Trade war brings old rivals closer together

August 19, 2018 12:00 am | Updated 03:34 am IST

China’s escalating trade war with the U.S. is drawing Beijing and Moscow closer to each other. China’s decision to curb soya bean imports from the U.S. as part of a tit-for-tat tariff spiral between the two countries is bringing Russia, especially its less developed but resource-rich ‘Far East’, into the equation. New links are being forged between the two neighbours, who are facing the heat from Washington. The plan fits well into Russian President Vladimir Putin’s pivot to the ‘Far East’. The Russians have identified Vladivostok and Khabarovsk, which are close to the Chinese border, as the double hubs for the growth of this long-neglected region.

The Hong Kong-based South China Morning Post recently reported that Russia is offering foreign investors from China and other countries one million hectares of land suitable for cultivating soya beans and other agri-products. Valery Dubrovskiy, director of investment for Russia’s Far East Investment and Export Agency, was quoted as saying that several Chinese companies have expressed interest in the deal, under which land in Russia’s Taiga region is being opened up for foreign investment. “We expect most of the investment to come from China,” he said. “We expect 50% from China, 25% from Russia and 25% from other countries like Japan and Korea.”

De facto alliance

In China, the reaction to Russia’s move has been largely positive, despite the undercurrent of friction between the two countries due to their chequered history. “Now the win-win cooperation between Russia and China will enable Chinese farmers to grow soya bean on the virgin land in Russia’s vast east and turn it into farm land,” said a Chinese blogger, who signs in by the name Chan Kai Yee. He added: “The China-Russia de facto alliance will put an end to not only U.S. military but also U.S. economic hegemony.”

The latest offering is yet another example of Russia’s attempts to invite Chinese investors in its ‘Far East’ — a region that has been largely ignored since the collapse of the Soviet Union. Nearly a decade ago, China and Russia launched a joint initiative to develop their border region. Over 200 key projects were cranked up on either side of the border. The Chinese response was particularly energetic. Investments flowed into the mining of metallic ores and other natural resources, backed by significant labour exports. In tune with the crisis in Ukraine and growing tensions with the West, Mr. Putin has gone into overdrive to develop the ‘Far East’. Four years ago, the Law on Territories of Accelerated Development was enacted, which triggered the emergence of new special economic zones.

Mr. Putin has gone out of his way to woo China, South Korea and Japan to invest in Russia. He made his intentions transparent by hosting an Asia-Pacific Economic Cooperation (APEC) summit in Vladivostok. While the trade war with China and enhanced sanctions on Russia are tightening the Sino-Russian embrace, Beijing and Moscow have, nevertheless to wrestle with their troubled past. In 1969, the former Soviet Union and China fought a bitter border war along the Ussuri river — the waterway that separates the Russian ‘Far East’ and China’s Manchuria.

The bitterness of those seven weeks of war still lingers on. Nevertheless, the necessity of reinforcing Sino-Russian bond is compelling against the backdrop of Mr. Trump’s so-called trade war. Unsurprisingly, Chinese President Xi Jinping is flying next month to meet Mr. Putin in Vladivostok, where the fourth Eastern Economic Forum will be held.

Russia is offering China and other foreign investors one million hectares of land suitable for cultivating soya beans and other agri-products in its less-developed but resource-rich ‘Far East’ region

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