General

With the continuous improvement of political mutual trust between China and Russia in recent years, the international trade cooperation between the two countries has gradually entered a faster track. It is mainly reflected in the rapid growth of bilateral merchandise trade volume and the gradual expansion of the scale of Chinese investment in Russia, especially in the Russian Far East. Russian Deputy Prime Minister and Presidential Plenipotentiary Representative to the Far Eastern Federal District Trutnev revealed on the 5th that more than 90% of foreign investment in the Russian Far East region comes from China, which shows that the Sino-Russian Far East international trade cooperation is entering a new stage. The reason why Chinese investors are more interested in investing in the Russian Far East is the result of many factors.

First of all, the continuous improvement of Sino-Russian political mutual trust encourages Chinese enterprises to increase investment in the Far East. China and Russia are each other's largest neighbors. Mainly due to some historical reasons, some people in Russia have always been grumpy about China's participation in the development of the Far East. Therefore, Russia has not been active in cooperating with China in the development of the Far East.

After the disintegration of the Soviet Union, the two countries quickly normalized their relations, from "friendly countries" (1992) to "constructive partnership" (1994), to the establishment of "strategic partnership of coordination" (1996), and then again The two countries have successively been upgraded to "Comprehensive Strategic Partnership of Coordination" (2011) and "Comprehensive Strategic Partnership of Coordination in the New Era" (2019). , to establish the concept of "friendship from generation to generation and never enemies" between the two countries in legal form. In 2004, China and Russia completely resolved the border issue, which further laid a stable political foundation for the development of bilateral relations and brought favorable conditions for bilateral international trade cooperation.

Entering the 21st century, with the deepening of cooperation between the two countries, the Russian society's understanding of China has continued to improve. According to a poll by the All-Russian Public Opinion Research Center, the friendship index of Russian society towards China has risen from 29% in 2009 to 43% in 2014, and it will reach 71% in 2021. The increasing favor of the Russian society towards China has also reduced the negative sentiment on issues such as development and cooperation in the Far East. China's investment and cooperation in the Russian Far East has also increased, and the fields of cooperation have expanded from agriculture to chemical industry, energy and infrastructure construction. Official support from China and Russia in terms of policies and funds has enabled enterprises of the two countries to achieve long-term strategic cooperation.

Secondly, the rapid development of China's economy provides market impetus for the cooperation between the two countries in the Far East. The development of the Far East is an established national strategy of Russia. In order to break through the capital and market constraints, Russia is increasingly investing in the development of the Far East to the Asia-Pacific countries with rapid economic growth. While attracting funds and technologies from relevant countries, it also provides products and services. Sales to the Asia Pacific market. China is undoubtedly the largest international trade market in the Asia-Pacific region, and the industries of the two countries are also highly complementary. The rapidly growing Chinese market makes Russia pay more attention to its economic cooperation with China. Taking the energy industry as an example, Russia has successfully opened up its energy and petrochemical markets to China by attracting Chinese companies to invest in upstream energy mining and downstream processing projects. In recent years, it has surpassed Saudi Arabia to become China's largest source of energy imports. The Sino-Russian trade volume has increased 12 times in the past 20 years, reaching US$146.887 billion in 2021 and is expected to exceed US$170 billion in 2022.

Among them, the Russian Far East is one of the important areas for economic cooperation between the two countries. The two countries have built oil and natural gas pipelines to Northeast China in the Russian Far East to establish a long-term energy cooperation relationship. The investment fields of Chinese enterprises in the Far East have extended from traditional energy, oil and gas, agriculture and forestry development to manufacturing fields such as automobiles, home appliances and food processing. The investment methods have also shifted from traditional "greenfield investment" to equity participation, mergers and acquisitions, and fund establishment.

Third, changes in the international pattern have prompted the Russian economy to further "look east". An external factor that cannot be ignored is the Crimea crisis in 2014 and the Russian-Ukrainian conflict in 2022. At the beginning of the disintegration of the Soviet Union, from the perspective of economic integration into globalization and integration into the West in terms of national identity, Russia once positioned the main direction of economic cooperation and marketization to Western developed countries and Western multinational corporations. However, after the Crimea crisis and the Russia-Ukraine conflict, Western countries led by the United States imposed increasingly severe sanctions on Russia, including restricting Western companies from investing in Russia and preventing Russian companies from going to Western capital markets for financing. Under such circumstances, Russia began to shift the focus of its diplomatic and economic cooperation to the Asia-Pacific and southern markets, and further increased its strength and determination to "look east".

Changes in the international pattern and Russia's strategic choice have objectively promoted the increase of Sino-Russian economic and trade cooperation. The two countries have successively established the Agricultural Development Fund, the Regional Cooperation Development Investment Fund and the Far East Investment Fund to provide financial support for Sino-Russian regional cooperation. After the outbreak of the Russian-Ukrainian conflict, Russia quickly decoupled from Europe and even the wider Western economy. More foreign trade centers turned to the Asia-Pacific, and more attention was paid to the development of the Far East. The motivation to attract China, India, Vietnam and other countries to participate in the development of the Far East is stronger. for strong.

It should be pointed out that the increase in the proportion of Chinese companies’ investment in the Russian Far East is due to both objective factors that Russia is subject to sanctions from the West at various levels, as well as subjective factors due to the joint efforts of China and Russia. On the one hand, companies from Japan, South Korea and other countries have become more cautious about investing in Russia after the outbreak of the Russia-Ukraine conflict, and some companies have even withdrawn from the Russian market voluntarily, resulting in a relatively higher proportion of Chinese investment. On the other hand, the investment environment in the Russian Far East and the expected improvement in the profitability of investment projects are also important considerations for Chinese enterprises to invest in the Far East. Russian officials and scholars have emphasized in recent years that one of the main factors restricting the development of the Russian Far East is the investment environment and investment returns. Russia has made some efforts to improve the investment environment and achieved certain results.

The rising proportion of China's investment in the Russian Far East is just a microcosm of the development of Sino-Russian economic and trade relations. Judging from the scale of investment and international trade, the economic and trade cooperation between China and Russia in the Far East has great potential. Of course, there are also many obstacles and difficult factors. From the perspective of economic development in Northeast China and the Russian Far East, there is still a lot of work to be done by both governments and business circles. As the saying goes, a journey of a thousand miles begins with a single step. For the healthy development of Sino-Russian economic and trade cooperation in the Far East, both sides need to continue to adhere to the principle of market and win-win, and integrate and deploy the elements of the two countries in terms of resources, technology and market, so as to benefit International trade and economic development of the two peoples and regions.