Explaining the appointment of economist Andrey Belousov as Russia’s new Minister of Defense, Russian presidential spokesman Dmitry Peskov said this week, “The Defense Ministry must be absolutely open to innovation, to introduce advanced ideas and to create conditions for economic competitiveness—that’s why the President chose the candidacy of Andrey Removich Belousov.” Given Belousov’s long history as an economic aide to President Putin, and as an advocate for state investment in infrastructure and industry, at least the potential exists—within this cauldron of horrific war in Ukraine, in Gaza, and potential hot war at China’s doorstep in the Pacific—for a shift in national policy in Russia, with regards to the Russian economy as a whole.
Simultaneously, Chinese diplomats are discussing, internationally, President Xi’s directive of January 31, 2024 which calls for “the development of new productive forces, [promoting] high quality development,” as reported by Xinhua. Xi called for “a new productive theory” at a meeting of the Political Bureau of the CPC Central Committee. According to Xinhua, Xi explained, “New productive forces are driven by revolutionary technological breakthroughs, innovative allocation of production factors, and deep industrial transformation and upgrading, taking the improvement of workers, means of labor, subjects of labor and their optimal combinations as its basic connotation, and a substantial increase in total factor productivity as its core hallmark.”
Seeming to echo Lyndon LaRouche’s physical economic analysis of discontinuous “jumps,” or “phase shifts”—within an entire national economy—when fundamental scientific discoveries are propagated through an economy, Xi called for “strengthening sci-tech innovation, especially original and disruptive innovation.”
Further, Xi specified, “sci-tech innovations should be applied to specific industries and industrial chains in a timely manner. Efforts should be made to transform and upgrade traditional industries, foster emerging industries, make arrangements for future industries, and improve the modern industrial system.”
Presently, during Russia’s special military operation (SMO) in Ukraine, Russia’s defense budget has grown from 3% to 6.7% of GDP. Peskov explained, “Today, the winner on the battlefield is the one who is open to innovation, more open to the most rapid implementation.” Thus, the appointment of a new Defense Minister to “disrupt” the industrial status quo.
Only potential policy changes are indicated. All shifts in the Russian cabinet are not yet revealed. However, when Presidents Putin and Xi meet in Beijing on May 15-16, they will undoubtedly be discussing a needed new security and economic development architecture for all of Eurasia—as a barrier to looming world war—which architecture, if implemented, would reshape the world economy.
