Developing Siberia and the Russian Far East: A Perspective on Chinarussia Cooperation

China International Studies (English) - - Contents - Shi Ze

Russia’s development of Siberia and its Far East is both an inheritance from its history and consistent with the needs of regional development. China’s active participation in the process will further release the potential of bilateral economic and geopolitical complementarities.

Developing the Siberia and Far East region and revitalizing Russia has been a common aspiration for generations of Russians. Mikhail Lomonosov, the great Russian scholar of the 18th century, once predicted that “Russia’s power will grow with Siberia.”1 Vladimir Putin, the Russian President who has embraced the dream of a strong Russia, has adopted the strategic choice of “Look East” shortly after retaking power in the face of complex geopolitical and economic pressures. Marked by the APEC summit in Vladivostok in 2012, Russia once again trumpeted developing Siberia and the Far East. Being an all-round strategic partner of Russia, China’s active participation in the development of Siberia and the Russian Far East will further release the potential of bilateral economic and geopolitical complementarities, and usher in a new chapter of deepening practical cooperation and common development for the two countries.

Geopolitical and Economic Significance

Siberia and the Russian Far East has a population of 30 million and its land area accounts for 75% of the Russian Federation’s territory, with 50~80% of Russia’s total critical strategic resources.2 In mid-20th century, the strategy for

developing Siberia and the Russian Far East heralded by the Soviet Union registered significant achievements and attracted worldwide attention. Nevertheless, the development efforts that followed have made little progress due to serious problems and constraints arising from both domestic and international situations. The sluggish growth of Siberia and the Russian Far East not only encumbered Russia’s overall development, but also triggered potential socio-economic crises. The commissioning of a new-round of development for Siberia and the Far East at the turn of the new century is not only an inheritance from its history, it also follows the trends of the time and the needs of regional development.

Providing new growth engine for sustainable socio-economic development in the Asia-pacific. Siberia and the Russian Far East remains one of the few treasure chests of natural resources not fully exploited. The energy reserve in the region is estimated to be more than one-third of the world’s total. Among them, oil is estimated to account for one-fifth to onefourth, natural gas for more than one-third, and coal for approximately one-half. The region also harbors abundant mineral resources with the iron ore reserve estimated at 8.9 billion tons and proved reserves of copper, aluminum, lead, zinc, nickel, tungsten and mercury registering the highest in the world.3 The Magadan Oblast and the Sakha Republic in the Far East are also Russia’s major gold producing areas. The area of forest resources in the region reaches 764 million hectares, accounting for about 83% of Russia’s total. The region is also rich in water, land, animal and plant resources as well as potential tourist resources. Russia has for a long time had quite limited economic interactions and cooperation with Asia-pacific economies, and its influence in the region has declined in the wake of the Soviet collapse. Compared with the fast-growing adjacent Asia-pacific region, Siberia and the Russian Far East has in reality become a concave in terms of development. The “Look East” strategy may enable Russia’s abundant resources to connect with the capital and technology of the Asia-pacific economies, and help

Russia tap the Asia-pacific market to promote accelerated growth of its eastern area. Countries in the region can also enjoy immediate access to energy resources for their development.

Critical means for Russia to merge into Asia-pacific economic integration. The Asia-pacific is the major direction for Russia to integrate into the world economy. With its strong economic growth, the region has become the world’s economic engine. It is estimated that in the coming 30 years the economic size of East Asia, Southeast Asia and South Asia combined will account for 50% of the world’s total output. Coupled with the rapid growth of regional powerhouses and the globalization process, the Asia-pacific region is enjoying robust momentum in its economic integration and actively exploring the pattern for regional cooperation. While it is a Eurasian country, Russia still belongs to the Asia-pacific region. Cooperating with the adjacent Asian economies remains a major pathway for Russia to attract foreign investment. It is also the main remedy for Russia to stimulate economic growth and social development in Siberia and the Far East. Therefore, accelerating the development of Siberia and the Far East has urgent significance for Russia to reverse its economic decline, achieve economic modernization, develop an innovative economy, merge into the Asia-pacific economic zone, and enhance its role in the global economy. Against the backdrop of economic globalization and the rise of the Asiapacific, the success of the development of Siberia and the Far East, to a large extent, rests with the progress of Russia’s regional economic cooperation and its integration with the Asian economies. Russia’s return to being a major world power, meanwhile, depends largely on the development of Siberia and its Far East. In promoting the development of Siberia and its Far East, Russia therefore has to take substantive measures to adapt itself to the needs of national socio-economic growth and the development and integration trend of the Asia-pacific region.

Enabling Russia to play a better role in linking Asia and Europe. The development of Siberia and the Far East will promote more balanced development of Russia’s own eastern and western regions, enhancing its

unique position on the Eurasian continent. Siberia and the Russian Far East has favorable conditions for the building of a new transportation artery linking Northern and Eastern Europe with Asia and North America. It’s predicted that the development of the Russian Far East may transform the Arctic Ocean route, the shortest sea route linking Asia and Europe, into reality. It will largely reduce economic and social costs between Asian and European countries and make Russia the only country directly connecting the Eurasian continent both by land and by sea, bringing Russia’s geographical and location advantages into full play.

Helping Russia obtain greater influence in Asia. Northeast Asia is one of the most important regions in the world with interests interwoven among China, Russia, the United States, Japan, and North and South Koreas. Russia’s geographical features in the region, its transportation potential and the demand for its energy resources by countries in the region, all add up to the benefit of Russia, and it can play an important role in the economy of Northeast Asia and the world at large. Promoting the expansion of political and economic ties with Asian countries will equip Russia with more access to and new leverage in the Asian affairs.

New Factors Bonding China-russia Cooperation

As its largest neighbor, China shares a common border of more than 4,000 kilometers with Russia in the east, with 50 pairs of adjacent cities and townships across the border. With the implementation of a new round of development for Siberia and the Russian Far East, and fresh efforts to revitalize the economy of Northeast China, the two countries have a historic opportunity to strengthen their development cooperation in the region.

Opportunities from global political and economic changes

In the aftermath of the international financial crisis that erupted in 2008, the global economy has faced increasing downward pressures, and differences in the recovery momentum among various economies

have become more pronounced. Countries are anticipating strengthening regional cooperation and joining hands for common development, taking advantage of regional economic partnerships to release potential of their complementary economies in an effort to achieve economic transformation. Both China and Russia have realistic needs to enhance their cooperation, elevate their cooperation to a new level, and overcome the challenges they face. The past strategic coordination between them was, for the most part, out of tremendous pressures imposed by the West which attempts to monopolize international affairs. The bilateral coordination and interactions were mostly passive, focusing on emergency measures and producing mainly short-term effects, but unable to go beyond security cooperation. Meanwhile, both countries fixed their eyes on the West in their economic and trade policies, valuing technology and capital from Western countries.

Despite strong push from both governments to bilateral economic cooperation, it was still weak. For a long time, both sides shared the view that while the bilateral relations was upgrading, the stimulating effects on their respective socio-economic development were quite limited, resulting in a lack of solid economic foundations for China-russia strategic partnership of coordination. After the rampage of the international financial crisis, however, China and Russia converged on their development strategies and both had urgent needs for economic transition and growth. They thus began to regard each other as the priority partner for boosting their own economic development. In terms of external cooperation, China has up to now transformed itself from a purely major trading power to a major investment country. China’s outbound foreign direct investment in 2015 was $145.67 billion, surpassing Japan ($128.65 billion) to be second only to the United States ($299.96 billion), accounting for 9.9% of the global total flow and realizing a year-on-year increase of 18.3%.4 Compared to the past, China has built up a considerable amount of foreign exchange reserves and outbound investment capability. Suffering from the pressures and sanctions imposed by the West, Russia has in recent years been lacking construction funds and is in urgent need of investment in its energy, transportation, telecommunications and infrastructure.

Russian President Putin once said that “one priority for Russia’s future economic work is to accelerate the development of Siberia and the Far East, which is the key to Russia’s overall economic revitalization.” During the Shanghai Summit of the Conference on Interaction and Confidencebuilding Measures in Asia (CICA) in 2014, Putin appealed to Chinese enterprises to grasp the opportunities offered by the “Look East” strategy to build Siberia and the Russian Far East into a solid platform for longterm stable development of bilateral economic and trade relations, and

achieve win-win outcomes.5 Russian Prime Minister Dmitry Medvedev also pointed out that the revised strategic planning for the development of Siberia and the Far East should be bundled together with the revitalization plan for Northeast China since the economy of China’s Northeast can’t be separated from the development of Siberia and the Russian Far East, and China is not only a big market for Russia’s industrial products, but possesses tremendous financial resources to be invested in Russia’s economy. Russia should therefore make its cooperation with China the top priority. China will always remain one of Russia’s partners with the most promising prospects for economic development.6

It can be seen from the remarks and inspections of Siberia and the Far East by Putin and other Russian leaders in recent years that Russia’s attitude towards developing the region and cooperating with Asia-pacific countries has greatly changed. Russia’s approach to the Asia-pacific region deviated from the traditional balancing of European and Asian diplomacy and even development of its western and eastern areas. Russia regards the rise of Asia-pacific as an important support for its modernization drive. Russia’s understanding of China’s significance in its overall strategic situation now goes beyond the strategic support level; it now deems China as its most important economic and trading partner and source of investment, and is actively exploring the synergy of their respective regional development strategies. To sum up, Russia has shown an unprecedented sense of urgency about Asia-pacific cooperation on development of Siberia and the Far East.

From China’s perspective, Northeast China shares a border with many countries, enjoying a unique geographical location. Cooperating with Russia and other neighboring countries will enable China to play a significant role in creating the Northeast Asian economic sphere and promoting regional integration. To strengthen regional cooperation with Russia is not

only the rational choice for China to overcome the bottlenecks of its own development, but also out of its urgent need to achieve comprehensive opening up to the outside world. By implementing its border development strategy, Northeast China can expedite its economic growth and give a full play to its advantages so as to make the country’s opening up more balanced.

The interaction and synergy of China and Russia’s respective strategies is conducive to the long-term interests of both countries. It adds new impetus to the development of Siberia and the Russian Far East and helps integrate Russia into the Asia-pacific economic sphere. It also gives new momentum to promoting Northeast China’s economic revitalization and the eventual realization of mutual benefits, common development and win-win outcomes with Russia. What is more, China-russia cooperation in the Asia-pacific will also become the new fusion point for economic and security interests of the two countries in the new era.

Good foundation for bilateral cooperation

The economic ties between China and Russia’s Siberia and Far East are increasingly closer. Thanks to its sustainable economic growth, China has become an important source of outbound investment and an exporter of technology and equipment whereas Russia, being eager to escape the pressures from the West and overcome its economic crisis, places higher value on its cooperation with China. It should be noted that the complementary natures of their economic structures has gradually expanded in recent years, from the economic and trade field to the financial and scientific and technological field. Driven by these new factors, their bilateral cooperation has displayed fresh momentum. China-russia cooperation on large-scale projects in Siberia and the Russian Far East has taken root, led by energy cooperation. Oil and gas exploration and pipeline construction are accelerating. Cooperation on electricity and coal is deepening and infrastructure construction has taken off, with cross-border and cross-river zones of economic and technological cooperation displaying great potential. According to Russian statistics, the trade volume between China and Russia’s Siberia and Far East accounted for 70% of

total imports and exports of the region; In Zabaykalsky Krai, Amur Oblast and the Jewish Autonomous Oblast, the percentage even reached 93~97%.7

Russia’s Far East and Eastern Siberia has been gradually interconnected with the neighboring provinces of Eastern China in development strategies. China and Russia have, on the basis of a wide-ranging consensus, signed the Program of Cooperation between Northeast China and Russia’s Far East and Eastern Siberia, which will certainly play an important guiding role in promoting sub-regional economic and trade cooperation between the two countries. The Chinese government has conducted macro-planning for the cooperation between its northeast region and Russia’s Far East, involving investment, trade, labor services, cross-border cooperation, interconnectivity, development and utilization of ports, and legislative and law enforcement. Some projects have registered considerable progress on the operational level.

Synergy of Silk Road Economic Belt and EEU

During President Xi Jinping’s visit to Russia in May 2015, China and Russia signed the Joint Statement on Cooperation in Coordinating Development of EEU and the Silk Road Economic Belt, indicating the gradual convergence of their positions on promoting Eurasian economic integration and that the major political obstacle for jointly promoting regional economic cooperation has therefore been settled. Due to differences in governance concepts, development levels and geopolitical considerations, the process of regional cooperation in Eurasia and its adjacent area has, for a long time, been slow and lagging behind, with its economic potential and geographical advantages not fully utilized, and sustainable development of Eurasian countries constrained. This has something to do with different positions of China and Russia on economic cooperation in adjacent areas. The interconnectivity of the Silk Road Economic Belt and the Eurasian Economic Union is undoubtedly a fresh outcome in the development of their relations, as well as indication of their common interest to maintain regional stability and

prosperity, which portends a new vision for Eurasian economic integration and opens up a new window of opportunity for bilateral economic interaction and mutually beneficial cooperation in Eurasia.

The China-russia strategic partnership of coordination is currently working at a high-level, and fresh new impetus is needed to sustain its development by innovating the areas, ways and means of cooperation. There are inherent advantages in the interconnectivity of the Silk Road Economic Belt and the Eurasian Economic Union. The Belt overlaps the EEU in terms of membership, since Russia and the Central Asian countries are all major countries in the core area of the Belt and enjoy their own strategic partnerships with China. Most of the region covered by the Belt and the EEU is home to developing countries and newly emerging economies. They pursue similar development goals and seek economic revitalization, improving people’s livelihood, promoting infrastructure interconnectivity, cross-border cooperation and facilitation of regional trade and investment. China actively supports the integration process within the EEU framework initiated by Russia and other member states, and is happy to see progress made in the negotiations for economic and trade agreements among the EEU member states. It is also exploring effective ways and means for greater interconnectivity with the EEU in terms of concepts, models and mechanisms of cooperation. China upholds the principles of transparency, mutual respect and equality, and calls for cooperation through bilateral and multilateral mechanisms, particularly the Shanghai Cooperation Organization.

The synergy of the Silk Road Economic Belt and the Eurasian Economic Union will provide strong impetus for the region’s economic development, and is conducive to the creation of an open, inclusive and balanced pattern of regional economic cooperation. After all, the EEU’S

The interconnectivity of the Silk Road Economic Belt and the EEU portends a new vision for Eurasian economic integration and opens up a new window of opportunity for mutually beneficial cooperation in Eurasia.

success depends on more investment and large-scale international trade, and the synergy of the Belt and the EEU may combine the Eurasian economic integration with Chinese capital, technologies and market. The region’s economic integration urgently needs more infrastructure interconnectivity, such as in transportation and energy, which will undoubtedly give a push to the development of Siberia and the Russian Far East. By reaching effective investment and trade agreements and implementing regional financing projects, utilizing funds from the Silk Road Fund, the Asian Infrastructure Investment Bank and the Interbank Consortium of the Shanghai Cooperation Organization, early harvests can be made on major infrastructure projects, such as industrial parks and cross-border economic cooperation zones. Furthermore, the EEU member states, including Russia, when pursuing their market diversification strategies, can expect to benefit from China’s further opening up.

Pending Issues for Coordination and Settlement

Practical cooperation between China and Russia faces a rare opportunity for growth in the current historical context and there is tremendous space for strengthening it. China and Russia should fully take advantage of this opportunity and make comprehensive plans, improve mechanisms, enhance safeguards, overcome bottlenecks, and effectively promote their practical cooperation, making it a genuine anchor for the comprehensive strategic partnership of coordination between the two countries.

Settling issues of interests with win-win mindset

China and Russia share a wide range of common interests. However, there also exist unavoidable conflicts of interest since the two countries have different national conditions and perspectives. Cooperation not only requires the seeking of common ground while shelving differences, it also calls for striving to increase the areas of common interest and eliminate disparities. Chinarussia cooperation on large-scale projects was, for a long while, on a bumpy

road and this can be attributed to the difficulty in overcoming their division of economic interests to reach consensus. Making breakthroughs in their cooperation on large-scale projects requires resolving differences on the basis of mutual understanding and mutual accommodation, and forming new points of common interest. China and Russia must follow and maintain the direction of long-term comprehensive cooperation, the market-oriented principle and the concept of mutual benefits, and properly resolve their division of interests to create a future of common development and win-win outcomes.

Upgrading bilateral practical cooperation

Since the mid-1980s, governments of the former Soviet Union and the successive Russian Federation have more than once drawn up and passed strategic plans and outlines for the development of the Far East with three key components remaining in place, namely, accelerating economic development of Siberia and the Russian Far East, stabilizing population, and promoting economic integration in Northeast Asia and the Asia-pacific region. Nevertheless, most of the goals set in the plans and outlines have not been achieved.8 Inertia as well as the complex internal and external environment explains the under-development of Siberia and the Russian Far East. Lack of capital and supporting policies and unfavorable legal and investment environment have proven to be insurmountable hurdles for practical cooperation between China and Russia in the region until recently. Thus the bilateral regional cooperation has for quite some time relied heavily on cross-border trade, playing a positive role in promoting bilateral relations. As time progresses, however, it has been unable to meet the current size and quality of bilateral cooperation. It has therefore been an urgent task for the two countries to upgrade their bilateral economic ties by expanding trade to inter-regional transportation, energy, technology, investment and financial cooperation. With the ratification by both sides of the Program of Cooperation between Northeast China and Russia’s Far East and Eastern Siberia

(2009-2018) in September 2009, 205 priority projects in eight areas have been established, ranging from port construction, transportation, cooperative industrial parks, labor services, tourism, and environmental protection. Russia also produced its latest version of the Scio-economic Development Strategy of the Far East and the Baikal Area prior to 2025, which redefined the development plan for Siberia and the Far East. Therefore, the two countries have given top priority to practical cooperation, including implementing the outline for cross-border cooperation. The development of Siberia and the Russian Far East requires that significant progress be made in Chinarussia practical cooperation. The two countries should streamline their relations and work together to contribute to a new pattern of cooperation in developing Siberia and the Russian Far East.

Improving safeguards for regional cooperation

China and Russia should make an overall design for their practical cooperation from a strategic perspective. It is imperative to do so, since the bilateral cooperation is large in scale, long in period, wide-ranging in areas involved, and also closely related to the long-term strategic interests of the two countries. China and Russia have consecutively signed mega-scale agreements on oil and gas, electricity, nuclear energy and infrastructure in recent years, producing an exemplary effect. As the bilateral cooperation deepens and expands, there has emerged the need to revise the sub-plan of practical cooperation in Siberia and the Russian Far East.

From a long-term and comprehensive perspective, the sub-plan should take into consideration the following factors: In the first place, some proper adjustments and amendments should be made to the original layout so as to be in line with the latest turn of events. The sub-plan has to be adapted to the new conditions and situation of the development of Siberia and the Russian Far East and the revitalization strategy of Northeast China, coupled with the needs of constructing the China-mongolia-russia Economic Corridor. In addition, both sides should explore a new pattern of cooperation by taking full advantage of Russia’s accession to the World Trade Organization (WTO),

the introduction of the Tumen River development plan and the opportunity of jointly developing Heixiazi (Bolshoy Ussuriysky) Island. Second, both sides must take a long-term view. Attention must be given to the operation of every major project. However, efforts should also to be made to ensure the overall balance and connectivity of their different economic strategies. The order of priority should be distinguished with a unified layout and phased implementation within the general framework of cooperation. Third, the multiple relations involved must be handled properly. Immediate and partial needs should be reconciled with longterm and overall interests of the region. The legitimate interests and concerns of China must be balanced with those of Russia. Synergy of the medium and long-term development plans of China and Russia can only be achieved if the two countries’ needs and plans are balanced and coordinated. Fourth, a thorough analysis of previous cases where planning was difficult to implement must be conducted so that lessons can be learned from them. Relevant research should be focused on the feasibility of priority projects, cooperation innovation, market demands, financing and the safeguards that lay the foundation for formulating practical policy measures.

China should further improve its working mechanism on regional cooperation with Russia. China-russia practical cooperation constitutes an important axis for the strategic partnership of coordination between the two countries, and is also the key to their future sustainable socioeconomic development. As such, the Chinese working mechanism should be strengthened to manifest the importance and special emphasis placed on regional cooperation with Russia. By giving full play to the Prime Ministers’ regular meeting mechanism and further strengthening its functions and roles, various diplomatic, economic, trade, and financial resources can be mobilized to enhance cooperation with Russia. Differences in the interests between

China-russia practical cooperation constitutes an important axis for the strategic partnership of coordination between the two countries, and is also the key to their future sustainable socio-economic development.

government agencies and enterprises, and between domestic enterprises and those of the other country, should be coordinated. Think tanks should conduct research on Russia’s macro-environment such as its domestic politics, economy, legal system and public opinion. If necessary, a special representative of China responsible for coordinating and implementing China’s cooperation with Russia on development of Siberia and the Russian Far East could be appointed.

Exploring approaches to a multilateral cooperative platform

The development of Siberia and the Russian Far East is a comprehensive large-scale strategy in need of huge capital injection and Russia’s national efforts, coupled with the support of other nations. Anticipating connection with Northeast Asian economies through its Far East strategy, Russia has no other alternative but to set up a multilateral mechanism for the development of Siberia and the Far East. China is supportive of Russia’s strategy and hopes to cooperate with it and other countries. Energy cooperation is the most realistic choice for multilateral cooperation in Northeast Asia, and the setting up of a multilateral platform covering China, Russia, Japan, and North and South Koreas may enable Japan and South Korea to access Russia’s energy resources via China, which might not only resolve the energy shortages of China, Japan and South Korea, but also reduce Russia’s over-dependence on a single market and expedite the development of Siberia and the Russian Far East.

Multilateral cooperation will also help the Northeast Asian countries resolve their differences and put together common interests of the parties concerned in an effort to realize win-win outcomes. It will play a positive role in promoting the stability and development of the Asia-pacific region. The Northeast Asian countries should carefully study the WTO rules, learn from the lessons and experiences of regional economic cooperation around the world, actively explore approaches to establishing regional multilateral cooperation centered on development of Siberia and the Russian Far East, and initiate, at an early date, the process of constructing a multilateral cooperative platform in Northeast Asia.

The second Eastern Economic Forum (EEF), with the motto “Opening up the Far East,” opened in the Russian city Vladivostok on September 2, 2016, with some 3,500 participants representing 56 countries, especially China, Japan and South Korea.

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