Russian Foreign Ministry spokeswoman Maria Zakharova has put a predictably optimistic spin on trade with Russia's Far East. Photo: Russian Foreign Ministry / Sputnik via AFP

Kim Jong Un’s meeting with Vladimir Putin has eclipsed Russia’s Eastern Economic Forum and related news, but there is a lot going on in eastern Russia that is of relevance to the development of a new, non-Western international order.

The eighth Eastern Economic Forum was held in Vladivostok from September 10 to 13. The forum’s purpose is to promote investment and business development in the Russian Far East and to expand trade and other interaction with the Asia-Pacific region. 

To this end, business executives, development experts and government representatives from India, China, Mongolia, ASEAN and other countries attended events related to trade, investment, infrastructure, energy, tourism, education and culture. 

In his plenary-session address, President Putin noted that Russia’s trade with Asia-Pacific countries had increased by 13.7% in 2022 and was up 18.3% in the first six months of 2023 – despite sanctions imposed by Japan, South Korea and Taiwan.

At a briefing during the forum, Russian Foreign Ministry spokeswoman Maria Zakharova pointed out, “Foreign trade between the [Russian] Far Eastern regions and their foreign partners has grown by 14% in terms of freight and by 11% in monetary terms in the first eight months of 2023.

“Nearly 2.9 trillion rubles [US$30 billion at the current exchange rate],” she added, “have been invested in the PDAs [priority development areas] and the Free Port of Vladivostok, with foreign capital accounting for 340 billion rubles.”

China-Russia trade

Xi Jinping did not attend the forum, but Chinese Vice-Premier Zhang Guoqing was there, telling Putin, “We have every reason to believe that the goal … to bring bilateral trade [between China and Russia] to $200 billion will be achieved ahead of schedule this year,” according to TASS. In the eight months to August, China’s total trade with Russia was up 32% year on year to $155 billion.

Looking to the long term, the Russian president said: “We will definitely not be scaling down the pace of development in the region, because the development of the Far East is an absolute priority for Russia, a direct priority for Russia as a whole for the entire 21st century.”

On the first day of the forum, China’s Xuan Yuan Industrial Development Company (XY Group) reached an agreement with the Amur Region Investment Attraction Agency to build an industrial park.

XY Group plans to invest 10 billion rubles in facilities to produce a variety of goods including robots, 3D printers, drones, wind turbine blades, LNG (liquefied natural gas) and helium storage and transportation tanks, and other products. More than 400 jobs could be created.

Chief executive officer Xue Hailong, quoted by RT, said:

“We want to build something new, different from what we had before – a new industrial park complex for the production of intelligent equipment. We know that there are good business opportunities in the Amur region, we have already looked at the site offered to us. We plan to attract experienced Chinese manufacturers to work with us.” 

Two days later, it was reported that XY Group had also reached an agreement with Russian investors to build a logistics terminal at the Russian end of the Tongjiang-Nizhneleninskoye railway bridge across the Amur River at a cost of $600 million to $700 million. Scheduled for completion in 2027, the terminal will handle LNG, liquefied petroleum gas, aviation fuel and other products.

XY Group is a trading and investment company based in Harbin that claims to be the largest Chinese investor in Russia. Active all over the world, it also deals in steel, building materials, chemicals, railroad equipment, urban heating and power supply, public security systems and real-estate development. One of its projects is the Chinese Commercial Street shopping district in Nakhodka.

On September 16, TASS reported that an agreement with SA International had been signed under which the Chinese mechanical and electrical engineering company will build a plant in the Amur Region to produce port equipment.

Headquartered in Shanghai, SA International provides equipment for projects in the fields of building and road construction, mining and metallurgy, chemicals and industrial production lines. It has clients in Russia, South Korea, Malaysia, Thailand, India, Europe and Canada. 

Russian Deputy Prime Minister Yury Trutnev, who is also presidential plenipotentiary envoy to the Far Eastern Federal District, noted that the Amur Region attracted the largest amount of investment in connection with the forum.

Quoted by TASS, he also said that foreign companies account for about 7% of investment in the Russian Far East and that “this is not bad.” In any case, that percentage is going up.

India resumes focus on region

Indian and Russian officials announced their intent to modernize port facilities and otherwise facilitate an increase in commercial shipping along an Eastern Maritime Corridor (EMC) between Vladivostok and Chennai. This project was launched in 2019, when Indian Prime Minister Narendra Modi attended the Eastern Economic Forum, but was delayed by the Covid-19 outbreak. 

India’s minister of ports, shipping and waterways, Sarbananda Sonowal, proposed that a workshop on the EMC be held in Chennai starting on October 30 to discuss its “smooth and swift operationalization,” according to RT.

In an official statement, Sonowal wrote: “As our teams hedged their effort for an early operationalization of EMC, the visit to Vladivostok, Vostochny, Nakhodka and Kozmino was particularly helpful.” The city of Nakhodka and Vostochny and Kozmino ports are located on Nakhodka Bay east of Vladivostok.

Russia’s minister of development of the Far East and the Arctic, Aleksey Chekunkov, told the news media that the EMC can be used to transport coal, oil, LNG, fertilizers and other cargo.

“Strong ties between our countries were built back in the Soviet period and today they are reaching a new qualitative level,” he said, according to RIA Novosti. 

RT notes that Indian investors already have experience implementing projects in the region and have made use of incentives provided in priority development areas and the free port of Vladivostok. 

According to Chekunkov, in previous years, Indian companies focused on energy, diamonds and the tea business, while new projects are currently being discussed in the mining, shipbuilding, gas chemistry, logistics, construction and development sectors, as well as pharmaceuticals. 

Primorsky Region’s ties to China

As the administrative center of the Primorsky Region, Vladivostok is also pursuing more trade with and investment from China.

In June, while attending the Harbin International Economic and Trade Fair, Boris Stupnitsky, head of the region’s Trade and Industrial Council, told TASS: “We expect an increase in mutual trade turnover and are looking for deeper economic ties with Chinese partners in agriculture, transport and logistics. We also want to attract Chinese investment to Primorsky Region to boost its development.” 

More than half of the Primorsky Region’s trade is conducted with China, much of it with the neighboring province of Heilongjiang. Delegations from the two regions led by the governor of Heilongjiang province, Han Shengjiang, and the Primorsky Region’s first vice-governor Vera Shcherbina met at the Eastern Economic Forum to discuss trade, investment, logistics, agriculture and other issues.  

Trade between the two regions is rebounding after Covid, with local officials targeting a one-third increase from 2022 to 2024. Shcherbina told her guests, “Chinese companies are returning to Primorsky Krai to implement their projects. We see this in business activity and the increase in tourist flow.”

Putin told the forum: “The Far Eastern Federal District accounts for 40% of Russia’s territory. Almost half of our forestland and gold reserves, more than 70% of our fish, diamonds, and over 30% of titanium, copper and so on are located here. Critically important strategic enterprises, seaports and railroads are located here. 

“It is necessary,” he continued, “to talk not only about the development of mineral resources … [but] to build even more enterprises for the processing of industrial raw materials, so as to increase the added value.… [In addition] we will strengthen aircraft construction [such as the SSJ-100 passenger jet] [and] shipbuilding; we will engage in developing industrial production across the most diverse range of sectors.” 

To facilitate this, special tax and administrative incentives have been implemented and infrastructure construction projects are under way. A new residential district is being built in Vladivostok and schools, hospitals and other public facilities in priority development areas are being built or repaired in order to attract and serve a growing population. 

Foreign Ministry spokeswoman Maria Zakharova said: “The Russian Far East is at the forefront of developing relations with the Asia-Pacific countries that enjoy sovereignty and can independently determine their own future.

“Amid the dismantling of bilateral cooperation with Japan to please the West, [Russia’s] trade with China, India, and several countries in Central and Southeast Asia is experiencing explosive growth.” 

We will have to wait and see how long this continues and how successful the projects launched at the Eastern Economic Forum will be, but it is obvious who will and will not benefit.

Follow this writer on Twitter @ScottFo83517667.