Thursday, November 16, 2006

Fault lines in Russia's Far East

The WSJ covers the demographic and economic forces at work in Russia's Far East, where a dynamic and populous China threatens to overwhelm sparsely populated and decrepit Russian territories. Things may go back to the way they were before Russia's eastern expansion of recent centuries.

WSJ: Russia is finding it hard to cope with the emergence of a new global power right on its doorstep, and many Russians fear being overwhelmed by their dynamic and more-populous neighbor. But on the ground, especially in Russia's sparsely populated countryside, Chinese labor is helping to stave off economic ruin.

To the outside world, Russia and China appear to be cozying up like never before. In October 2004, Moscow ceded territory to its southern neighbor to resolve a longstanding border conflict that had sparked a war in the late 1960s. The following year the two carried out their first-ever joint military exercise. China buys about $1 billion worth of Russian weapons every year, making it the Russian arms industry's biggest customer. Altogether, the two countries' trade was valued at $29 billion last year, an increase of 37% over 2004.

Meanwhile, as China scours the world for energy to power its booming economy, it's increasingly looking to Russia's bountiful reserves of oil and gas. Last week, the Kremlin's oil company, state-controlled OAO Rosneft, pledged to nearly double crude exports to China and said it was teaming up with China National Petroleum Corp. to build an oil refinery and operate gas stations in China.

But China's efforts to strengthen its economic ties with Russia have run into repeated roadblocks. Only one of Beijing's state energy companies has so far succeeded in gaining a stake in a Russian oil field, and only when it agreed to relinquish a controlling stake to Rosneft. Despite years of trying, Beijing has so far failed to secure access to a planned pipeline carrying Siberian crude to the Pacific. Russia, concerned about becoming too dependent on one customer, has refused to commit to building a spur that would link the pipeline to northern China, instead hinting that it will rely on rail shipments -- which are much costlier and less reliable.

Even when the Chinese try to invest in less-sensitive sectors than energy, the relationship can be fractious. In St. Petersburg, Russia's second-largest city, local politicians have campaigned to block a $1.3 billion real-estate development by a conglomerate of five Chinese state-owned companies. The concern: that the 553.5-acre project, which would include housing, schools, hospitals, recreation and retail, would become a "Chinatown"-style enclave for illegal immigrants.

...Behind the ambivalence is a fear that once the floodgates are opened, Russia could be swamped by Chinese immigrants. The surrounding tensions over linguistic, cultural and economic differences echo those along the U.S.-Mexico border, where states have to deal with a constant flow of legal and illegal immigrants seeking opportunity. In Russia the concern is heightened by the stark contrast between China's enormous population and Russia's steep demographic decline.

The differences are most palpable in Russia's Far East, a vast region bordering on China that has more than a third of Russia's territory but just 5% of its population -- seven million people. Across the border are China's three northeastern provinces -- Heilongjian, Jilin and Liaoning -- with a combined population of more than 100 million.

Inevitably, tens of thousands of Chinese migrants are already crossing over to fill the void, some of them settling down and acquiring Russian citizenship. According to the official count, there are about 250,000 Chinese living in Russia. Some Russian academics say they could become the predominant ethnic group in the Far East and eastern Siberia by the year 2025.

Visiting Blagoveshchensk in 2000, President Vladimir Putin warned that if the authorities failed to develop the region, "even the indigenous Russian population will mainly be speaking Japanese, Korean and Chinese in a few decades."

Yet in the countryside and Russia's provincial capitals, the Chinese are often seen quite differently -- as a potential lifeline for an economy desperately in need of extra hands.


Anonymous said...

Don't take it personally, Russians treat all foreigners like that :-)

Steve Hsu said...

But what do you think the Russian far east will look like in 20 or 50 years? Demographically and economically, it seems like it will inevitably be more Asiatic. Will Moscow maintain control?

Anonymous said...

I don't like to predict that anything will be the same in 20 years time. There will certainly be many more Chinese there, even the climate is changing to their advantage :-) But as Machiavelli said, it's madness to fight with your best customer.

Anonymous said...

It is not becoming Chinese cities. It is Chinese cities. The fact shall not change just because the Russians killed all Chinese there 100 years ago, or because China has a ruler who is good comrade to Russia, or because the nukes which makes a major war impossible for China to take back the land. Just think about, how old is Russia, where is Russia, how come that Russia has land so far away in China? Chinese were cultivating in Russia's far east 1500 years ago. And Russia doesn't exist by then.

paul said...

I think the time has come for Beijing to start appointing the governors to all the Oblasts in Russia, east of Ural Monatains.

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