Russia’s East I: An Introduction

In recent weeks the Western media has begun to argue that ongoing altercations with the West are forcing Russia to enlist stronger economic reliance on the great hegemony of China. What is being overlooked, however, is that this isn’t a new phenomenon for 2014; the Sino-Russian relationship has been strengthening over the past twenty years and Russia already has a strong and profitable eastern connection with China.

During the Soviet period, relations between the two largest Communist states were complicated; one can only imagine how the industrial landscape of Siberia would be different if manual and physical resources had been available earlier from China. After the collapse of the Soviet Union, however, the 4000km border between the two countries was gradually opened, and in 2008 the last territorial dispute was settled. This has enabled Russia, as it looks to globalise its economy, to slowly, but surely, join the rest of the world in tapping into the potential and opportunities offered by the world’s largest economy.

In January, Liam Halligan encouraged Daily Telegraph readers to “[raise their] eyes and, at least occasionally, [look] East”. He argued that by ignoring Russia’s East, many in the West have a “false impression” of the factors affecting Russia’s economy. I would add it’s not only the West that stands accused of forgetting investment in this part of the country, but it is also something of which Moscow was long guilty.

Times are changing. In recent years Moscow has concentrated on developing closer relations with its eastern neighbour, both for geopolitical and economic gains. As Halligan highlighted, in 2003 the volume of trade between China and Russia was $12 billion. In 2012 this figure increased to $88.1bln. Later this year, cross-border trade is expected to be in excess of $100 billion. During his state visit to China this month, Putin oversaw the signing of the world’s largest gas supply contract to-date (see interesting infographics on Russian site RBK Daily). Nonetheless, I find it incredible that despite China becoming Russia’s largest trading partner, surpassing both Germany and the Netherlands, the Russian Cabinet remains devoid of a speaker of Chinese.

Over the next two posts I will offer a couple of examples as to how Russia and China are supporting ventures to develop stronger economic and cultural ties. Despite growing up on Russia’s western frontier, I have always been fascinated by the country’s unique geographical position, spanning two very different continents. As a company, with investment interests in Russia’s Far East, we are actively participating in a number of bilateral initiatives, and over the years this has enabled me to enjoy first-hand experience of observing the presence and influence China is having on my country.

Halligan’s article focuses on how Sino-Russian energy links are overlooked, but – as anyone who knows me and my business interests – oil and gas are not where my curiosities lie. In my next two posts I will therefore outline a couple of schemes which I consider illustrative of how Chinese-Russian relations are developing. The first will discuss the long-established trade route along the lengthy Sino-Russian border, whilst the second will analyse the Yangtze-Volga project which was launched in Spring 2013 to encourage the exchange between these two industrial regions.

PART I: An Introduction

PART II: The Physical Connection

PART III: Volga-Yangtze Project