The independent resource on global security

Balancing resource expectations in the Russian Far East

Balancing resource expectations in the Russian Far East
City of Khabarovsk, Administrative Centre of the Far Eastern Federal District. Photo: Flickr/Paukrus
Jiayi Zhou

 

Chinese agricultural engagement and land acquisitions in Russia’s Far East Federal District (RFE) in the past three decades show that media reports of Chinese ‘land grabbing’ and other unsavoury practices are more hype than reality. China and Russia share a long eastern border of over 3000 kilometres in Russia’s far east—a region that constitutes one third of Russia’s territory but contains only 4 per cent of its population. Virtually all of the RFE’s arable land is concentrated in its southernmost border provinces. At present, Chinese companies—either directly or indirectly through joint ventures with Russians—lease or own some 20 per cent of that land—amounting to about 670 000 hectares—on which they produce vegetables, grains and livestock, and engage in post-production processing.

Since the liberalization of the Sino-Soviet border in the late 1980s, Chinese labourers—predominately from Heilongjiang province—have been actively engaged in the RFE agricultural sector. They came first as agricultural workers to fill a labour gap, and later as more entrepreneurial and independent farmers. By the late 1990s and early 2000s, this flow had turned into a ‘farm rush’ (种地), marked by robust networks of Chinese migrant farmers and farm workers capitalizing on opportunities in much more land-abundant Russia.

Relatively small-scale farmers rented from Russian rural residents, restructured the collective farms (колхозы) and state farms (совхозы), or leased from the state’s regional land funds on relatively short-term leases of one, five or 20 years. In 2002, Russian legislation was altered to allow foreigners to lease Russian agricultural land for up to 49 years, including the purchase of land by Russian-majority shareholder companies. This, in conjunction with China’s ‘Going Out’ (走出去) strategy, which encouraged Chinese enterprises to invest abroad, led to more regularized investment in agriculture by state-affliated and large corporate actors from China. As a result, these companies were able to acquire and develop much larger agricultural land concessions.

 

Commercial motives

In contrast to the discourse surrounding China’s land-grabbing and food security imperatives over the years, Chinese farming in the RFE has been overwhelmingly commercial in motive. Chinese produce for the local Russian market rather than for the Chinese market, capitalizing on higher market demand and greater profitability. Policy barriers and transportation costs are additional factors.

Far from being an extractive case of exploitative land-grabbing to support foreign markets, Chinese activity has actively contributed to the consumer market in the RFE, with Chinese supplying anywhere from half to two-thirds of the vegetable consumer market. These activities have driven down prices substantially. In this regard, Chinese investment and engagement in the RFE parallels other cases of Chinese cross-border agricultural investment—including in South East Asia and Central Asia—in that they are more reflective of the individual behaviour of enterprises and a desire to make profits, rather than any governmental macro-strategy.

It is important to note that China’s Going Out in the agricultural sector is in many respects still quite a limited phenomenon. It still lacks any strategic coordination at the national level on bringing large-scale imports of products back into China. However, this picture may be changing. One of the first large-scale shipments of soya beans—the only major agricultural commodity and grain crop in which China is less than 50 per cent self-sufficient—from Chinese production bases in Russia into China occurred in 2014. Such exports from Russia to China quickly rose from around 80 000 tonnes in 2014 to around half a million tonnes in 2015.

Higher-level agricultural deals by corporate and state actors in Russia and China have also been agreed. In May 2015, during a state visit to Moscow by China’s President, Xi Jinping, a USD $2 billion investment fund was announced to finance agricultural projects between the two countries. National companies such as the China National Cereals, Oils and Foodstufs Corporation, China’s largest grain-trading state-owned enterprise (SOE), are showing increasing interest in the Russian agricultural market. As of the first quarter of 2015, however, Russian supply accounted for only 1 per cent of China’s total agricultural imports.

 

The human dimension

Unique to Russia, however, is the human dimension of Chinese actors not only as corporate investors, but also as migrant farmers and farm labourers. In this regard, the phenomenon goes well beyond investment to touch upon Chinese– Russian migration dynamics. Beyond economic liberalization and profit-seeking, there have also been other more political drivers at play. Chinese local government and local labour bureaus continue to work to find outlets for surplus rural labour, increase rural incomes and create of-farm employment. Labour exports to foreign countries have been one means of achieving this, although governmental support for these activities has diminished in the past decade.

As for where Russia’s own policies and drivers fit into this picture, the Chinese media has labelled Russia’s attitude to China ‘tangled and fickle’. Such assessments detail Russia’s dependence on and welcome for external sources of labour and investment, which are often limited by securitization imperatives and nationalistic or xenophobic discourses at home. At the investment level, Russia has been very welcoming of foreigners penetrating their agricultural market. This was evident at the Asia-Pacific Economic Cooperation (APEC) Summit hosted by Russia in Vladivostok in 2012, which focused on global food security.

At the summit, Russia unveiled an investment plan offering some 20 projects to outside investors, some involving 150 000–200 000 hectares of agricultural land. It was notable that while the Deputy Minister for Economic Development, Andrey Slepnev, listed Viet Nam, Singapore, Thailand and Japan as among the countries able to benefit from this tender process, he conspicuously failed to mention China. Around the same time, the Minister of Development of the Russian Far East, Viktor Ishayev, openly stated that in the field of agriculture, Russia preferred cooperation with Japan and South Korea to working with China.

 

Conclusions

In practice, despite cases in which China has been left out of deals or targeted in official statements, there has been no real barrier to Chinese penetration of the RFE and the Russian land market. In contrast, labour migration, which is still poorly regulated and institutionalized, continues to be subject to more mercurial politics. For example, in 2013, the Amur Oblast and Krasnoyarsk outright banned Chinese agricultural labourers by providing them with no allotments as part of the foreign labour quota. This decision was attributed to alleged evidence of Chinese use of banned chemical additives, fungicides, insecticides and other toxic chemicals on Russian soil. While some of these cases of exclusion may have some foundation, linked to Chinese farming methods or other empirical data, the extent to which perception continues to drive these trends should not be underestimated.

ABOUT THE AUTHOR(S)

Jiayi Zhou is a Researcher in the Climate Change and Risk Project.