Russia struggles to attract Chinese capital to its Far East
Investors are worried about region's problems despite beneficial tax regime

Official data on the Far East

Last month during a visit to Beijing, Russian president Vladimir Putin told his Chinese counterpart Xi Jinping that co-operation between the regional neighbours had "reached an unprecedentedly high level and has become an example of how relations between states should be built in the present-day world", noting that bilateral trade rose 24.5 per cent in 2018 to a record high of $108bn.

Tax privileges in Russia

Russia set up the FPV, a special economic zone with tax and customs privileges that apply across five regions along Russia's eastern coastline, in 2015. That being said, only 3 per cent of the FPV's projects involve Chinese capital, while only 2 per cent of China's $140m foreign direct investment in Russia in 2017 landed in the country's Far East.

What scares investors off

Chinese companies are daunted by the often unreliable rules within the FPV itself. Existing residents complain that the investor contracts with the port are constantly being amended. Moreover, Russia's legal system appears to be too complicated for the market entrants from China.