The first treaty China and Russia signed together bears the name of Nerchinsk – a small Siberian town in what is now Zabaikalsky Krai. It was 1689 and Russia’s push eastwards had seen it encroach on land that China’s Qing rulers considered theirs.
Representative of the two empires met at Nerchinsk and using Latin to converse they agreed that Russia should have the land along the western course of the Amur river and China should have the territory in the east. The deal is often hailed as the moment Sino-Russian relations officially began. Fast-forward 326 years and Zabaikalsky Krai is the location of another historic deal – this time involving farmland.
According to a statement released by Zhejiang-based ZOJE Resource Investments this month the government of the far eastern Russian region has agreed to lease 200,000 hectares of agricultural land to a unit of ZOJE, Hua’e Xingbang. The deal is the largest of its kind – indeed some excited netizens have pointed out it’s about the same size as Hong Kong Island – and many in China hope it will set a precedent for further agricultural cooperation.
China is in the unenviable position of having to feed 20% of the world’s population on less than 10% of its arable land. Meanwhile Russia has more agricultural land than it can farm – millions of hectares go untilled every year because the country doesn’t have the people or the resources to develop them.
China has long pushed for more access to Siberia’s untapped agricultural wealth but Moscow has always resisted, perhaps mindful that the two nations only settled their last outstanding border dispute in 2003.
“For a long time the fear of Chinese economic and territorial expansion was widespread in Russia, creating many limits on what the country could do with its unused farmland. Now Russia is starting to let go of those fears, which is a great step forward,” Wang Haiyun of the International Institute for Strategic Society wrote in the Global Times.
Under the terms of the new deal in Zabaikalsk, ZOJE will have exclusive use of the land for 49 years and will pay a total of Rmb17.6 million ($2.8 million) in rent. Russian media reports that ZOJE has also committed to invest a further $450 million to develop the project.
After the implosion of the Soviet Union in 1992 Russian agriculture largely collapsed too. And today some 40% of its farmland is still unused, according to the country’s ministry of agriculture.
A statement by ZOJE said that nearly 60% of the 200,000 hectares are farmland and 85,000 hectares is currently classified as wasteland. “Hua’e will use the land to produce organic, ecologically-safe meat, grains and vegetables for Chinese, Russian and international consumers,” it said in a statement. Previous attempts by Chinese companies to break into Russian farming have resulted in the lease of much smaller plots – the largest Chinese-run Russian farm to date measures 40,000 hectares.
Though China is technically food secure, it is keen to secure foreign land for food because much of its own soil is exhausted or contaminated by pesticides or industrial waste (see WiC234).
Moving agriculture overseas would also help China conserves its own precious water resources.
But while China has bought or leased land in places as far afield as Ukraine, Mozambique and Brazil, Russia – with which it shares a 3,645km border – is still the preferred option.
Thankfully for Chinese farmers the signs are good. Ties between the two nations are close to an all-time high and earlier this year the two governments agreed to set up a $2 billion fund to improve agricultural cooperation. The Financial Times reported this week that in May China imported more oil from Russia than from any other country (including Saudi Arabia).
Russia’s parliament has come out in favour of the Zabaikalsk project too, with Nikolai Pankov, the head of the committee on agriculture, saying future deals could come even bigger. The Duma, however, did not address the issue of manpower. Experts estimate Hua’e will need as many as 3,000 people to work its new land. With population density in Siberia as low as 3 people per square kilometre, China will need to import labour – and that remains a sensitive issue for Russia…
© ChinTell Ltd. All rights reserved.
Exclusively sponsored by HSBC.
The Week in China website and the weekly magazine publications are owned and maintained by ChinTell Limited, Hong Kong. Neither HSBC nor any member of the HSBC group of companies ("HSBC") endorses the contents and/or is involved in selecting, creating or editing the contents of the Week in China website or the Week in China magazine. The views expressed in these publications are solely the views of ChinTell Limited and do not necessarily reflect the views or investment ideas of HSBC. No responsibility will therefore be assumed by HSBC for the contents of these publications or for the errors or omissions therein.