Problems and Prospects for China-Russia Inter-Regional Cooperation

A crucial component of China-Russia comprehensive strategic partnership, regional cooperation is a focal point for both countries and receives the necessary support both at the top level and from the local authorities. Thus regional cooperation has a huge potential in terms of the development of bilateral relations.

Cooperation between non-adjacent regions in both countries is gradually gaining momentum. This is primarily the interaction between the Middle and Upper Yangtze Region of China and Russia’s Volga Federal District. Cooperation in the Volga-Yangtze format got under way in May 2013. In July 2016, Ulyanovsk hosted the first meeting of the Council for Inter-Regional Cooperation that pushed the cooperation and development processes to a new level. The Council will hold its second meeting in Anhui Province, China, in June this year.

Cooperation between these two regions has huge potential. I would like to focus on eight widespread problems confronting various kinds of Chinese businesses as they cooperate with Russian businesses in their respective areas.

The main problems encountered by Upper Yangtze businesses:

1.     Trade and economic cooperation with Russia has no obvious strategic advantages and is in an inferior position. Neither China, nor Russia has taken steps to create favorable conditions for bilateral and regional trade and economic cooperation.

2.     Russian laws and regulations constantly change, causing businesses to have to waste huge resources to adapt to the situation.

3.     Russian administrative procedure is not efficient and the process of obtaining administrative authorizations is excessively slow.

4.     Russia is not inclined to provide state guarantees for costly long-term infrastructure projects.

5.     The current visa arrangement is extremely strict both in Russia and China.

6.     The potential of Chinese businesses in Russia is dispersed; there are no official commercial entities that specialize in protecting business interests.

7.     The financial risks are comparatively high on the Russian market.

8.     Russia-China information exchange channels are insufficiently developed.

Generally speaking, the most obvious problems in the context of bilateral inter-regional cooperation are a lack of mutual understanding and inadequacy of the information channels. The Center for Russian Studies of East China Pedagogical University came up with an initiative to establish in Shanghai the Volga-Yangtze Joint Analytical Center. The initiative was implemented with the support and active participation of the Chinese Foreign Ministry and other government agencies. The Center held its first forum attended by more than 50 Chinese experts. The Center pursues the following four main objectives:

1)    Submitting analysis on Volga-Yangtze cooperation issues to upper-level organizations and government agencies of the six provinces as well as directly to businesses.

2)    Joint development of investment guidance for businesses involved in programs; this includes analysis of bilateral cooperation prospects and assessment of investment risks.

3)    The normalization of dialogue between businesses participating in the Volga-Yangtze programs through better information exchanges by the creation of an online platform and holding business forums.

4)    Joint training of specialists on inter-regional cooperation and provision of working exchange mechanisms.

China is prepared to focus on the following three areas during the next two years:

1)    Generalizing the two regions’ development experience and looking for opportunities to establish exchange mechanisms.

2)    Getting to know the markets of 14 Russian federal constituent entities, including aspects of local legislation and economic management.

3)    Studying six PRC provinces and 14 constituent entities of the Russian Federation from the angle of mutual complementariness of production patterns and industrial capacities.

This is only the first step in solving China-Russia inter-regional cooperation problems, some of which, are of a long-term and resistant nature, and cannot be solved overnight. We will have to explain their causes and map out ways so we can address them. It is quite clear, that this cannot be carried out by China alone and requires that Russia too be actively involved.     

Views expressed are of individual Members and Contributors, rather than the Club's, unless explicitly stated otherwise.