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  • Sino-Russian Border Economic Survey (Part 1): The Sino-Russian Ussuriysk Economic Cooperation Zone

Sino-Russian Border Economic Survey (Part 1): The Sino-Russian Ussuriysk Economic Cooperation Zone

|China

At the beginning of September this year I visited Primorsky Krai in Russia with Associate Professor Chung Ahyoung (College of Business Administration, Ritsumeikan University) and Quan Yongnan (Japanese Language Department, Yanbian University). To date the author had researched Chinese rural areas and agricultural problems, but from last year I got added as a member of the Ministry of Education, Culture, Sports, Science and Technology scientific research fund (representative researcher: Norio Horie; project number: 21402019; research project name: “The Potential and Limits for the Redevelopment of the Russian Far East: A Number of Problems Seen from Sino-Russian Mutually-Dependent Economic Relations”) and got the opportunity to conduct surveys and research on Sino-Russian economic relations. I am a complete amateur regarding the Russian economy, however, and because I felt I wanted to first see things once with my own eyes, I got on an international bus from Yanbian and went from Hunchun to Russia, and subsequently I visited the Sino-Russian Economic and Trade Cooperation Zone, the Chinese market and the wholesale market, etc., in Ussuriysk, and logistics firms in Vladivostok, and then I visited the Port of Slavyanka, the port at Zarubino, and Kraskino and Khasan District, etc.

At the Chinese and wholesale markets in Ussuriysk I felt the power of the Chinese and of Chinese products. From the street the Chinese market doesn’t look particularly big, but the maze-like market, where they have spread out Chinese products (clothing, leather goods, and everyday items, etc.) in a narrow space with stalls of stacked containers, extends further and further in. Also at the wholesale market, things including agricultural produce grown in the suburbs, and vegetables, fruit, rice, and processed foods from China, are carried in on secondhand trucks which they once probably used in Japan, and are sold. At this wholesale market too people who looked Chinese were prominent.

Earlier I also visited the Sino-Russian Ussuriysk Economic and Trade Cooperation Zone. This zone is one of nineteen external economic and trade cooperation zones which China has sanctioned, and in 2006, with Dongning Jixin Industry and Trade Group Company Ltd., the Kangnai Group (of Zhejiang), and China Resources (of Zhejiang) investing approximately 2 billion yuan, they began construction in Ussuriysk. Still in the middle of the construction of factories, according to the Heilongjiang Daily (5 August) this summer two clothing firms newly set up operations there, and together with the firms currently undertaking construction, eight companies have effected their expansion there. Dongning County in Mudanjiang City, Heilongjiang Province, has constructed a “cross-border chain production” among the Huayu Industrial Park in Oktyabrsky District and the Dongning Economic Development Zone within China, along with the aforementioned cooperation zone, has succeeded in attracting 30-plus southern Chinese footwear and clothing firms, and has attained a production of 2.5 billion yuan and a total value of imports and exports of US$200 million. This “cross-border chain production” is a system going from partly-finished goods within China, to low-tariff exports to Russia, to processing within the cooperation zone, to exports to Russia and other countries. Taking leather footwear as an example, the export tariff rate per pair for finished products is 33% and the number that can be loaded into a container is 12,000 pairs, and in contrast, for partly-finished goods costs can be greatly reduced, at the respective figures of 10% and 31,000 pairs. Other than that, the construction of industrial zones in Russia by investment from the Chinese side is ongoing, and additionally in Suifenhe, Heilongjiang Province, the Suifenhe Integrated Free Trade Zone is under construction and they are aiming at the largest accumulation of export-driven industry on the Sino-Russian border, but if the processing and distribution setups, which straddle the Sino-Russian border in this way, develop, then it may also be hoped that they will lead to development of processing and distribution systems for the Northeast Asian region, involving neighboring countries such as the ROK and Japan, and not just between China and Russia.

Within the Ussuriysk cooperation zone, however, there are dormitories for the Chinese workers undertaking production and the construction of factories, etc., and from what can be seen, there appear to be fair numbers of Chinese people working there. Furthermore, when I tried talking to people, I was immediately told to leave the area, and I was unable to get to talk in detail. While the supervision of Chinese workers in Russia in recent years has grown strict, it seemed to be having an effect. Before this visit to Russia, I visited Suifenhe, and Dongning County, etc., and also before that the personnel training school (which, after training, exports manpower to other countries) under the umbrella of the Bureau of Commerce of the People’s Government of the Yanbian Korean Autonomous Prefecture, and conducted interviews to investigate the economic and trade relations with Russia, and what I often heard at that time concerned the strictness of the procedures for exporting manpower to Russia and the expensiveness of the fees. A researcher at the Strategy Research Center of the People’s Government of Suifenhe City has stated that costs are too high, as much as approximately 10,000 yuan to send an individual Chinese worker to Russia, and in addition the levying of tax and fees on companies is stringent. Against a background of the exacerbation of trade friction, the increase in its foreign currency reserves, and the rise in wages, etc., China appears now to promote the overseas expansion of Chinese firms, but as seen from this cooperation zone, they are selling construction and production to Russia domestically and to third countries, along with the many Chinese workers; and as has been seen from the Chinese market and wholesale market, in only that a large volume of Chinese goods are being exported to Russia, they will just further deepen the discord, without quelling the sense of caution toward China which is growing in Russia. In addition, a situation where the securing of Chinese workers grows difficult, including the strengthening of the supervision of Chinese workers by the Russian side and the expensiveness of fees, the rise of wages in China, and the problem of the attractiveness as a labor market of Russia itself, will also come up. How to subsequently continue constructing reciprocal development systems is a major challenge.

[Translated by ERINA]