Russia looks east to benefit from China

The thawing of relations between the two giants has seen an uneven development across their shared border, with Chinese towns booming while their Russian counterparts lag far behind

By Howard Amos  /  The Guardian, BEZRECHNAYA, Russia

Thu, Jan 03, 2013 - Page 9

Thirteen years ago, Russia pulled its troops out of the military town of Bezrechnaya, several hours’ drive from the country’s main border crossing into China. The abandoned buildings were then stripped to their foundations by jobless locals, some of whom lost their lives scavenging for the second-hand bricks that sell for less than a penny each.

The few inhabitants that remain today expect the village to be completely abandoned within a decade.

“It looks like the aftermath of a bombing raid,” said Evgeniya Arameeva, 38, who works in Bezrechnaya’s small shop. “People higher up probably don’t even know we are here.”

Bezrechnaya is a symbol of how a thawing relationship between Moscow and Beijing after the fall of the Soviet Union in 1991 has led to the gradual demilitarization of a once tense area. Yet it is also a reminder of the demographic trends in the Sino-Russian border region, which extends for more than 4,184km from the eastern fringes of the Mongolian steppe to the Pacific Ocean. There are fewer than 5 million people in the five Russian regions facing China across the Amur and Argun rivers, compared with the more than 100 million people living in the three Chinese regions on the opposite banks.

For the Kremlin, this is both a problem and an opportunity. Russia has given multiple signals in recent months that it wants to shift its focus east and shore up state authority in the farthest reaches of the nation, seven time zones east of the capital. The designation of Vladivostok as the host city for last year’s APEC summit was supposed to be a catalyst for development.

PARTNERSHIP

In an echo of policies followed by both Tsarist and Soviet governments, several special far east agencies, including a new government ministry, were set up in the wake of Russian President Vladimir Putin’s inauguration for a third term in May last year.

“In the 21st century, the vector of Russia’s development is to the east,” Putin told more than 1,000 politicians in the Kremlin during an annual address last month.

China replaced Germany as Russia’s most important commercial partner in 2010, and the total volume of trade between the two countries was likely to reach US$90 billion last year. The first Russia-China oil pipeline, pumping more than 1 million tonnes of crude a month, was opened in 2011.

Russia’s exports to China are principally raw materials, including timber, coal, electricity and metals. However, the scale of the cross-border trade falls short of the potential implied by the apparently perfect economic fit between China’s hunger for resources and Siberia’s great bounty.

Agreements have stalled over a reluctance to shoulder huge infrastructure costs and arguments over how profits will be shared. In the most high-profile case, Russian state-owned gas giant Gazprom has been locked in negotiations over gas exports with the China National Petroleum Co for longer than a decade.

While China has gained visibly from its economic growth, Russia appears to be treading water.

At the Zabaikalsk-Manzhouli border crossing, through which passes 70 percent of Russia-China trade, the disparities are clear.

Twenty years ago, Zabaikalsk and Manzhouli — which face each other across the border marked by a few strips of barbed wire — were settlements of about 15,000 people. However, while Zabaikalsk remains a dusty border town, Manzhouli now has high-rise buildings, an indoor skiing facility, 3D movie theaters and a population approaching half a million. Russians flock to it for the shopping opportunities.

To help rectify the problem, the Kremlin is trying to cultivate domestic manufacturing, rather than simply shipping raw materials to China.

“Just because there is a big demand for natural resources in China does not mean that the far east should turn into one big mine,” said Alexander Bazhenov, head of a Russian state development fund set up last year to invest in the Far East.

However, it will not be easy. Bazhenov estimates that the region needs at least US$94 billion over the next 15 years.

Chinese demand also fuels criminal networks in Russia that cash in on lucrative export opportunities. Russia supplied China with US$1.3 billion of illegally logged wood in 2011, the Environmental Investigation Agency said.

INFLUX

Hunters in the far east’s Primorsky region can easily make up to US$5,000 from poaching rare Amur tigers, whose body parts are used in Chinese medicine, said Sergei Aramilev from the World Wildlife Fund’s Vladivostok office. Chains of middle-men and smugglers also make large profits.

There are few signs of a mass influx of Chinese seeking to forge new lives in the harsh climate of southern Siberia. The Chinese presence is instead driven by economics. Chinese markets and restaurants are ubiquitous across the region, and Chinese laborers — valued for their work ethic and low wages — are employed even hundreds of kilometers from the border.

Chinese companies are crowding out their Russian competitors. In Chita, 804.7km from the border, the main square is paved with Chinese tiles engraved with Mandarin script and the construction of fairytale ice parks, where Russian children play during winter months, is contracted to Chinese companies.

About 48.28km from the shattered ex-military town of Bezrechnaya, residents of the Soviet rocket base Yasnaya are fearful they could soon be living amid ruins after troops finally left last year. They complain that the few jobs available are given to Chinese workers.

Mikhail Shagirev, 63, who served in the Soviet army in the 1980s, criticized the new Russian relationship with China and the loosening up of the once tightly controlled frontier.

“Mongolia guards its border with China better than we do,” he said.