The most urgent task now is to correct the past stereotype of “Far East = remoteness + marginalization”. We need to regard it as the hope for future development, and strive to promote the integration of the Russian Far East into the Greater Far East, that is, the process of East Asian economic integration, writes Wang Wen, Executive Dean of Chongyang Institute for Financial Studies (RDCY), Renmin University of China. The article was prepared in advance of the Valdai Sessions as part of the Eastern Economic Forum 2022.
In the eyes of the Chinese, the “Far East” is a Western-centric concept. The term “Far East” is rarely used by Chinese except to discuss Soviet or Russian Far East policies and related historical issues. After the Age of Navigation in the 16th century, when Western European countries began to expand eastward, they referred Eastern Europe and Northeast Africa as the “Near East”, West Asia as the “Middle East”, and the easternmost part of Asia as the “Far East”. This actually regarded East Asia (including Southeast Asia, Northeast Asia, and even South Asia) as the periphery of the world with Europe as the center. People at the time must not have imagined that East Asia, which was regarded as a peripheral zone, is now emerging as the new center of the world in the 21st century.
The most urgent task now is to correct the past stereotype of “Far East = remoteness + marginalization”. We need to regard it as the hope for future development, and strive to promote the integration of the Russian Far East into the Greater Far East, that is, the process of East Asian economic integration.
The rise of the Far East is real
No one mentions “the rise of the Far East”, probably to avoid confusing the concept of “Far East” in the eyes of the West with the geographical category of Russia’s Far East. In fact, the Russian Far East is only a part of the Western concept of “Far East”, and if the “Far East” is regarded as the combination of China, Japan, South Korea, North Korea, Southeast Asia, Australia, New Zealand, the South Asian subcontinent, and the Russian Far East.
Then, “the rise of the Far East” is certainly a global consensus, and it can even be said that the 21st century is the century of the Far East.
In 2021, half of the world’s population was in the Far East. Half of the top 20 countries by population are from the Far East: China, India, Indonesia, Pakistan, Bangladesh, Japan, the Philippines, Vietnam. The Far East Economic Circle accounts for 40% of the global GDP and contributes more than 50% of the global economic growth. Between 2015 and 2030, the consumption of the world’s middle class is expected to increase by 30 trillion U.S. dollar, with Europe accounting for only 1 trillion U.S. dollar, and more than a half is from the Far East.
In the past two hundred years, European colonial invasions have forced the Far East to break up into many fragmented regions, which were economically backward and dependent on the West, and all partieswere at a standstill. After the Cold War, the countries of the Far East are trying to form a unified system. In 1999, ASEAN formally integrated 10 countries in Southeast Asia, and established the “10+1”, “10+3” and “10+8” mechanism around ASEAN with China, South Korea, Japan, and the United States. Since the beginning of the 21st century, ASEAN has maintained an average annual growth rate of around 5% and has been the third largest economy in Asia and the sixth largest economy in the world.
ASEAN is an important part of the rise of the Far East, which fully proves the misunderstanding from the West, that the Far East is a China-centered region, and even believes that the only bright spot in the development of the Far East is the rise of China. In fact, China accounts for less than 40% of the Far East’s population, and the Far East is by no means “China + other countries”. On the contrary, the Far East represents the collective rise and integration process of China, ASEAN and many other countries and associations.
In the past 20 years, the Far East hasbecoming the world’s largest industrial belt, with an international pattern of cross-border labor division among China, Japan, South Korea, and ASEAN. The total export volume has exceeded the sum of the EU and North America. The boom in trade lifted a large number of people out of poverty in the Far East and produced a large number of rich population. Over the past 20 years, more than 1 billion people in the Far East have been lifted out of poverty. Billionaires in the Far East already account for more than 1/5 of the world’s total, and more than 80% of then are first-generation billionaires. In the next 20 years, there will be the largest wealth transfer in history, from both sides of the Atlantic to the Far East. Thousands of wealth management and trust companies are being set up in the Far East.
The Far East is achieving a new height of intelligent revolution. Beijing, Singapore, Shanghai, Shenzhen, Seoul, and Tokyo are among the world’s high-tech cities. Technologies such as autonomous driving, urban IoT deployment, sensor networks, cashless payments, energy-saving technologies, energy storage batteries, urban monitoring, telemedicine and many other technologies are innovating and spreading far faster in Far Eastern countries than in other countries.
The attractiveness of technological innovation has attracted more and more talents to the Far East. Since the 2008 financial crisis, the number of people in the U.S. moving overseas for work or long-term residency has risen sharply, from 4 million in 1999 to 10 million in 2019. The Far East has become the most popular destination for Americans to go overseas. China, Japan, South Korea, Singapore, etc. all have national talent programs to attract entrepreneurs, scientists and innovators to the Far East for stable long-term residency.
Westerners are accustomed to measuring the merits of a country by its democratic politics, but in the Far East, most countries pay more attention to government efficiency and national tolerance, and major investments in infrastructure, employment, education, and medical care. This has enabled many countries in the Far East to develop a path that suits their own national conditions. They transcended the shackles of “the conclusion of the end of history”, avoided the troubles of American-style veto politics, and developed their own countries based on sustainability.
In the past two hundred years, European colonial invasions have forced the Far East to break up into many fragmented regions, which were economically backward and dependent on the West, and all partieswere at a standstill. After the Cold War, the countries of the Far East are trying to form a unified system. In 1999, ASEAN formally integrated 10 countries in Southeast Asia, and established the “10+1”, “10+3” and “10+8” mechanism around ASEAN with China, South Korea, Japan, and the United States. Since the beginning of the 21st century, ASEAN has maintained an average annual growth rate of around 5% and has been the third largest economy in Asia and the sixth largest economy in the world.
ASEAN is an important part of the rise of the Far East, which fully proves the misunderstanding from the West, that the Far East is a China-centered region, and even believes that the only bright spot in the development of the Far East is the rise of China. In fact, China accounts for less than 40% of the Far East’s population, and the Far East is by no means “China + other countries”. On the contrary, the Far East represents the collective rise and integration process of China, ASEAN and many other countries and associations.
In the past 20 years, the Far East hasbecoming the world’s largest industrial belt, with an international pattern of cross-border labor division among China, Japan, South Korea, and ASEAN. The total export volume has exceeded the sum of the EU and North America. The boom in trade lifted a large number of people out of poverty in the Far East and produced a large number of rich population. Over the past 20 years, more than 1 billion people in the Far East have been lifted out of poverty. Billionaires in the Far East already account for more than 1/5 of the world’s total, and more than 80% of then are first-generation billionaires. In the next 20 years, there will be the largest wealth transfer in history, from both sides of the Atlantic to the Far East. Thousands of wealth management and trust companies are being set up in the Far East.
The Far East is achieving a new height of intelligent revolution. Beijing, Singapore, Shanghai, Shenzhen, Seoul, and Tokyo are among the world’s high-tech cities. Technologies such as autonomous driving, urban IoT deployment, sensor networks, cashless payments, energy-saving technologies, energy storage batteries, urban monitoring, telemedicine and many other technologies are innovating and spreading far faster in Far Eastern countries than in other countries.
The attractiveness of technological innovation has attracted more and more talents to the Far East. Since the 2008 financial crisis, the number of people in the U.S. moving overseas for work or long-term residency has risen sharply, from 4 million in 1999 to 10 million in 2019. The Far East has become the most popular destination for Americans to go overseas. China, Japan, South Korea, Singapore, etc. all have national talent programs to attract entrepreneurs, scientists and innovators to the Far East for stable long-term residency.
Westerners are accustomed to measuring the merits of a country by its democratic politics, but in the Far East, most countries pay more attention to government efficiency and national tolerance, and major investments in infrastructure, employment, education, and medical care. This has enabled many countries in the Far East to develop a path that suits their own national conditions. They transcended the shackles of “the conclusion of the end of history”, avoided the troubles of American-style veto politics, and developed their own countries based on sustainability.
This is the new type of political value that has been underestimated by the West in the 21st century and is taking place in the Far East.
In fact, if you replace the word “Far East” with “Asia”, you will be surprised to find that as early as a century ago, Liang Qichao of China, Okakura Tenshin of Japan, and Tagore of India already proposed the idea of pan-Asianism. Today’s Asia does not expect to establish a “United States of Asia” like the European Union, but wants to build an inclusive, efficient and practical union through intellectual synergy, just as Parag Khanna says in his book “The Future of Asia: Business, Conflict and Culture in the 21st Century”, Asia’s journey to the world represents a great fusion of civilizations, driving the progress of a new human civilization.
From this perspective, Westerners have long maintained a “Far East” logic of Asia, ignoring the civilizational leap that is taking place in the Far East. As an important part of the Far East, Russia needs to avoid the parochialism and self-centeredness of the Western approach.
The rise of the Russian Far East should accelerate
The rise of the Far East is also a reflection of the development of the Russian Far East in the past decade. Since Putin became president for the third time in 2012, Russia’s new round of Far East development has accelerated: the Ministry of Far East Development has been established, and more than 40 laws and regulations have been introduced, including The Law on Advanced Development Territories,and also the heavy investment in the Eastern Economic Forum to expand international cooperation between the Far East and the Asia-Pacific region.
These measures brought about four positive economic changes: First, capital inflows have accelerated. Since 2012, the Russian Far East has attracted more than 40 billion US dollars of investment, accounting for about 1/3 of Russia’s foreign investment. Second, economic growth has accelerated. Since 2015, the economic development of the Russian Far East has remained at around 4%, which is about twice the average growth rate in Russia. The third is that the trend of population decline has been curbed. With the birth rate higher than the death rate, a positive growth momentum has gradually been formed. Fourth, progress has been made in the construction of free ports, especially the Vladivostok Free Port that has been put into operation, and more than 1,400 enterprises have settled in. These achievements are positively appraised by Chinese academia.
But on the other hand, it must be admitted that the Russian Far East is still a relatively backward region in East Asia. It is more like a latecomer and bystander to the overall rise of the Far East. It has not fully shared the dividends of the rise of the Far East, nor has it fully integrated into the economic development of the Far East’s rise, and unable to fully participated in the process of division of labor and cooperation in the Far East’s economic development.
The reasons can be roughly divided into three points: First, Russia’s economic structure is relatively simple, with resource export as its pillar industry. Short summers and long winterssuppress the development of human and industrial environment, restricting transnational economic cooperation and manufacturing development, coupled with the small economic volume of the Russian Far East, with a total GDP of about 60 billion US dollars compared to China, a 17 trillion US dollars economy, Japan, a 5 trillion US dollars economy, and South Korea a $2.5 trillion economy. It is easy to be isolated from the East Asian regionalized economic and industrial chain system.
Second, the development of the Russian Far East faces the local problem of insufficient endogenous dynamics. Although President Vladimir Putin has said, “We have never forgotten that most of Russia’s territory is located in Asia. The time has come for us to move from words to actions to develop economic, political and other ties together with Asia-Pacific countries”, local governments in the Far East still lack the sense of ownership,urgency and implementation of the development of the local economy. As one scholar pointed out, over the years, local governments in the Russian Far East have been less interested in promoting local economic development and increasing local budget revenue than in seeking federal budget investment and obtaining more transfer payments.
The third is the hesitation and wavering of development strategies in Russia’s integration into the East Asian industrial chain system. In some media reports and documents, it is easy to find that the Russians are worried that the foreign trade in the Far East will fall into the trap of “exchanging resources for goods and technology”, and thus become a raw material vassal of East Asian countries. Rumors of “Sinification” of the Far East, hype of the “China threat theory” and concerns about China’s “economic and population expansion” have also spread in the media occasionally, all of which have discouraged Chinese investments.
In fact, regardless of the above three points, the development potential of the Russian Far East is enormous.
The Russian Far East has the most abundant resources in the entire East Asia. Nearly 80 kinds of minerals have been discovered. Coal reserves account for 40% of Russia’s total coal reserves, timber reserves account for 26% of Russia’s total timber reserves. There are also extremely rich in oil, natural gas, fish and seafood resources. In the future, when resources are scarce, the Russian Far East will be the most advantageous region in Asia.
At present, Northeast Asian countries are optimistic about Russia’s Far East region. When the late former Japanese Prime Minister Shinzo Abe became prime minister again in 2012, he proposed a “new thinking” towards Russia and became one of the largest investors in Russia’s Far East region. South Korea has proposed a new northern policy, hoping to participate more in the strategic development of Russia’s Far East. Although India is a latecomer to participate in the development of the Far East, Prime Minister Modi has also proposed that he is willing to invest heavily in the development of energy resources in the Far East.
From this perspective, Westerners have long maintained a “Far East” logic of Asia, ignoring the civilizational leap that is taking place in the Far East. As an important part of the Far East, Russia needs to avoid the parochialism and self-centeredness of the Western approach.
The rise of the Russian Far East should accelerate
The rise of the Far East is also a reflection of the development of the Russian Far East in the past decade. Since Putin became president for the third time in 2012, Russia’s new round of Far East development has accelerated: the Ministry of Far East Development has been established, and more than 40 laws and regulations have been introduced, including The Law on Advanced Development Territories,and also the heavy investment in the Eastern Economic Forum to expand international cooperation between the Far East and the Asia-Pacific region.
These measures brought about four positive economic changes: First, capital inflows have accelerated. Since 2012, the Russian Far East has attracted more than 40 billion US dollars of investment, accounting for about 1/3 of Russia’s foreign investment. Second, economic growth has accelerated. Since 2015, the economic development of the Russian Far East has remained at around 4%, which is about twice the average growth rate in Russia. The third is that the trend of population decline has been curbed. With the birth rate higher than the death rate, a positive growth momentum has gradually been formed. Fourth, progress has been made in the construction of free ports, especially the Vladivostok Free Port that has been put into operation, and more than 1,400 enterprises have settled in. These achievements are positively appraised by Chinese academia.
But on the other hand, it must be admitted that the Russian Far East is still a relatively backward region in East Asia. It is more like a latecomer and bystander to the overall rise of the Far East. It has not fully shared the dividends of the rise of the Far East, nor has it fully integrated into the economic development of the Far East’s rise, and unable to fully participated in the process of division of labor and cooperation in the Far East’s economic development.
The reasons can be roughly divided into three points: First, Russia’s economic structure is relatively simple, with resource export as its pillar industry. Short summers and long winterssuppress the development of human and industrial environment, restricting transnational economic cooperation and manufacturing development, coupled with the small economic volume of the Russian Far East, with a total GDP of about 60 billion US dollars compared to China, a 17 trillion US dollars economy, Japan, a 5 trillion US dollars economy, and South Korea a $2.5 trillion economy. It is easy to be isolated from the East Asian regionalized economic and industrial chain system.
Second, the development of the Russian Far East faces the local problem of insufficient endogenous dynamics. Although President Vladimir Putin has said, “We have never forgotten that most of Russia’s territory is located in Asia. The time has come for us to move from words to actions to develop economic, political and other ties together with Asia-Pacific countries”, local governments in the Far East still lack the sense of ownership,urgency and implementation of the development of the local economy. As one scholar pointed out, over the years, local governments in the Russian Far East have been less interested in promoting local economic development and increasing local budget revenue than in seeking federal budget investment and obtaining more transfer payments.
The third is the hesitation and wavering of development strategies in Russia’s integration into the East Asian industrial chain system. In some media reports and documents, it is easy to find that the Russians are worried that the foreign trade in the Far East will fall into the trap of “exchanging resources for goods and technology”, and thus become a raw material vassal of East Asian countries. Rumors of “Sinification” of the Far East, hype of the “China threat theory” and concerns about China’s “economic and population expansion” have also spread in the media occasionally, all of which have discouraged Chinese investments.
In fact, regardless of the above three points, the development potential of the Russian Far East is enormous.
The Russian Far East has the most abundant resources in the entire East Asia. Nearly 80 kinds of minerals have been discovered. Coal reserves account for 40% of Russia’s total coal reserves, timber reserves account for 26% of Russia’s total timber reserves. There are also extremely rich in oil, natural gas, fish and seafood resources. In the future, when resources are scarce, the Russian Far East will be the most advantageous region in Asia.
At present, Northeast Asian countries are optimistic about Russia’s Far East region. When the late former Japanese Prime Minister Shinzo Abe became prime minister again in 2012, he proposed a “new thinking” towards Russia and became one of the largest investors in Russia’s Far East region. South Korea has proposed a new northern policy, hoping to participate more in the strategic development of Russia’s Far East. Although India is a latecomer to participate in the development of the Far East, Prime Minister Modi has also proposed that he is willing to invest heavily in the development of energy resources in the Far East.
India and Russia have long shared geopolitical perspectives on the balance of power in Eurasia. In the post-Cold War era both turned their attention to the West. However, over the past decade India has pursued the Look East Policy, seeking to regain its political and economic influence in Southeast Asia and building new strategic partnerships with East Asian powers like Japan and South Korea.
Valdai Papers
After the “The Program of Cooperation between Northeast China and Russia’s Far East and Eastern Siberia (2009–2018)” expired, the “Programme for development of Russian-Chinese cooperation in trade, economic and investment spheres in the Far East of the Russian Federation (2018–2024)” was re-signed, hoping to give full play to Chinese capital, technology, management and Russia’s Far East resources and geopolitical location advantages.It is hoped that China’s participation in the development of the Far East will be organically combined with China’s strategy to revitalize the northeastern region and the economic transformation and upgrading of the eastern coastal region to jointly create a cross-border economic belt.
It should be said that on the occasion of the tenth anniversary of President Putin’s acceleration of the development strategy of the Russian Far East, the Russian Far East is becoming the sweet pastry of the “Far East”, and has become the target of various countries. All countries hope that the Russian Far East will become more open, more efficient in cooperation, and more pragmatic and synergistic, so that the Russian Far East can share the common sustainable rise of the Far East.
Some pragmatic suggestions
The outbreak of the Russian-Ukrainian conflict and the decoupling of Russia from the European and American worlds remind Russians that in the foreseeable future, they must clearly realize that the 21st century belongs to the Asia-Pacific century, and even the century of the Far East. The Far East is becoming the center of the world economy and trade, and Russia’s “Look East” should become “Go East” at a faster pace, so that Russia can adapt to the development trend of the 21st century more quickly.
There is a lot that can be done to develop the Far East. In my view, there are at least two proposals that are most urgent for China’s and Russia’s development initiatives.
First, focus on accelerating the implementation of the original strategic moves to increase the attractiveness of Russia to develop the Far East. In the eyes of some outsiders, Russia’s sincerity in developing the Far East is not enough, and many commitments and plans have not been fully implemented. For example, in April 1996, the then-President Yeltsin signed the presidential decree “economic and social development of Far East and Transbaikalia for the period of 1996-2005”. The outline proposed to establish development zones on the Russian-Chinese border in the Far East and Transbaikal by 2000, and to establish economic cooperation zones, development zones, and storage zones with the corresponding major cities of Heihe, Suifenhe, Hunchun, and Manzhouli, which include: (1) establishing a bridge over the Amur River (Heilongjiang) between Blagoveshchensk and Heihe; (2) opening a railroad link to Northeast Asia between Zarubino and Hunchun; (3) establishing a storage zone and industrial development zone of world advanced level in Transbaikalsk and Manzhouli; (4) redrafting the draft economic development of the economic cooperation zone between Blagoveshchensk and Heihe.
These are fine ideas, but unfortunately, the degree of implementation is still too low. It is somewhat reassuring that in June 2022, the Heilongjiang Bridge finally opened. Although it is a belated gift, it makes people look forward to the future with more anticipation.
Second, taking advantage of the strategic relationship between China and Russia, we should put aside the mutual strangeness and precautions amongthe middle class of the two countries, complement each other’s advantages, and jointly promote the common development of northeast China and the Russian Far East.
As a matter of fact, Northeast China is in serious economic decline, facing the problems of resource depletion, lack of economic growth momentum, overcapacity and population loss. Revitalizing the northeast is an important development strategy for China, and expanding the level of opening to the outside world is the primary choice for economic revitalization. For northeast China, the pace of economic cooperation with South Korea and Japan is accelerating, but the pace of cooperation with the Russian Far East is relatively slow. From the Russian side, there is no need to worry about the so-called “population migration from northeast China” or “China’s territorial claims” rumored by some media. Russian should boldly attract Chinese capital, technology and production capacity, and focus on building more than 20 “advanced development zones”. For the Chinese side, the three northeastern provinces should improve the business environment, strengthen transportation links to neighboring countries, deepenhumanistic exchanges and cooperation, and enhance the ability to directly import and export products, so that the Northeast Asian region can become a new hub of the new economic belt of the Far East.
All in all, amid the new changes in the world after the Russia-Ukraine conflict, the continued rise of the Far East will be an inevitable trend. Time waits for no one, and the prospects for each other will get better and better by doing what has been planned.
The coming era will require states to have a much greater degree of de facto sovereignty and, in a sense, a capacity for limited autarky. Therefore, for all the importance of ties outside the West, Russia cannot simply reorient itself from one direction to another while maintaining its historically-formed strategy of dependence on external sources of development, writes Valdai Club Programme Director Timofei Bordachev.
Opinions
Views expressed are of individual Members and Contributors, rather than the Club's, unless explicitly stated otherwise.
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