The Far East Fortune

By+Li+Sha

Since Vladimir Putin assumed Russias presidency again in 2012， the development of the countrys eastern region has become a national strategic priority. The policy shift has not only brought new opportunities for the economic growth and urban development of Russias eastern part but also provided much more room for regional cooperation between China and Russia.

Tremendous potential

The eastern part of Russia mainly refers to the countrys Siberian Federal District and Far East Federal District. Given natural geographical factors， regional development history and national policies， the prospects for urban development in the eastern region are promising.

The economic and social development of Russia is spatially imbalanced. Gaps of development between cities are quite large. The western region of Russia makes up about 78 percent of the countrys total population， while producing more than 70 percent of its total industrial products and 76 percent of its total agricultural products. The population density of Russias eastern region is only one 11th that of the western region. Thus， the urban development potential in the eastern region is tremendous.

Most of Russias mineral， energy， forest， water and marine biological resources are concentrated in the eastern region. Therefore， the eastern region plays a decisive role in Russias raw material supply and energy security.

Currently， as the western region of Russia becomes increasingly scarce in resources， the countrys economic development is more and more dependent on the resources of its eastern region. With intensified instability in the Middle East， eastern Russias energy exporter status in the world market will be further enhanced. In the next 20 or 30 years， both the domestic and global demand for economic development will further promote the resource development of Russias eastern region， which could exert a great influence on urban development in the region.

After the disintegration of the Soviet Union， the eastern region of Russia began to lose the Central Governments policy and financial support for development due to the ending of the Soviet Unions strategy of balancing regional development. The economic situation in the region continued to deteriorate as the development gap between the east and the west increased sharply. The Federal Government of Russia is aware that the economic backwardness of the eastern region not only hinders its involvement in Asia-Pacific economic cooperation， but also restricts the revival of the national economy. Therefore， Russia has begun to gradually adjust its national development strategy， with federal policies tilted in favor of the eastern region.endprint

A more reasonable layout

Under the market mechanism， economic ties between cities will be further strengthened. Population， resources and economic activities within the region are likely to further agglomerate to major cities with greater potential for development and economic benefits. Most of the big cities today are likely to become cornerstones in the new regional economic system.

The eastern region is Russias most important raw mineral base， containing more than 80 percent of the proven deposits of the countrys mineral resources. These resources have not yet been mined en masse， however. The future development prospects are beyond measure. With the deepening of exploration and infrastructure improvement， it is certainly possible that new sources of economic growth will emerge in areas with abundant resource reserves， giving rise to new resource-based cities.

Siberia and the Far East provide the nearest transportation corridor between Asia-Pacific countries and Europe， and the northern seaway is also a favorable transportation route in Russia. After the dissolution of the Soviet Union， Far East ports became Russias most important ports. The significance of border cities and coastal cities in the Far East has been further increased since Russia adopted an eastern development strategy aimed at integrating into the Asia-Pacific region. The Far East has also become Russias leading base in strengthening trade and economic and technological cooperation with other Asia-Pacific countries. Border cities and coastal cities have thus gained new development advantages.

The future economic and urban development in eastern Russia should allow the market to play a fundamental role， with policies serving as an incentive.

Favorable policies are an important tool in narrowing the regional development gap. The less developed eastern region of Russia needs favorable policy support focusing on infrastructure construction and investment environment creation at the early stage. At the same time， the policies must help to foster new regional market forces and tap the market potential. Though both belong to the eastern region， differences between the Far East Federal District and the Siberian Federal District are sharp—the latters urban development level is far above the formers. Therefore， in the process of developing the eastern region， policy support to the two districts should be different.endprint

Some restricting factors threaten to limit the urban and economic development of Russias eastern region.

Since the Soviet Unions disintegration in 1991， population decline and labor shortages have become major problems for the development of the region. From 1990 to 2012， the population of the Far East Federal District and the Siberian Federal District fell by 8.7 percent and 22.1 percent respectively， causing a sharp decline in the labor force. The majority of the staff lost consisted of capable adult workers and professional elites. The continued loss of personnel will also weaken innovation， which could be problematic for the long-term development of the region.

Moreover， the excessive reliance on resources for economic growth could ultimately represent a kind of curse. The countrys abundant natural resources have inadvertently weakened the incentive role of institutional improvement and delayed the course of economic reform. The slow rate of reform and weak institutional improvement have hindered the efficient use of natural resources. This vicious cycle is particularly evident in Russias eastern region. The abundance of natural resources has yet to form an endogenous power source for the sustainable and comprehensive economic development of the region.

Furthermore， the investment environment in the region is poor， primarily due to the lack of corresponding legal guarantees and necessary preferential policies. Despite the work of many scientific research institutes， the marketization of technologies in the region is not mature. Scientific research achievements are not yet being translated into productivity.

Promising cooperation

The eastern region of Russia and Chinas northeastern provinces enjoy healthy economic and trade cooperation. The positive interaction of Russias eastern region development and the revival of northeast China will promote mutually beneficial cooperation in the two countriesborder areas.

The labor and funding shortages that the eastern region of Russia faces cannot be easily solved in the short term—this is particularly likely to be the case without additional assistance from China. Participating in the development of Russias eastern region is also in accordance with the interests of China. It could help China meet its demand for energy and resources， contributing to the revival of the old industrial bases in northeast China and improving Chinas resource security as a whole.

The infrastructure construction in Russias eastern region also requires a huge labor force， which could allow more job opportunities for Chinese workers. In addition， China has an advantage in infrastructure construction， and Russias eastern region development strategy may employ related Chinese enterprises.

Khabarovsk， the biggest city in Russias Far East District， is just across the border from Chinas Fuyuan County. With China and Russia planning to jointly develop Heixiazi Island， known as Bolshoy Ussuriysky Island in Russia， economic ties between the two countries border cities will be further intensified.endprint