To Find New Investment Opportunities in Russian Far East

After Putin was elected Rus- sian president in 2012， he issued the presidential order on May 21 to establish the Far East Development Sector. This is the only ministry of Russia that is not located in the capital at the federal level. In September this year， the APEC summit will be held in Vladivostok， one of Russia’s most eastern large cities. Undoubtedly， the far east region with the Asia-Pacific geographical advantage and rich resources has be- come Russia’s strategic focus. The development of the Russian Far East will not only become the driving force of economic development in Russia， but also the new focus of the Sino-Russian cooperation.

According to the statistics of Far East Bureau of Russian Customs， from January to May in 2012， the total import and export trade of China and the Russian Far East Federal District was US$ 3.72 billion， an increase of 27.6% from the previous year and accounting for 26.9% of the total foreign trade of the Far East. China is the region’s second largest trading partner. The exports to China of Russian Far East was US$ 1.94 billion， an impressive gain of 46.2%， accounting for 19.5% of the total imports of the Russian Far East. China is the third largest export destination for Russian Far East. And the imports from China was US$ 1.78 billion， a rise of 12%， equalling 46.5% of the Far East’s total imports. China is the largest source of imports for the Russian Far East.

“To promote the economy of the Far East is to develop the bilateral trade in particular. There is no doubt that China will play a positive role in the process of Russian Far East development，” Yelena， Associate Professor of Geography Department of Moscow State University， Department of Geography， said. She expressed that due to the obvious geographical advantage of Russian Far East， the border trade between Russian Far East and northeast China has been developed with good results. She told China’s Foreign Trade that in the future， Russia will establish the Far East Regional Development Company and further strengthen the cooperation with China’s northeast region. China is engaged in the strategy of revitalizing the Northeast old industrial bases， which has positive meaning for the development of the Far East.

Yelena pointed out that Russian exports to China is mainly crude oil， nonferrous metals， and aquatic resources， while Chinese exports to Russia are mainly mechanical and electrical products with high added value， which requires both sides to attach importance to the adjustment of bilateral trade structure. So， when facing with the opportunity for the development of the Far East， China and Russia should work together to find new trade growth points， and not just rely on the development of resources.

She suggested that Russia should make more preferential policies in the fields such as transportation industry and processing industry， which could attract more Chinese investors’ interest. For instance， nowadays， there are a lot of investment projects in the Far East region because of the upcoming APEC summit， and Chinese investors attended some related infrastructure projects. In addition， the population of the Far East is declining， while China has a rich source of labor. So in this regard， Russia could take the advantage of China to import the labor force.

Lin Yueqin， associate researcher of the Chinese Academy of Social Sciences also pointed out that China and Russia stronly complement each other. China has a rich source of labor force， while， in the past ten years the popula- tion of Russian Far East has reduced by 1.3 million. Lack of labor resources has effected the development of the Far East region. Over the decade or so， Chinese labor exports to Russia reduced the pressure of the shortage of human capital of Russian Far East. Chinese labor exports to Russia are mainly in the field of agricultural cultivation， aquaculture， construction， logging， commercial services， and catering and medical care.

Mr. Lin believed that the development of the Far East for China is both an opportunity and a challenge. He suggested that in the future， China and Russia should cooperate in the fields of agriculture and infrastructure construction. He said that the development of the Far East should be reasonable， beneficial and build an effective communication mechanism to solve all the problems within the legal framework. And in addition to strengthening the bilateral cooperation in resource extraction， manufacturing and infrastructure construction， both sides should promote the communication in the fields of environmental protection， technology and cultural exchanges. The development of the Far East should combine the shortterm benefits and long-term interests to realize a win-win situation.

Additionally， some experts also suggested that China and Russia could cooperate in large-scale investment projects such as labor force， border tour under the framework of APEC， and jointly resist illegal fishing， illegal logging and the destruction of the ecological environment to promote bilateral cooperation in the Far East.

At the same time， Ms. Tian Chunsheng， the Secretary-General of China and Russia Eastern Europe and Central Asia Economic Institute said excellent location and abundant natural resources are important conditions for the rise of the Russian Far East. However， in her view， there are a lot of risks: unfavorable investment environment， shortage of labor force， low work efficiency of local government in the Far East. She further added that the serious shortage of investment funds， long payback period and cultural differences are elements that increase the investment risks of the Chinese investors. Many Chinese investors are worried about entry into the Far East and this psychological barrier can not be lifted in a short time.

Some experts in Russia also mentioned that the future development should attach importance to ecological protection. Ms. Tian also believed that the Far East needs to be developed but should not be over developed. Therefore， speaking from the perspective of investment cooperation between China and Russia in the Far East， development up to what extent is the issue for Russia to consider.