Chinese Direct Investments in the Russian Far East Economy

Abstract

The Far East is traditionally very attractive to Chinese business. The region has everything to attract Chinese investments: geographic proximity, accumulated experience of cooperation, differences in economic development and factors of complementarity. All these facts have an impact on the economic ties of the Russian Far East and the PRC. In theory, the Far East should become the main beneficiary of the strategic partnership between Moscow and Beijing. Currently, the four southern regions of the Russian Far East demonstrate different models of China’s economic activity, depending on the historical background and the level of economic development. The bulk of Chinese investment in the Russian economy comes from intergovernmental cooperation, especially in the energy sector and large infrastructure projects, while there are few private investors from China. Therefore, Chinese investors face the problem of transforming their activities and looking for new business opportunities. This paper systematizes the main projects of Russian-Chinese investment cooperation carried out through intergovernmental agreements, as well as investigates the dynamics of direct investment from China. Despite the positive trend, it was revealed that the total amount of accumulated investments is decreasing with debt instruments being the main share of it. In the northern regions of the Far East, the activity of Chinese investors is practically excluded. The authors identify the main problems of Russian-Chinese investment cooperation in the Far East based on the analysis of Russian and foreign studies.