Far East Russia being farmed by Chinese
One of the largest foreign-invested agricultural projects in Russia is owned by Chinese businessman Li Deminwas. It began with a struggling pig farm in Russia’s Far East 14 years ago. This is just one of several agricultural operations in Russia controlled by Chinese firms.
Currently Li’s agricultural operation stretches over 40,000 hectares and is expected to expand further, Li's farm near Ussuriysk raises 30,000 pigs a year and grows soybeans and corn that are sold in local markets or shipped back to China.
Li asked for land to take on the project of buying and saving the pig farm. Li is chairman of the Dongning Huaxin Group, a private trading firm based in Heilongjiangprovince, China, asked for 500 hectares of land to be thrown into the deal. In the end, the local government offered to lease Li more land than for which he originally asked.
Russia's Far East Federal District, a region two-thirds the size of the United States, has a population of just 6.3 million and wide swathes of unfarmed fertile land.
China is next door; its 1.4 billion people have an insatiable appetite for crops and produce, and its companies have gone as far as Australia, South America and the Pacific island of Vanuatuto to lease farmland, as reported by David Stanway for Reuters, who wrote about the agricultural arrangement between Russia and China.
Unlike most other parts of the world, the local population, cut off from Russia's western-facing economy, mostly welcomes Chinese investment, which has provided a lifeline following the collapse of the Soviet Union. Chinese firms already lease or control at least 600,000 hectares of land in the Far East, which is equivalent to the size of a small U.S. state like Delaware.
The investments could surge if the political masters in Moscow were more accommodating, Stanway suggested.
"When the Soviet Union collapsed, the local people didn't really know what to do, so they started encouraging us to take over the land at very cheap prices," Li said. "They would pay us to clear the forests—they gave us a lot of support."
Pavel Maslovsky, who represents the Amur region near the Chinese border in Russia's upper house, the Federation Council, said the region needs investment and fears of an influx of Chinese is misplaced.
"To fear that investors would come to the wrong sector and in a manner which we do not like is like selling a bear's skin before you have caught the bear," he said.
But there remains considerable ambivalence in Moscow about the region's growing dependence on China. Relations between the two nations have been improving since a border war in 1969, but some tensions remain.
"It is no longer necessarily the fears that the Russians are going to be swamped by gazillions of Chinese," said Bobo Lo, associate fellow at Chatham House and an expert in Sino-Russian relations.
"Now it is slightly different, and more that the Chinese are a rising economic power, that part of Russia is struggling and China will inexorably take over."
FEARS OF CHINA
Russian fears of Chinese encroachment in its under-populated Far East have eased since the 1990s, but while Russia has vowed to rejuvenate the impoverished region, it is still reluctant to rely entirely on China. Unfortunately for Moscow, the Chinese remain the only ones willing to invest.
"There is already a feeling (from the Russians) in the bilateral relationship that they are being outmatched, and this makes them anxious," said Lo.
"It is bad enough being a resource appendage to the West and it is worse if you are a resource appendage to a country to which you have felt superior for the last 300 years."
The Far East received $9.9 billion of foreign investment in 2011, according to Russia's Federal Statistics Service, accounting for just 5 percent of the amount received by Russia as a whole. More than three quarters of the total was spent on the development of oil and gas in Sakhalin, a resource-rich island off the Far East coast, north of Japan.
Ussuriysk, about 100 km (62 miles) north of Vladivostok and 60 km (37 miles) east of the Chinese border, was once controlled by a succession of Chinese dynasties and built over the last century from the proceeds of logging and food production.
One of the first areas in Russia to open up to Chinese business in the 1980s, it has also benefited from the establishment of a free trade zone that has brought investment from 26 Chinese firms since its foundation in 2006.
Widespread fears about the region being flooded by Chinese migrants have not come to pass. Dongning Huaxin's Li said his company has been doing its utmost to ease the concerns and ensure that local labor is used on farms. He said local Russian farmers now make up around 60 percent of a total workforce of 600.
But the problem is that the local population has dwindled, and those left behind are mostly unwilling to do agricultural work, Li said. "This is how I see it: if Chinese labor left the Russian Far East, the region would grind to a halt," he said. "Take our pig farm: Russians don't like pigs and we can't find people to work on it and we can only hire Chinese to do it."
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