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The year 2018 promises to become an important milestone for Russian-Chinese regional cooperation in the Far East—“Russia’s national priority for the entire twenty-first century,” as Vladimir Putin famously termed the region.
This February, the two countries declared 2018 and 2019 the “Bilateral Years of Russian-Chinese Interregional Cooperation.” Additionally, a number of transborder projects have been revived—although, so far, their tangible results have been limited to exhibitions, conferences, and festivals.
In September, Chinese President Xi Jinping attended Russia’s Eastern Economic Forum (EEF) in Vladivostok for the first time, bringing an impressive official delegation with him. Among the forum’s highlights was a roundtable discussion with 20 regional leaders from both countries. The discussion featured up to seven provincial Communist Party heads, who manage regions with a total population of 363 million people. The provinces’ combined GDP amounts to $5 trillion, four times more than Russia’s nominal GDP.
Meanwhile, all eyes were on the Putin-Xi summit: the two leaders baked Russian crepes by the Sea of Japan coast. Distracted by this spectacle, many observers missed the news that the countries also signed a key document on Russian-Chinese interregional cooperation to replace the 2009–2018 border region development coordination program, which will soon expire.
This time, however, it was signed by ministers—Russian Minister for Far East Development Alexander Kozlov and Chinese Minister of Commerce Zhong Shan—and not heads of state. Unfortunately, that accurately reflects regional development’s position in the countries’ bilateral relations: geopolitics takes priority, while on-the-ground economic cooperation is seen as dull and not particularly rewarding.
But the agreement’s demotion to a ministerial project doesn’t fully explain why it got so little coverage—even on the Far East Development Ministry’s website, which seldom misses a chance to write about regional minutiae. This is particularly surprising because the new program improves upon the previous one, which was controversial and hotly debated nine years ago.
So why are government officials not rushing to brag about the new document? There are several important reasons.
First, it’s clear that the parties didn’t sign the agreement expected of them. The new program is not an extension of the 2009–2018 program but a completely different agreement. And a source in the Far East Development Ministry said that “no other program will be signed” and that this document will serve as the one road map for Russian-Chinese regional economic cooperation.
The Russian official indicated that the decision “not to extend the failed 2009–2018 program” was made as early as September 2017 at the first meeting of the Russian-Chinese intergovernmental commission on development in the Far East and transborder region. The parties decided to work out a new cooperation program, but not to attract public attention.
Nonetheless, the changes in the agreement are substantive rather than cosmetic. New government agencies are now responsible for the program. The Russian Far East Development Ministry and the Chinese Commerce Ministry have replaced the Russian Ministry of Economic Development and the Chinese State Committee for Development and Reform. And while the old program focused on developing Eastern Siberia and the Russian Far East along with northeastern China, the new program targets the Russian Far East only.
Second, the new program is missing many high-profile projects that the Far East Development Ministry and potential Chinese investors have long been discussing. It makes no mention of a “transborder priority development area” and fails to include the issue of constructing high-speed transborder freeways—despite the fact that, in August, Russian Deputy Prime Minister Yury Trutnev assured the public in Dalian, China, that the freeway construction was all but a done deal.
The new document only briefly alludes to joint development of the transborder Bolshoy Ussuriysky Island near Khabarovsk, which obviously understates the territory’s importance in the eyes of Russia’s Chinese partners. The program only states that “the Bolshoy Ussuriysky Island is a unique territory that is capable of becoming a tourist hub.” In essence, Russia is not yet ready to create visa-free and tariff-free regimes on its part of the island, as the Chinese suggest. Thus, it delays making a decision without offending its geostrategic partners.
Why did so many projects not make it into the agreement? On the eve of the EFF, the document appeared unlikely to be signed. However, the parties were eventually able to agree to a more limited compromise text. According to informed sources, the Russian Foreign Ministry recommended not including these projects, since the Russians cannot be sure that they are economically feasible and the country’s security agencies are unlikely to approve them. As a result, the final version of the text resembles a memorandum of intent or a “navigator for Chinese investors,” as some officials have called it.
For these reasons, some suggest that the 2018–2024 agreement can be forgotten even sooner than its 2009–2018 predecessor. But that would be a mistake.
Despite the difficulties agreeing on the document’s final version, the text appears quite adequate given the current levels of Russian-Chinese cooperation. It is not overly ambitious, but it is coherent and potentially implementable.
The bulk of the “Program for the Development of Russia-China Trade, Economic, and Investment Cooperation in Russia’s Far East in 2018–2024” is a well-prepared report on the state of bilateral cooperation. The rest outlines potential spheres for cooperation and investment. Unlike the 2009–2018 program, the new document doesn’t impose excessive obligations on the parties (especially on the Chinese), which is actually positive, given the failure of the 212 investment projects listed in the last program.
That old list may have looked well thought out, but it was actually unclear about the parties’ responsibilities and impossible to implement. In the new document, the Russian side simply proposes “to consider a possibility of investments” in petrochemicals, the mining sector, transportation infrastructure, forestry and agriculture, aquaculture, and tourism.
The document also mentions individual projects in which the Chinese are invited to invest their capital: constructing a bridge over the Lena River, building a truck assembly plant and modernizing a sugarcane processing factory in the Primorsky region, and developing gold, platinum, coal, nickel, and copper mines throughout the Far East.
None of these projects are new. Some have long been part of the bilateral cooperation agenda, and have even produced agreements on joint ventures. However, the program doesn’t name specific Chinese companies, nor does it specify concrete terms for the projects’ completion.
The terms and obligations appear only in connection with large government-sponsored infrastructure projects scheduled for the coming years: the Nizhneleninskoye–Tongjiang Amur River Rail Bridge (2019), the Blagoveshchensk–Heihe automobile bridge (2020), and the ropeway between these cities (2022). These projects are already underway, so the program authors didn’t risk much by including them in the document.
There is no completion date for the most problematic site: the second line of a bridge over the 5-meter-wide Granitnaya River in the vicinity of the Poltavka–Dunin border crossing. The parties have been unable to start construction for over ten years and cannot repair the existing bridge before the new line is built.
The Chinese offered to pay for the construction themselves numerous times, but since it’s a transborder site, the parties couldn’t agree on many contentious issues—for example, bringing workers, equipment, and supplies over to the Russian bank. Finally, on March 1, 2018, the Russian government approved the preliminary accord on building the bridge, but, as of today, the proposal still hasn’t transformed into a full-fledged agreement. As a result, the 2018–2024 program authors framed the issue very cautiously, saying that “the sides will assist in preparing the text of a proposed intergovernmental agreement on the construction of a sea link over the Granitnaya River.”
Another paragraph focuses on creating the Primorye 1 and Primorye 2 transportation corridors. The actual transportation routes that connect the Chinese border territories with Russia’s Southern Primorye ports already exist, but there has to be sufficient demand from Chinese shippers to justify serious investments in modernizing them. So far, China doesn’t provide sufficient transit cargo volume from its northern provinces to southern ones, citing the complexity of transborder procedures and undeveloped infrastructure.
However, the program signed at the EFF states that the Chinese will support their enterprises doing cargo transit and help prepare project feasibility studies to determine the economic viability of developing the transportation corridors. The concluding sections of the document contain a program implementation mechanism, a clear improvement over the 2009–2018 program.
The intergovernmental commission responsible for implementing this project will be headed by Hu Chunhua, the lowest in the tacit hierarchy of Chinese deputy prime ministers, and Russia’s Yury Trutnev. Thus, besides managing Far East development, Trutnev will also be responsible for all Russian-Chinese regional cooperation. If the Baikal region is transferred under the Far East Development Ministry’s jurisdiction, as Minister Kozlov recently suggested, then the entire Russian-Chinese border (and all the transborder projects) will end up in Trutnev’s hands.
The commission will have a business council that is to include entrepreneurs from both countries. As per the agreement, the Chinese Ministry of Commerce is to enlist the services of China’s State Development Bank to prepare “recommendations on implementing the program” (in reality, to provide construction loans).
Although these developments represent an important milestone, 2018 is still unlikely to become a turning point in Russian-Chinese regional cooperation when words turn into deeds. The festive facade of the Putin-Xi summit and the well-attended Communist Party of China Committee field session hardly signify real change.
The current level of regional cooperation between the two countries, as well as its abominably low results, is far out of sync with the closeness of the two leaders. In fact, the heads of state are deliberately distancing themselves from this issue, allowing their subordinates to do all the work.
No one hopes for quick success anymore. The parties are gradually realizing that they will have to deal with local issues and, in certain cases, even create special conditions—for example, the free port regime in Vladivostok and the issuance of electronic visas.
By centralizing the issues of regional cooperation with China, Moscow has made this cooperation less dynamic than it was in the 1990s, but also more orderly. With power concentrated in his hands and a cooperation mechanism outlined, Trutnev is now in a position to resolve complex transborder agenda issues by mere “political will.”
However, there are some limits to what Trutnev and his team can do, as the creation of the 2018–2024 program demonstrates. The “traditional bureaucracy”—represented by the Finance Ministry, Foreign Ministry, and especially the security establishment—is still quite capable of blocking any initiative put forward by the “development bureaucracy.”
That is why the final version of the program appears incomplete. It provides good guidelines for what has to be done, but doesn’t obligate anyone to do anything. And it definitely doesn’t guarantee that proximity to China will finally bring long-awaited development to the Far East.
Carnegie does not take institutional positions on public policy issues; the views represented herein are those of the author(s) and do not necessarily reflect the views of Carnegie, its staff, or its trustees.
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