Staunton, Dec. 11 – Yet another sign of the ways in which Vladimir Putin’s turn toward the east is having an impact inside Russia is a Moscow decision to declare the entire Far Eastern Federal District, which occupies 40 percent of the country’s territory, a TOR or “territory for advance development.”
That will give tax breaks to foreign firms and also reduce the level of supervision of their activities by Russian officials, according to Russian experts. China is in a position to take greatest advantage of this, but some of these same experts say the impact on Chinese decisions of this Russian one may be minimal (ng.ru/economics/2022-12-11/1_8612_russia.html).
On the one hand, they say, Beijing and Chinese business generally operates according to long-term plans and tax breaks as such may not matter that much. What may matter far more is the possibility to operate without the kind of suffocating official supervision that Moscow officials often inflict.
And on the other, while the size of the territory involved is enormous, the population of the Far East FD is very small and its infrastructure so underdeveloped that many firms, including Chinese ones, would be better off opening branches elsewhere in cities with more customers and better transportation and communication links.
Consequently, their comments suggest, this latest Moscow move represents more than anything else a desire by the Kremlin to curry favor with China at low cost and the level of desperation about the Russian economy that the leadership now feels. It is ready to try almost anything except genuine reform in the hopes that this will change things for the better.
And if the TOR does lead to an influx of Chinese firms into the Russian Far East, that may spark more anti-Chinese attitudes there given that these firms often behave in ways that anger the population regardless of how much economic benefit they may bring.
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