Russia seeks to attract Chinese investment to the Far East
Investors are concerned about the economic situation in the region despite the favorable tax regime
Official Data on the Situation in the Far East
During his visit to Beijing last month, Russian President Vladimir Putin told his Chinese counterpart Xi Jinping that cooperation between the neighboring regions had reached “an unprecedentedly high level” and had become “an example of how relations between states can be built in the modern world.” He also noted that the volume of bilateral trade grew by 24.5% in 2018, reaching a record $108 billion.
Tax Incentives in Russia
In 2015, Russia established the Free Port of Vladivostok— a special economic zone with preferential conditions operating in five regions on the country’s eastern coast. Nevertheless, Chinese investors have been reluctant to invest in projects in Russia’s Far East. Only 3% of all projects in the Free Port of Vladivostok are at least partially financed by Chinese money, while just 2% of the $140 million in Chinese foreign investment in 2017 ended up in Russia’s Far East.
What discourages investors
Chinese companies are reluctant to invest in Russia’s Far East largely due to unstable investment conditions. Residents of the Far Eastern special economic zone complain that the terms of contracts between investors and the Free Port administration are constantly being revised and changed. Moreover, the Russian legal system seems too complicated for Chinese investors.