China pushes ‘border model’ in a booming Russian trade zone

August 11, 2014 07:19 pm | Updated November 17, 2021 04:58 am IST - MANZHOULI

China is building a sprawling, modern $ 500 million trade zone along its border with Russia in an indication of the two countries’ increasingly close ties, bolstered by a recent landmark energy deal and a trans-continental railway project aiming to link the two economies.

In Manzhouli, a once sleepy Russian-style border town dotted with faux cathedrals and cobbled streets, the Chinese government has begun work on a sprawling logistics park that will more than double the average annual capacity for cargo transport across the border.

The first phase of the project, soon to be completed, has cost the government 3 billion RMB (around $ 500 million), and will enable 70 million tonnes of cargo to pass through this land border port every year.

The China-funded logistics park underlines the shift in balance in the relations between the neighbours – a sweeping change that has played out in the trading markets and border crossings of Manzhouli.

Half a century ago, the newly founded People’s Republic of China was reliant on Soviet Russia for vital technological support and skilled labour as it sought to rebuild its economy after decades of war and internal strife. Then, barren northern China was decades behind the towns across the border, reliant on imports of food and industrial goods from the Soviet Union.

A symbol in the gulf across the border was a towering border gate erected by the Soviet Union, an imposing edifice that stood over the land port of Manzhouli.

Today, the roles have been reversed: the Russian border gate is but a speck in the shadow of an expansive structure built by China at the entrance to its logistics park. It is Russia that is importing on Chinese machinery and electrical goods, while heavy-haul trucks and trains carrying thousands of tonnes of Siberian timber speed down the four-lane expressway that runs out of the Manzhouli port, through which 70 per cent of the China-Russia land trade passes.

New rail lines

Part of the plan to bring the economies of the two countries closer together is a new trans-continental rail line that runs through Manzhouli, starting in China’s southern manufacturing heartland of Jiangsu province before running north, through this town, to Russia and finally ending up in Poland.

The line is the second Euro-Asian route being championed by China, following a rail link from south-western Chongqing, through Xinjiang to Central Asia, according to Li Xiguo, the deputy director of Manzhouli’s port affairs office.

“We believe this route is four days shorter and cheaper by $ 1,000 per container,” he told a group of journalists who were invited by the government to visit the port project.

The free trade zone, he said, was unlike anywhere else in China: Russians can land in Manzhouli without visas, and can travel anywhere in China for as long as a month. They can also take back 8,000 Yuan a day (Rs. 80,000) without tax. On the grasslands dotted with sheep and horses that sprawl across the China-Russia border, there are no signs of Chinese or Russian troops, only of herders and a flimsy barbed wire fence.

Border model

Mr. Li says the project can be a model for the regional integration across China’s other borders. China and its northern neighbour had for long grappled with a long-running border dispute – tensions spiralled following a clash in 1969 through much of the 1970s, and serious negotiations only began in 1991.

Some of the disputed areas were not far from Manzhouli, such as the Abagaitu islet in the border Argun river, which was only settled by a 2004 agreement.

That agreement, local officials say, triggered the growth in border trade, with China, eight years later, designating Manzhouli “an experimental area” for “opening up”.

This year’s landmark $ 400 billion gas deal signed between China and Russia in May, after years of deadlocked negotiations – the agreement was seen as a signal of warming ties amid continuing Russian tensions with the West – may play a similar role, the local officials said, and bring in a second transformation for an old border town once only known in China for kitsch Russian replicas.

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