TE20160102 by MrDi

Author:MrDi [MrDi]
Language: eng
Format: epub
Tags: News, The Economist
Publisher: The Economist
Published: 2015-12-31T10:51:20.120397+00:00

In the autumn of 2015 Russia declared several Far Eastern regions priority development zones. Investors will enjoy a five-year break on most taxes and streamlined bureaucracy. Foreigners arriving through Vladivostok will be allowed in without visas. Some firms have moved in: En+ Group, an energy holding company controlled by Oleg Deripaska, a Russian oligarch, has signed a deal with China’s Huawei to build data centres in Siberia.

But it has not exactly been a gold rush. Western sanctions have made Chinese lenders cautious about Russian firms. Chinese foreign direct investment in Russia more than doubled in 2014, but collapsed during the first half of 2015. Gas export volumes are up, making Russia China’s largest supplier, but falling oil prices have slashed revenues. And although China is now Russia’s largest trading partner, Russia does not crack China’s top five—a fact not lost on Chinese businessmen. “They believe, and not without good reason, that they can dictate the conditions,” says the boss of a Vladivostok-based shipping firm.

Russia, meanwhile, frets about being exploited. The desire to get closer to China is offset by a fear of becoming dependent, says Victor Larin of the Russian Academy of Sciences in Vladivostok. Russia imposes tough restrictions on businesses because of unfounded fears that the Chinese will take over its sparsely-populated Far East. Chinese businessmen complain about restrictions on hiring foreign labourers. Deals to lease farmland draw the ire of Russian nationalists.

Even innocuous projects can incur the wrath of Russian apparatchiks. In November Cai Shangjun, an internationally acclaimed Chinese film director, brought more than 50 cast and crew to Khabarovsk to shoot a new movie, but customs officials held his camera equipment at the border. The frustrated cinéaste was left cooling his heels in his hotel for over a week. “It’s a tragedy,” said Mr Cai, as his crew lingered aimlessly in the lobby. His film “Under the Ice”, about two Chinese lovers who meet in Russia, has since resumed production. But like most things under ice, and Russia’s eastern pivot itself, it is moving slower than hoped.

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