Vladivostok in interregional cooperation: problems and prospects

Dun Ichzhou PhD in Politics Postgraduate student, Department of International Relations, Far Eastern Federal University Russian Island str., Ajax, 7.2, Primorsky Krai, Vladivostok, 690922, Russia dongyizhou@mail.ru

Introduction: The object of the study is the city of Vladivostok, connecting Russia and China. The subject of the study is the current state of development of Vladivostok and the platform for cooperation between Russia and China. The purpose of this article is to analyze the approaches and prospects of Russian—Chinese cooperation in Vladivostok. The Russian Far East is a vast region rich in resources and focused on the large market of the Asia-Pacific region. However, after Russia conducted a special military operation against Ukraine in 2022, Russia is actively "looking to the east" and creates an economic development model focused on the Asia-Pacific region. In order to promote the accelerated development of the Far East, Russia is actively creating cities with advanced socio-economic development and hopes to improve business conditions in the Far East through a number of measures such as: improving infrastructure, providing tax incentives and simplifying administrative procedures.

1. The basic status of the Far East

In the last decade, the center of the world economy has gradually shifted towards the Asia-Pacific region, and Russia has missed a period of rapid development in this region. Changes in geostrategic, geopolitical and economic models have influenced the foreign policy of major powers, including Russia, and in 2022, after Russia conducted a Special military operation against Ukraine, Russia's diplomatic reaction took on a more "breakthrough" form in the context of Russia's diplomatic isolation from the West and economic sanctions against Russia. The policy of "looking EAST" is not only a way to break out of the Western blockade, but also a strategic path for Russia to long-term development. The best way for Russia to move forward in the new order is to build a comprehensive and friendly strategic partnership with China.

1.1 The current state of development of the Far East

The Russian Far East is a region in the heart of Russia, with relatively harsh natural and climatic conditions, lagging economic development and inadequate infrastructure. The model for the development of the Far East in the 1950s was based on a highly centralized planning system and specialized division of labor in the Soviet Union, which relied on annual allocations of 700 to 800 million US dollars from the central government. Although this allowed the creation of the Far East as a raw material base and demonstrated its importance to the Soviet Union, it also created a deformed and closed model of economic development, which led to a serious imbalance in the development of various sectors of the economy in the region, while the economic growth of the region was supported mainly by high levels of public investment, and the permanent population stabilized due to high levels of government subsidies ^[9].

After the collapse of the Soviet Union, the original model of Russia's economic development was disrupted, and the economy declined sharply. On the one hand, the fiscal benefits enjoyed by the Far East were consistently canceled in the context of sluggish or even regressive economic development of the country, which put the regional economy, which has long relied on public finances in its activities, in a difficult position. On the other hand, the sharp rise in transport and electricity prices increased the burden on businesses and the population, which led to a prolonged recession and slow recovery, and a number of indicators of economic and social development turned out to be below the national average. In this situation, the total population of the Far East is constantly decreasing.

Therefore, in order to accelerate the socio-economic development of the Far East, ensure geostrategic interests and security, and develop priority areas of the regional economy, it is necessary to create a favorable investment climate and attract investments that will create jobs, consolidate and increase the population. Russia intends to create cities of advanced socio-economic development, open its doors and use the opportunities to increase the economic competitiveness of the Far East.

1.2 The current state of Vladivostok's development

Vladivostok is the capital of Primorsky Krai and one of the most economically developed cities in the Far East, with one of the highest levels of urbanization among all cities in the Far East. It is surrounded by mountains in the north, the Ussuri Bay in the east, the Great Peter Bay in the south, the Amur Bay in the west, the Great Siberian Railway and the Arctic Ocean Route. The city is an important window city, the distance from Japan is 1063 km (660 nm), from South Korea - 744 km (446 nm), from Beijing - 1340 km (446 nm), from Dalian - 97 km (606 nm), from Qingdao - 1254 km (779 nm). In December 2018, President Vladimir Putin officially approved the transfer of the administrative center of the Far Eastern Federal District of Russia from Khabarovsk to Vladivostok ^[2].

In addition, Vladivostok is one of the largest natural ice-free ports in the eastern part of the country and has the highest capacity in the Far Eastern Federal District of Russia, having trading partners in the Asia-Pacific region, including China, South Korea and Japan. As the engine of the economic development of the Far East, Vladivostok has the potential to become an important center for in-depth cooperation between Russia and China in the Far East. Vladivostok's excellent geographical location can be used to further consolidate and strengthen Russia's economic relations with the countries of the Asia-Pacific region, which will contribute to deepening and strengthening comprehensive strategic cooperation between Russia and China in a new era.

2. Vladivostok as a platform for cooperation between Russia and China

Vladivostok has become an important hub in the Russian Far East, connecting China and even other Northeast Asian countries for the following reasons: first, cooperation between Russia and China at the local level is mainly reflected in economic, trade, investment, economic and technological, scientific and educational cooperation between the Northeast of China and the Far East The East of Russia, playing its role as a hub. Secondly, the city of Vladivostok is the administrative center of the Russian Far East and has a special political potential and economic value.

According to the General Administration of Customs of China, in 2021, the volume of bilateral trade between China and the Russian Far East will reach 138.9 billion US dollars, an increase of 21.7% compared to the previous year. In 2022, bilateral trade between China and the Russian Far East will reach 178.05 billion US dollars, an increase of 29.3% compared to the previous year.

Vladivostok is the only city in the eastern part of Russia where the Eastern Economic Forum for the Asia-Pacific Region is held annually, which has significant international influence; it is the city with the largest coverage of program documents of the Federal Government of the Russian Federation on local economic development in the eastern part of the country; it has the largest number of Chinese visitors among all cities in the eastern part of Russia and the most developed tertiary sector and economic indicators. Vladivostok is the city with the largest number of Chinese visitors and the most developed tertiary sector and the best economic indicators among all cities in the eastern part of Russia; it is an inland area of natural resources and an important port city and military fortress for the distribution of goods from the eastern part of Russia to the countries of the Asia-Pacific region. This suggests that Vladivostok has the potential to develop Russian-Chinese local cooperation.

Currently, Vladivostok, as a hub city, has developed four main platforms for hosting Russian-Chinese local cooperation.

1)Holding the APEC Summit

After the collapse of the Soviet Union and especially in recent years, with the special support of the Russian government, Vladivostok began with the holding of the APEC summit in 2021, and the budget of the Russian Federation allocated more than 20 billion US dollars for the reconstruction and construction of the city's infrastructure, and turning it into a hub city of China and Russia in Northeast Asia.

2)Holding of the annual Eastern Economic Forum

Since 2015, the Eastern Economic Forum has been held annually in Vladivostok, headed by Russian President Vladimir Putin. The fifth Eastern Economic Forum, which will be held from September 4-6, 2019, will be dedicated to accelerating economic growth, optimizing the business environment and cooperation between the Russian Far East and the Asia-Pacific region.

The strategic importance of the Eastern Economic Forum as an important annual Russian diplomatic event lies in the fact that it provides Russia with broad opportunities for cooperation with business partners in the Asia-Pacific region, deepening participation in international cooperation in the Asia-Pacific region, optimizing the allocation of resources of the Asia-Pacific region, promoting the active participation of the Far East in the industrial planning of the Asia-Pacific region, and also becomes an important platform to distribute and integrate the resources of the Asia-Pacific region. Using the advantages of this platform, Russia accelerates the economic development of the Far East and increases its attractiveness for foreign investment, which is precisely the function that a hub city in the Far East should perform.

3)Vladivostok Free Port  

On July 13, 2015, Russian President Vladimir Putin signed the law on the creation of the Free Port of Vladivostok - the Law on the Free Port of Vladivostok, which entered into force on October 12, 2015 and has been in force for 70 years. The law provides for a free customs regime in the port, simplified procedures for issuing visas and administrative approvals for foreign citizens, a "single window", as well as tax benefits for companies in the port for five years from the date of registration, including land tax, corporate income tax and property tax. According to preliminary estimates of Russian experts, the economic benefits of creating a free port. Since the establishment of the free port until 2025, the Primorsky Territory of Russia will see an increase in gross regional product by 2.7 times, investment in fixed assets by 2.5 times, employment by 1.3 times and labor productivity by 2 times ^[14].

To date, according to the Analytical Review of the Far East, there are no more than 2 thousand residents in the register of SPV, compared to 275 in August 2017 ^[4].

The most significant residents of the Free Port of Vladivostok include:

— Vostochny Port JSC - construction of the 3rd stage of the coal loading complex in Vostochny port, 619 jobs;

— Khabarovsk International Airport JSC - construction of a new

passenger terminal of the international airport in Khabarovsk, 549 jobs;

— LLC "Organization of multidisciplinary services – BK" - capital construction of the Sixth microdistrict in Bolshoy Kamen (Primorsky Krai), 75 jobs;

— LLC "Elbrus" - creation of an industrial complex for mining and

processing of fish in the village. Fisherman-Sailor (Primorsky Krai, Olginsky district), 189 jobs;

—Primorskaya Gold Ore Company LLC - development of the Zolotoy and Zolotoy Severny gold deposits (Primorsky Krai, Partizansky district), 130 jobs.

4)Development of the Russian-Chinese international transport corridor "Primorskiy 1" and "Primorskiy 2".

5)The Primorskiy 1 and Primorskiy 2 International Transport Corridor is a major national infrastructure development cooperation project between Russia and China ^[10]. On December 30, 2016, the Government of the Russian Federation approved the concept for the development of the Primorskiy 1 international transport corridors and the concept for the development of Primorskiy 2. During the visit of Chinese President Xi Jinping to Russia in July 2017, China and Russia signed a memorandum of cooperation on the joint development of the Primorskiy 1 and Primorskiy 2 international transport corridors. The joint statement on further deepening the comprehensive strategic partnership between Russia and China clearly outlines the task of accelerating the construction of the Primorskiy 1 and Primorskiy 2 international transport corridors ^[15]. Primorskiy 1 and Primorskiy 2 international transport corridors They are a system project, including roads and railways, ports, airports and ports of entry, which will simplify border crossing and customs clearance procedures through the construction of modern communication systems and infrastructure, as well as reduce unnecessary costs and expenses associated with the movement of goods in transit. Due to the construction of modern communication systems and infrastructure, simplification of transit and customs clearance procedures, reduction of unnecessary costs and clearance time for the movement of transit goods, etc., the transport potential of routes in Russia as international transport corridors will be increased, steady growth of Russian transit goods will be achieved and the international competitiveness of Russian land and sea transport will be increased.

Russian Russian Ring Road (Vladivostok Ring Road) construction program is being implemented for Vladivostok's inner-city transport, the highway project provides for the construction of a highway along the Amur Bay and the connection of the highway with the transport network of Russky Island via a drawbridge to Elena Island from Cape Egersheld, transport interchanges on Russky Island: on Universitetskiy Prospekt near Russian Bridge, to the village of Kanal. Currently, the project is planning the implementation of the second stage of the VKAD (from Kazanskaya Street on Egersheld to the low-water bridge).

3. Problems of cooperation with Vladivostok

3.1 Demographic problems of Vladivostok

The Russian Far East has a long history of population decline, and Primorsky Krai is no exception: between 1992 and 2020, the population declined for 28 consecutive years, while in 2020 the permanent population of the region will decrease by almost 420,000 people compared to 1992, which represents a decrease in the total population by 18%. Vladivostok, the capital, is also suffering from population loss: for 16 years in a row, the permanent population decreased from 1992 to 2009, and from 2010 to 2016, there was a slight increase in the total population, mainly due to the Development Strategy of the Far East and the "Look East" policy. The strategy for the development of the Far East and the policy of "Looking to the East" We have increased the attractiveness of the city as an important "window city". The city's population has fluctuated in recent years: in 2017 and 2018, there was a short-term decline, followed by positive growth trends in 2019 and 2020, however, the overall population of the city in 2020 will be 4,002,000 fewer than in 1992, which represents a decrease in the total population by 7%. Although the population decline in Vladivostok is not very large on the Russian scale, there is a problem of aging demographic structure. According to the Primorsky Department of Statistics, in 2020 the share of pensioners in the Primorsky Territory will amount to 28.5% of the total permanent population, and in Vladivostok - 31.6% of the permanent population of the city. Population decline and population aging are holding back the implementation of national strategies, such as the redevelopment of the Far East, developed by the federal government.

3.2 The lagging level of economic development in Vladivostok

Although the Primorsky Territory and Vladivostok occupy a strategically important place in the context of economic development in the Russian Federation, a number of large national projects have been created here: the Free Port of Vladivostok, the Zone of Socio-Economic Super-development, the international transport corridors Primorskiy 1 and Primorskiy 2, etc. "international transport corridors", etc. For the construction of basic facilities: transport, housing, schools, shops, etc. There is still a lack of cooperation and attention to relevant projects. However, with regard to this issue, Russian scientists believe that the lack of a permanent population in Vladivostok and low demand for infrastructure construction will lead to problems such as low return on investment, which will affect the income balance. The construction of transport facilities will also entail a number of problems, such as the question of who will drive in the future. Vladivostok has a small population, and all the needs of the population are met by domestic and international flights, road and rail transport. The opposite point of view is that the only way to attract people back to Vladivostok is to improve infrastructure and reduce the negative impact of the problem of population loss.

4. Solving demographic and infrastructural problems

For Vladivostok, as well as for the Russian Far East as a whole, the demographic issue is the most serious problem affecting the economic development of the region. Since 2000, Russia's overall demographic dividend has been drying up, especially in the relatively underdeveloped Far East. Without a significant increase in labor productivity, there was a shortage of labor and an increase in the cost of labor, which seriously limits the economic development of the region. A number of appropriate measures should be taken in response to this situation.

    1) Optimize the transport network, strengthen the density of connections between cities and facilitate the movement of people and goods. Improving the transport network will increase employment on both sides and contribute to the complementarity of the industrial advantages of the regions, expanding the space for economic growth.

    2) Strengthen cooperation in the field of infrastructure and various fields. On the one hand, to increase the volume of cooperation in infrastructure projects to attract foreign capital to the region, increase employment and encourage people to return. On the other hand, to increase the attractiveness for small and medium-sized enterprises from other countries. In particular, after the end of the current Newcastle pneumonia epidemic, it is necessary to strengthen cooperation in various fields in order to mitigate the impact of the epidemic on the domestic economy of Russia.

3) Strengthen cooperation in the field of education. Increase the autonomy of universities and the quality of education, try to meet the needs of the local workforce and solve the problem of employment. It is also necessary to strengthen the work on language education in order to eliminate language barriers for cooperation in various fields.

Conclusion

The main conclusions of the study are that in the overall strategic context of the modern world, China and Russia should gradually strengthen their complementary advantages and local industrial cooperation between the two countries. The novelty of the study lies in the fact that Vladivostok, as the fastest growing city in the Far East, has a great impact on regional cooperation between Russia and China. In terms of bilateral trade, foreign investment and financial participation, China has always been Russia's largest partner in the Far East, so how to make rational use of Vladivostok's advantages and how to solve Vladivostok's current problems (for example, demographic problems and the investment market for enterprises of the two sides) is the way to achieve the common development of both countries.