Realities of Chinese FDI in Russia come home to roost by Baikal

The day-to-day implications of Russia’s pivot eastward are gradually unfolding for its Far Eastern and Siberian inhabitants – and not all of them are happy, least of all the country’s nationalists. While President Vladimir Putin must have given the Grand Baikal  tour operator his backing (if not necessarily his heartfelt blessing) for the massive $11bn in funding  it secured from Chinese to  realise its plan of developing Siberia’s Lake Baikal into a significant tourist destination, the sleepy  town of  Listvyanka (pop. 2,000) on its shores has inadvertently become a cause celebre after more than 55,000 Russians signed an online petition claiming that Beijing was planning to turn it into a Chinese province in all but name.
The petition calls on Putin to band land sales to Chinese investors in the region and several newspapers have now joined in the chorus, running headlines about a Chinese “invasion”, “conquest” and even China’s “yoke” — a reference to the Mongol invasions of the Middle Ages, reviving  deep-seated  Russian fears about its more prosperous and populous neighbour and especially the vulnerability of the sparsely populated and economically undeveloped eastern third of the country  to large-scale Chinese immigration.
“People really are worried about the Chinese buying everything here. They build huge hotels. They tear down and change the façades,” says Viktor Sin’kov, head of the legal department in Listvyanka’s municipal government. “Their advertisements are everywhere, hanging from fences.”
Accurate data about the extent of Chinese migration into Siberia and Russia’s Far East is  hard to come by and estimates vary wildly. According to Alexander Shaikin, the official in charge of controlling the Russian-Chinese border, 1.5 million people  illegally entered the Russian Far East from China  between January 2014 and July 2015 and  there are now believed to  somewhere between two and five million Chinese living in Russia. For the Chinese to become the dominant ethnic group within the space of the next 30 years would only require an annual influx of about 250,000 to 300,000 – less than one-third the rate claimed  by Shaikin three years ago.
Even if that rate were to slow down, however, there is no escaping the rise of China’s financial clout across the  border. Back in 2015 the authorities in Trans-Baikal region in eastern Siberia  granted China’s Zoje Resources Investment and its Huae Sinban subsidiary a 49-year land lease for the development of modern agriculture and livestock industries on 115,000 hectares of its uncultivated land in return for a $440m investment  in local agribusiness development.
As well as looking to develop new food supplies, China is also using its fiscal muscle to secure energy supplies from its western neighbour. Last September, CEFC China Energy put up $9.1bn to secure a 14.16% stake in the Russian oil producer Rosneft in a deal that will give give it access to oilfields  close to the Sino-Russian border; while
in May, a Chinese consortium led by Fosun agreed to buy as much as 15% of Polyus, Russia’s largest gold producer. A month after that, Beijing Gas Group bought a 20% stake in  Rosneft’s Verkhnechonskneftegaz — one of eastern Siberia’s biggest oil and gasfields — for $1.1bn.  CEFC is also currently in talks to acquire a stake in the Russian hydropower and aluminium company EN+ as a cornerstone investor in the group’s planned initial public offering.

Source: FT