Though Beijing and Moscow have touted their “unlimited partnership” on the global stage, a far-eastern corner of Russia has caught China’s eye.
The border region of Primorsky Krai has seen a surge of Chinese farmers, and their growing economic clout is outcompeting locals, reported Nikkei, a Japanese newspaper.
The region, ceded to Russia by the Qing dynasty in 1860, has become a subject of interest for policymakers in Beijing and Chinese nationalists. Last year, the government decreed the country’s maps should include Haishenwai—the Chinese name for Vladivostok, the administrative center of Primorsky Krai—and the Chinese names of seven other far-eastern Russian locations.
Like Russian President Vladimir Putin, who claims Ukraine has always been part of the Russian nation, Chinese Leader Xi Jinping has held the restoration of perceived lost territory high on his agenda for the “great rejuvenation of the Chinese nation.”
China has pledged to someday bring self-governed Taiwan into the fold. It has also claimed most of the South China Sea, where Beijing’s “historical rights” pit it against the Philippines and other neighbors.
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Amid a gloomy economic outlook for Hegang, a former coal boomtown in China’s northeast, more Chinese farmers may soon make their way to Russia, Nikkei reported.
“The concern for ‘Yellow Peril’ in the Russian Far East is not new. It has existed for decades, if not centuries, due to the vast imbalance of population on the two sides of the border,” Yun Sun, the director of the Stimson Center’s China Program, told Newsweek.
She added: “The concern is the inflow of Chinese people will challenge the Russia control. I don’t think the sovereignty issue is still up for negotiation, but how to manage the Chinese farmers on the ground will be a thorny issue.”
A 2021 study published in The American Journal of Economics and Sociology found that in some cases, the presence of Chinese farms and sales to Chinese-owned businesses boosted local farmers’ incomes.
The study also said, “The same factors raise land prices through increased competition, reduce the wages of Russian workers and the number of family members working on Russian farms, increase the number of full-time jobs for farm workers, lower yields of corn and wheat, and raise yields of potatoes and rice.”
Trade with China, along with the Kremlin’s wartime spending, has helped prop up Russia’s economy amid Western international sanctions and financial exclusion over its invasion of Ukraine.
While this has allowed Russia to buck the most pessimistic forecasts for its economy, it has also made the country more reliant on the yuan, China’s currency.
In the first half of 2023, Russia used the yuan to settle three-quarters of its trade turnover with China and one-quarter of its transactions with other countries, Russia’s Economic Ministry said.
In its annual report, published on March 29, Russia’s central bank said it had no good alternatives to the yuan when it comes to international reserves, according to a Bloomberg report.
“The exchange rates of these currencies are highly volatile, the markets have low liquidity, and in a number of such countries there are restrictions on the movement of capital, which is an obstacle to their use,” the report said.
Sun said using the yuan, also known as the renminbi, for transactions has helped Russia and China mitigate the impact of sanctions and allowed the countries to test an alternative financial payment system to SWIFT.
“Reserve currency is a different matter,” Sun said. “You could argue that given their level of bilateral economic activities, it is only natural for Russia to assume more RMB in their foreign reserve. But we also know that has many practical difficulties—China’s capital control, the lack of cash, and Beijing’s manipulation of the exchange rate.”
“So if Russia had other options, RMB is not the most appealing reserve currency,” she added.
Russia’s reliance on the yuan leaves “junior partner” Putin in a tight spot should any diplomatic tensions or trade disputes arise between the two countries—and more exposed to economic challenges facing the world’s second-largest economy.
Moscow is also vulnerable to third-party pressure via its dependency on Beijing. For example, Russian companies with business interests in China reported payment bottlenecks after Washington introduced secondary sanctions targeting banks that facilitate the transfer of banned goods into Russia.
Uncommon Knowledge
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.