'. Streets lined with poky two-story houses, reeking of cheap food, cluttered with a multitude of small, dirty shops that deal in dubious objects of even more dubious origin and purpose expand as far as the eye can see. The city truly knows no boundaries, as its 20 million people call these low-rise areas home.

Also detracting from the city's growing sense of grandeur is Shanghai's ever-present veil yellowish-grey smog that shrouds the skyline. This unearthly haze seemed illogical, as no operating production works or industries are visible within the city and the traffic does not even begin to compare to that of Moscow. Perhaps it is the broad waters of the Yangtze River that are breathing a yellow mist across the burgeoning metropolis, or maybe even a metaphorical smoke-screen come to life to conceal the secrets of the Chinese economic wonder from prying European eyes.