China’s military capability is a thorn in the side for Moscow
China is currently friendly with Russia, but if a friend is too powerful, the relationship also carries a sense of threat, says Andrei Kalachinski, the best-known political scientist in Vladivostok, the capital of Russia’s Far Eastern Federal District, in this interview with Diplomaatia. “China has managed to get back nearly all the former colonies, such as Macao and Hong Kong. For China, Primorsky Krai is a part of the former Manchuria. I think … they may deliver an ultimatum to us at some point on any old pretext. The British, the Germans, the Portuguese—all of them have left the former territory of China. Only the Russians have remained,” says Kalachinski.
Diplomaatia: After the events of 2014 in Ukraine and the subsequent Western sanctions, China gained a larger role in Russia’s foreign and economic policy than it had before. This is seen as Russia’s turn to the East. How much is this felt in Primorsky Krai, the Russian region closest to East Asia?
Kalachinski: The most visible result is the sharp, almost unbelievable rise in the number of Chinese tourists. [This is true for all of Russia. In 2018, Russia was visited by 1.25 million Chinese tourists, and today the number is even greater. In Moscow, Chinese tourists make it harder to get into certain museums.—JP] Chinese leaders participated in the Eastern Economic Forum in Vladivostok in September, which Xi Jinping, general secretary of the Communist Party of China, had attended last year. It is also very important that the construction of large facilities that are intended to export 100% of their products to China has started in the Russian Far East. For example, two huge pig-farming complexes with 700,000 animals were built with the sole purpose of exporting all the pork produced—some 300,000 tonnes a year—to China. A Russian company, Biobank, intends to involve Asian entrepreneurs and invest 100 million dollars in growing trepang (sea cucumber) and scallops, which would all be exported to China. These are the most prominent examples.
Do Chinese companies invest in Russia’s Far East, and if so to what extent? The idea that the Chinese could buy everything worth having in the Far East has caused widespread anxiety in Russia for years. Is this tendency evident now, as the countries seem so friendly?
Chinese investment is a complicated issue. According to official statistics, 70–80% of the investment in Primorsky Krai is Chinese, but this is difficult to confirm based on actual projects. It is most likely that the figures include protocols of intent signed at large events like the Eastern Economic Forum. I don’t see this amount of money anywhere here. One can only see that, due to the huge increase in the number of Chinese tourists, many more Chinese restaurants have opened in Vladivostok. These are, of course, also investments, since the Chinese have been buying up local restaurants. These establishments mainly cater for Chinese tourists. It’s not a small business. Last year, we were visited by 422,000 Chinese tourists, the highest number ever. Every one of them needs to be fed. The problem is that all those restaurants and hotels [that cater for and accommodate Chinese tourists] belong to the Chinese and money flows out of the country. A similar scheme and issue applies to all places Chinese tourists visit en masse, together with Chinese capital. It’s really crazy in Moscow and St Petersburg. I have the feeling that the authorities have issued an order not to interfere with Chinese tourists, allowing them to come and do their business here.
The Chinese also invest in our soya and rice cultivation, but those sums are not large. However, in Amur Oblast, the Chinese have leased numerous soya and rice fields, tended by Chinese workers with Chinese equipment. All the produce is exported to China. The Chinese presence is strongly felt there, not so much in our Krai yet. Another thing is that when the export of unprocessed timber [from Russia] was banned, the Chinese started to build a network of sawmills in Primorsky Krai. Now they cut down the trees, do the initial processing on the spot and export the timber. This activity stands out in smaller settlements where such sawmills are important employers. The Chinese manage the operations, while local workers are employed. The Chinese pay well, better than the Russians.
I think the majority of investment in our region is still from Russian companies. In the context of funding by Gazprom and Rosneft, the influx of resources from China, Japan and South Korea is not that significant.
What are the main China-related trends in the Far East, if the impact is not that prominent in the economy and business?
Right now, there’s an ongoing political game in the sense that China is allowed to do what it wants because we need it. China has adopted a programme of transferring heavy industry abroad, out of its north-eastern provinces. We’re talking steel works, and coke and chemical plants. Negotiations are underway to construct a Chinese steel works in Primorsky. In terms of the environmental aspects, we don’t need it, but in terms of creating jobs, we do. We’re at an impasse with this. After the Soviet Union disintegrated, industry in this region all but collapsed, which is why we’re happy when some big corporation wants to set up here.
Some years ago, there was talk of China being interested in using Primorsky Krai’s ports [Vladivostok, Nakhodka and Zarubino] for transporting its products. Allegedly, it is cheaper to ship goods through our ports in [Greater] Manchuria to southern China than transporting them across the entire country by rail. But this project hasn’t materialised despite signing protocols of intent for two large transportation projects. The Chinese speak of their great interest but contribute no resources towards realising it. Many local Chinese projects have gone nowhere.
Why is it that talks and promises are in the air with the Chinese but there’s no action?
We’ve been saying for the past ten years that China is our main partner, but no large Chinese corporations have brought their business here. Small business owners come and trade on the market, or open a restaurant or start growing rice on a small paddy when they get more successful. This tendency was initiated independently by entrepreneurs from north-east China and is not supported by the state. We won’t see large funds from China backed by the government or big corporations, at least not to my knowledge.
Why so?
You see, China is pouring huge sums into Africa—for example, they built the Trans-African railway line. Why? Because China can dictate demands to weak African states. This is not possible with Russia; they can’t invest here on their own terms. By the way, I think this is why the construction of the Moscow–Kazan high-speed railway line has ground to a halt—the terms had almost been negotiated with China, but then the project came to a standstill. [Russian president Vladimir Putin announced the plan to build a 760-kilometre high-speed rail line from Moscow to Kazan in 2013, but construction still hasn’t started due to a lack of funds. At first, the project was supposed to be funded by the Chinese, because the high-speed line was to be potentially extended all the way to Beijing.—JP] It’s important for China to source raw produce here—for example, China imports 5% of its soya from Russia—but they have no strategic interests here.
However, it is interesting that China is doing everything it can to protect its market from us. They are in great need of drinking water. There’s lots of it in Primorsky—we have about 20 really good producers. But none of them has managed to enter the Chinese market. There is a demand but all kinds of excuses are made to keep them away. Neither does China allow certain people on its territory. One of my acquaintances has been living and doing business in China for over ten years. He still hasn’t managed to get a permanent residence permit and has to leave China every two to three months. I recently read about Russians residing in China, the successors of the former great community of Harbin Russians. Despite the fact that these people’s families have lived in China for more than 100 years and they’re married to Chinese nationals, they still haven’t received Chinese citizenship. China simply won’t allow it.
How has China’s presence in the Far East changed compared to the situation 10–20 years ago? Has it decreased or increased?
It has transformed. Twenty or twenty-five years ago, when times were tough here, China saved us with its cheap food and other products. A lot of people earned money from trading in and transporting those goods. Today, our people have a better standard of living and there are fewer Chinese consumer goods. The Chinese market [in Vladivostok] is not that powerful anymore. One doesn’t see many Chinese workers because their average wages are higher in China. They come here to earn a profit, not to make a living as before. I’d say that today one mostly sees Chinese tourists and Chinese food in Vladivostok.
What are the average wages on the other side of the border in the provinces of north-eastern China that might explain why Russia no longer attracts Chinese workers?
The average in Primorsky is 35,000–40,000 roubles [500–570 euros]. There, they earn one and a half times to double the wages in similar positions, even up to 100,000 roubles [i.e. 1,420 euros, the average in Estonia—JP]. They pay even more than us for skilled labour, which is well paid there.
So why does Moscow still talk about a Chinese threat? It was only recently that Nikolai Patrushev, the secretary of the very influential Security Council of Russian and a former head of the FSB, warned the public about China.
I see two main reasons behind this. A big and powerful state is always awe-inspiring. If a large state [i.e. China] grows stronger, it is logical that it starts thinking whether it has handed over too many of its territories in the past two centuries. China has managed to get back nearly all the former colonies, such as Macao and Hong Kong. For China, Primorsky Krai is a part of the former Manchuria. I think that Patrushev is right, since they may deliver an ultimatum to us at some point on any old pretext. The British, the Germans, the Portuguese—all of them have left the former territory of China. Only the Russians have remained. It is good that we have remained, but the devil only knows [what may come of this].
Do you mean one can’t beat the numbers? There are a couple of million people this side of the border, and more than 100 million on the other?
This is not about arithmetic but about military power. I’ve spoken with our officers: joint military exercises and friendly relations may be important but this is a powerful, too powerful, friend we are talking about.
Do you think that Moscow’s fear of China is not about the Chinese coming and taking over the Far East by sheer numbers alone but something else?
That is no longer it. We aren’t allies, after all. Our countries have an agreement on good neighbourliness and friendly cooperation, which doesn’t mean we’re allies. Everything is changing in the world. That doesn’t mean something will change in five or 50 years. For China, whose history stretches back 3,000 years, 50 years is nothing.
So you think China hasn’t forgotten what it lost here two centuries ago?
No, it hasn’t. Do European borders shift? They do—despite the fact that the Helsinki Accords were signed in 1975. What remains of that agreement? Life changes, everything changes. A peaceful country may change. [Shrugs] China was peaceful because it was weak.
Russia is very interested in conducting Sino-Russian trade in roubles and yuan instead of US dollars. How often can this be seen in practice?
The rouble is a valid currency in Chinese border cities—you can pay with roubles everywhere, without fail. They even give you the change in roubles if you want.
That was true ten years ago as well. The Chinese agree to anything as long as you buy something. I mean settling payments in roubles and yuan in state-level trade.
Yes, it [using roubles in Chinese cities] has been going on for years. However, the fact that Primorsky’s banks have opened branches in China to support our businesses there is a new thing. The Chinese use their own different and particular schemes of converting roubles to bitcoins and then transferring the money. But I haven’t heard of any large transactions in roubles and yuan.
Does China have a state policy regarding Russia’s Far East?
Officially, Chinese leaders emphasise the importance of friendly relations, just like us. This year, it’s 50 years since the Damansky Island incidents. [This was the most serious conflict between the USSR and China. In 1969, the Chinese tried to occupy the 1.2 km2 island of Damansky/Zhenbao in the Ussuri River, which formed the border. More than 50 border guards and servicemen died in the ensuing shooting. In 1991, bilateral negotiations granted possession of the island to China.—JP] It was hardly mentioned at all in the Chinese media. I even visited the Chinese People’s Liberation Army’s website; there was a report on festive events at the Damansky border guard station—no banners included the words “USSR” or “Russia”. They have made a policy of forgetting everything unpleasant. Friendship is underlined in everything: there’s the year of the Russian language in China, the year of Russian culture in China, and so on.
What about the Far East specifically?
They don’t have a separate policy. They’re interested in the raw produce, but we don’t know how long even that will last. Most of their oil comes from the Persian Gulf. Our ports are mostly used for transporting Siberian timber, plus fish, but also some oil and coal. Having raw produce to sell is no bad thing.
Ten years ago, you told me that the development of the Far East depended on China more than on Russia. Now you’ve changed your mind. Why?
The Far East has become more important to Russia. Take the development of the Northern Sea Route, for example—this increases the importance of ports in the Far East, since they’ll become crucial bases. A large harbour is being built on Kamchatka to service the route and its icebreakers. The Kremlin has indeed invested a lot of money here in the past ten years. The 2012 Asia-Pacific Economic Cooperation summit changed Vladivostok immensely. At least the centre looks like a decent European city now. [The Kremlin spent 15 billion euros on building infrastructure for the summit.—JP] Some problems remain—it’s hard to keep people in the region, they’re still leaving. The wages are too low for people with initiative. Besides Moscow and St Petersburg, they travel to Krasnodar and Kaliningrad. Today, all regional centres in the Far East are starting to build new airports, just like Vladivostok got one for the summit. It is very important. I’d erect a monument to Putin here, it would be fair. Three bridges—that’s remarkable! [Three large bridges were built across Vladivostok’s bays for the 2012 summit; before this, people had to drive along the bays, which took a long time.—JP]
This article was published in ICDS Diplomaatia magazine.