29 May 2023

An EEF 2023 Field Session at Blagoveshchensk Discusses Establishing an International ASEZ for Foreign Investors in Russia’s Far East

The Russian–Chinese Economic Forum ‘Amur Expo 2023’ held in Blagoveshchensk featured a field session of the Eastern Economic Forum called ‘Russia’s Far East and China: international priority development zones and cooperation prospects and opportunities’. The event was organized by the Ministry of Development of Russia’s Far East and Arctic, the Russian Far East and Arctic Development Corporation (FEAD) and the Roscongress Foundation.

Representatives of ministries, agencies and business associations, and top managers of big companies from Russia and China, considered the opportunities and risks involved in making the administrative, legal, financial, technical and personnel decisions required for launching international advanced special economic zones (IASEZ) offering a new preferential regime.

FEAD’s General Director Nikolai Zapryagayev, who moderated the session, reminded the attendees that at EEF 2022, Russian President Vladimir Putin set the strategic task of developing a special regime for the Far Eastern Federal District with the most favourable conditions for implementing, jointly with partners from friendly countries, high-tech projects and projects for manufacturing competitive products with high added value.

“As part of its sanctions pressure, the West is blocking traditional European, southern and northwestern areas of collaboration, which is objectively prompting Russian companies to pivot their economic interests toward the East and significantly increasing the role of commercial, investment, border region and humanitarian cooperation with the People’s Republic of China. The new circumstances open up additional opportunities for developing trade turnover between the two countries, implementing joint projects and launching new manufacturing enterprises. Developing cross-border cooperation between friendly countries appears to constitute a possible response to the challenges of our times. Today, we propose exchanging opinions on the expedience and feasibility of establishing an economic zone offering favourable conditions for both Russian and Chinese businesses engaging in mutually advantageous cooperation. We call this initiative an international advanced special economic zone since we are ready to extend an invitation to join this cooperation format to representatives from any friendly country without any restriction. Nonetheless, we believe it natural to launch this initiative with our Chinese partners”, FEAD’s head said.

Pavel Puzanov, Deputy Prime Minister of the Amur Region, was the first to offer his opinion on establishing an IASEZ in Russian Far East. He believes that, given the current geopolitical situation, this concept developed by FEAD and the Ministry for Development of the Russian Far East and Arctic is highly relevant today, while establishing joint enterprises in priority areas (logistics, trade, high-tech manufacturing, agriculture, tourism) is a condition for the functioning of the international zone. Additionally, the region already has an operational Amurskaya ASEZ implementing several major investment projects in industry and in transport logistics. Some of these projects are being carried out on an international scale and they could serve as anchors for export-orientated manufacturing.

“We see a practical possibility of establishing an IASEZ at several promising sites in our region. First, as part of the master plan for the city of Blagoveshchensk, the bridge area of the Amurskaya ASEZ, and the Rovnoye site. With our FEAD colleagues, we have already developed the concept for siting an industrial logistics park. Second, this is the Blagoveshchensk Dry Port concept implemented by SC Region, a big investor. We are talking about the station closest to the Trans-Siberian Mainline, which will connect the international highway bridge with the railway infrastructure. A territory of around 300 hectares will have a state-of-the-art rail terminal and an industrial park that could host joint Russia-China manufacturing enterprises. And the third IASEZ option is to develop a chain of manufacturing enterprises at the gas chemical cluster”, Pavel Puzanov said, confirming that the Amur Region Government and development institutions are ready to participate in a pilot project for establishing an international ASEZ and engaging Chinese colleagues in cooperation on all these proposals.

Mr. Zhao Zhongguo, Mayor of the city of Heihe, offered his assessment of the prospects for Russia-China cross-border cooperation. As a representative of Heilongjiang Province, which has the longest border with Russia’s eastern territories, he emphasized that, in addition to being neighbours and having engaged in long-standing trade and economic cooperation, Blagoveshchensk and Heihe have another unique feature, namely, fortunate alignment in three aspects. First, their location. Second, new opportunities for developing the mutually advantageous cooperation outlined by the leaders of Russia and China when signing their joint statement “On the plan for developing key areas in Russia–China economic cooperation through to 2030”. And, third, there is the friendship and long-standing multi-area practical communications between the people of the two cities.

“If we use these advantages skilfully and effectively, Blagoveshchensk and Heihe will become economic windows for our countries. Through joint efforts, we will be able to implement ideas and projects and become the cutting edge of Eurasia as a whole”, Mr. Zhao Zhongguo said.

Artyom Sheikin, Senator (Amur Region) of the Russian Federation, spoke on what needs to be envisaged in the draft legislation on establishing the IASEZ. In his opinion, the special regime should promote digital technology projects and greater trade turnover between Russia and China.

“Russia–China cooperation in digital technologies has great potential for the two countries’ development in the new era of technological progress. International cooperation with China in microelectronics, in developing innovative engines and fuel systems for aviation and shipbuilding will have a positive effect. China is a major global actor in many cutting-edge areas such as Big Data, AI and many others. So, Russia has great prospects here for IT import substitution”, Artyom Sheikin emphasized.

Mr. Xue Xingfa, President of the Xuan Yuan Corporation, spoke on behalf of China’s business community. He called establishing an IASEZ a “strategically inevitable choice” and drew attention to the legal component of establishing an ASEZ so that every investor could be confident that their business is protected. China’s XY Group has long experience of working with Russia and is continuing to expand this cooperation.

“We are interested in the Amur Region, its territories along the border with China where things are already set up and where there are people with experience in collaboration, and we want to offer our participation in constructing a conveyor system between Heihe and Blagoveshchensk; once operational, this system would allow for uninterrupted transportation of coal, minerals, agricultural products and other consumer goods. This is our company’s know-how; we have registered patents. It is an airway of sorts that would resolve many transport issues”, Mr. Xue Xingfa said.

Alexander Karpov, Executive Director of the N.N. Muraviev–Amursky Blagoveshchensk International Airport, continued the transportation theme. He proposed using the airport to effect seamless transit for passengers from domestic Russian flights travelling to and from Heihe.

“This option will attract greater tourist flows. Additionally, connecting the airports of the two cities on the Amur could effectively supplement the IASEZ. Essentially, this is a “Blagoveshchensk–Heihe international city” project using the two cities’ unique geographical location and forming synergy with implemented Russia-China projects, such as the ‘Golden Mile,’ the cable car, customs and logistics terminal in the pre-bridge area, and others”, Alexander Karpov says.

Andrei Cherkashin, Chair of Sberbank’s Far Eastern Bank, described how the IASEZ could catalyze international cooperation, primarily in new technologies and AI.

“Lending institutions are actively involved in developing new Russian manufacturing sites, through, among other things, mergers and acquisitions, lending to small businesses and investment projects. Establishing an IASEZ in the Russian Far East could additionally propel this process forward. Our engagement is not limited to financing; we are looking to the future. It is important for us to develop cross-border cooperation with Chinese partners in AI and new technologies. We see great prospects for developing international transport corridors and launching driverless freight trucks. Our subsidiary SberAutoTech is already developing driverless transport technologies that could also be used to implement such projects”, he said.

In conclusion, the moderator Nikolai Zapryagayev suggested discussing the proposals put forward at the session in order to see the first results at the Eastern Economic Forum on 10–13 September 2023 in Vladivostok on the Far Eastern Federal University campus.

 Photo: Dmitriy Belik

Read more