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Tuesday, October 25, 2016

The hopes of the Crimea associated with China

Due to the particular position of China on the question of the reunification of Russia and Crimea China quickly became the Peninsula an important economic partner. In some questions the Chinese even claim to monopoly that creates certain problems. But what you need from the Crimea, China and China the Crimea can give given the fact that cooperation with China in the era of Yanukovych Crimeans considered disadvantageous?

Monday at the site of the Russian Embassy in China held a large-scale presentation of the Crimea with the participation of a representative delegation headed by Chairman of the state Council of the Republic Vladimir Konstantinov. Talks about bringing in the Crimea Chinese investments and mutual “courtesy visits” occur more than two years, and now the leadership of the Peninsula expects that they will finally bring results.

The parade of projects

“The first large tour group from China arrived in Crimea to participate in the celebration of Victory Day in Sevastopol”

“We hope that after endless meetings and negotiations of businessmen from China will begin to work and invest in the economy of the Crimea. This is the main task of our visit,” – said Konstantinov before the trip to China. The seriousness of these intentions confirms the composition of the Crimean delegation. In the pre-stated list included two Deputy Prime Minister (Vitaly Nahlupin and Georgy Muradov), the Minister of resorts and Turim Sergei Strelbitsky, the deputies of the state Council, the rector of the Crimean Federal University, heads registered in Crimea, Russian national commercial Bank and GenBank.

This visit was scheduled as part of a series of presentations of economic, investment and tourist potential of the Peninsula, set at the recent Yalta II international economic forum the head of this event, Sergey Lazutkin also included in the list of participants of the trip to China). As reported at the end of the forum Georgy Muradov, in addition to China, the “days of Crimea” is planned in Bulgaria, Serbia, Israel and several other States.

In the two years that have passed since the reunification of the Peninsula with Russia, the Crimean leadership has repeatedly tried to establish business contacts with China. In June 2014, the head of the Republic Sergey Aksenov has informed on the intention to submit a number of projects for overseas investment fair in Beijing (COIFAIR 2015), which was done.

The development of the Crimean-Chinese contacts occurred at the local government level. In July last year, a large delegation under the leadership of the head of the administration of Yalta Andrew Rostenko visited with official visit the third Forum of development and cooperation of cities in the Economic zone of the silk road, which took place in Urumqi – the capital of the Xinjiang Uygur Autonomous region of China.

For its part, the representatives of the PRC also made several business trips to Crimea. In particular, in June of last year Sergey Aksenov signed a Protocol of intent with the Chairman of the Board of Directors of the International energy companies of China Chen Jejunum. During his visit, the sides discussed such projects with participation of Chinese business, as the development of canning and engineering plants of the city of Dzhankoy, tobacco farming, the creation of a building materials terminal with an area of 100 thousand sq. m.

The first organized group of Chinese tourists came to the Peninsula at the end of July 2014. Last year one of the most significant events in this sphere has become a media tour to the Republic of Crimea and Sevastopol for the largest tour operators from the 10 provinces of the PRC. The Chinese guests then proposed to integrate the visit to Crimea for a period of two to four days in the program sightseeing tours in Russia, including the best in Moscow and Saint-Petersburg. This year, the first large tour group from China arrived in Crimea to participate in the celebration of Victory Day in Sevastopol.

One of the latest joint initiatives in the tourism and recreational sphere was presented a few weeks ago. As reported by the Deputy Chairman in March established the black sea Association of international cooperation, Ian Epstein, now the Chinese investors together with the Czech chamber of Commerce are considering the possibility of creating in the Crimea of nursing homes for the citizens of the PRC, which could accommodate Russian pensioners.

The power of monopoly

In General, for the PRC leadership and Chinese businessmen of Crimea is not terra incognita. Back in 2013 during the visit of the then President of Ukraine Viktor Yanukovych to China was signed a Memorandum of cooperation with Beijing Interoceanic Canal Investment Management Co. Ltd., which included the launch of massive infrastructure projects on the Peninsula. In particular, they talked about the construction in Crimea of a deepwater port, a new airport, shipyards, oil refinery and reconstruction of fishing port in Sevastopol. The total investment was marked to $ 10 billion.

However, on the Peninsula this agreement then caused a negative reaction. “The port built for the export of grain from the Crimea, where the Chinese out is supposed to give about 160 thousand hectares of land for the production of wheat and corn. It is planned to obtain with this area are unbelievable yields – eight million tons. Ultimately, the port on the West coast will kill the Crimea as a health resort”, – said the member of the expert Council under the government of the Autonomous Republic of Crimea Sergey Kiselev.

Associate Professor, NRU HSE, member of the Zinoviev club MIA “Russia today” Pavel Rodkin believes that the current visit to China, the Crimean delegation actually means new, postukrainskogo, round of talks with the Chinese side on cooperation. “To make the usual courtesy visit to China just senseless,” says Rodkin, Recalling that China in 2014 has clearly expressed support for Russia’s actions in Crimea. Indeed, Beijing has not supported the sanctions imposed against Russia after the annexation of Crimea and voting in the UN security Council on the question of the legitimacy of the referendum in Crimea chose to abstain.

At the same time, Rodkin believes that the specifics of the Chinese position on the Crimea means that in the negotiations with the leadership of the Peninsula, China has a certain advantage: “China’s Interest in these projects lies in the fact that due to the West’s position on Crimea and the imposed sanctions, China has remained without a serious European and American competitors. The limits of economic cooperation with Crimea for China, to create favorable conditions for negotiations, depriving the authorities of Crimea and Russia as a profitable alternative partners. Such a “monopoly” can only be reversed by intensification of internal projects for development of Crimea”.

However, the examples of other Russian regions suggests that two years is a very short period of time for the adoption of the Chinese solutions on specific projects. For example, in the middle of the last decade to develop economic relations with China became Ingushetia, which in 2006 within the framework of the Year of Russia in China was presented at the Russian national exhibition in Beijing 15 investment proposals. Since then there have been many reciprocal visits from time to time discussed various joint initiatives and signed agreements of intent. In the past smallholder authorities of Ingushetia has even declared its readiness to provide the Chinese 100 hectares of land for their projects, but any tangible results of this cooperation has not yet yielded.

Not that the Chinese were concerned about the exorbitant risk the troubled Caucasus Republic, in comparison with a number of African countries, which have long been working companies from China, they are clearly below. The other: the Chinese, in principle, not prone to quick decisions, moreover, do not forget about the famous Eastern principle of “to promise – does not mean to perform.” Among the factors hindering the growth of Chinese investment in Russia, analysts have also referred to problems with obtaining state guarantees for the projects and the complexity of immigration laws (the Chinese prefer to import their own workforce projects).

As a result, in the Russian-Chinese economic relations have developed remarkable disproportion: while in trade, China is one of Russia’s key partners in the field of direct investments in Russia, China’s share is very small. In 2013, the volume of Chinese investment in the Russian economy amounted to 5,027 billion dollars – substantially less than the corresponding figures of Germany or France, not to mention such offshore jurisdictions as the Netherlands, Luxembourg or Cyprus.

At the same time, economic cooperation of Crimea with China is growing even without major joint investment projects. According to the Crimean customs, in 2015 China became the fourth largest trade partner of the Peninsula after Ukraine, Turkey and Panama, the share of China in foreign trade turnover of the Crimea and Sevastopol was 8.6%. The total value of goods imported from China to the Republic of Crimea for 2015, over 7.7 million dollars, but exports to China is significantly lower – only 431 thousand dollars.

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