Dr. Alexandr Nemets and Dr. Thomas Torda
Thursday, July 11, 2002

As was shown in one of the authors' articles recently published at NewsMax, China National Petroleum Corp. (CNPC)-subordinated Daqing Oil Corp. (based in China's most northeastern province, Heilongjiang) is creating a gigantic web of oil and gas pipelines, reaching the Tomsk region of Western Siberia in the West and covering most of the Krasnoyarsk region and all of the Irkutsk region of Eastern Siberia, as well as all of the Trans-Baikal zone, reaching Yakutsk city (capital of the Sakha-Yakutia Republic) in the north.

Part of this web exists already (particularly the Soviet-built oil pipeline between the Tomsk region and Angarsk city in Western Siberia), and part will be constructed before the year 2010.

This web could also cover most of Russia's Khabarovsk region in the northeast and Maritime region in the east, and could even reach the Sea of Okhotsk and Sakhalin Island.

As a result, many billions of tons of oil deposits and up to 100 trillion cubic meters of natural gas deposits located in Siberia and the Russian Far East (RFE), including the Sea of Okhotsk shelf, will be at China's unlimited disposal. These plans are being compiled in Daqing city and approved in Harbin (capital of Heilongjiang province, the "major player" in Chinese expansion in Russia) and in Beijing.

According to these plans, by 2005, Daqing Oil Corp. alone would be capable of receiving, through newly constructed pipelines (in addition to expanded crude oil deliveries through railways), up to 30 million tons of oil and several billion cubic meters of natural gas.

By 2010, oil and gas deliveries from the eastern regions of Russia to Daqing Oil Corp. could increase, by humble estimates, to at least 50 million tons and 20 billion cubic meters, respectively. In addition, huge flows of oil and gas will stream, by 2010, through separately constructed pipelines, from Eastern Siberia – via Mongolia – to Northern China.

Is all this really so important for America?

First, let's look through an article published on June 20, 2002, in the Hong Kong-based Far Eastern Economic Review magazine and devoted to the problem of China's energy security. The article claims that China's increasing imports of crude oil and liquefied natural gas (LNG) make this country more and more vulnerable and dependent on the situation in the external world.

Moreover – as the article insists – the necessity to provide, through sea routes, a continuously growing supply of oil and LPG (liquefied petroleum gas) from the Middle East and Southeast Asia unavoidably pushes Beijing to maintain good relations with the U.S. and Japan; this alone diminishes greatly Mainland opportunities for attacking Taiwan. (end of article theses)

And what about oil and gas supply from the eastern regions of Russia? By 2005, when the Angarsk-Daqing oil pipeline will be in service and railway supply of crude oil and oil products from Russia and Kazakhstan will increase to 10 million tons a year or more, China will obtain a reliable alternative oil supply source. This will make it possible for China to initiate military action against Taiwan, even if this results in several months' stoppage of oil and LNG supply through sea routes.

Second, about China's domination in the eastern regions of Russia: At the end of 2001 and the beginning of 2002, when the authors published several articles on the growing Chinese presence and emerging domination in the Sakha-Yakutia republic and Maritime region of Russia, the situation was already grim. After 2005, when the listed pipeline projects are to be finished, the following will take place:

1. China's "physical presence" in these regions as well as in all of Eastern Siberia and the RFE will greatly increase. This, along with the continuing depopulation of Russia's eastern regions, will result in a

   tremendous demographic shift and, consequently, expanded Chinese control here.

   By the way, development of Chinese oil and gas projects in Sudan and Myanmar is accompanied by deployment of PLA (Chinese People's Liberation Army) engineering troops in these countries. Would the RFE escape this? Take into account also that the number of Russian army servicemen is in steep decline and that other Russian armed forces (subordinated to the Internal Ministry, or Federal Security Service (FSB)) are targeted toward "internal enemies" only.

2. Presently, China, entirely or almost entirely, controls the retail and wholesale trade, the timber industry (not directly but effectively, because a large part of the product goes to China), and other raw materials industries (in the same way) in Eastern Siberia and the RFE.

   After the new pipeline projects are completed, Chinese economic control (more exactly, domination) in these regions will become absolute and unshared. Possibly the eastern regions of Russia by 2010 will still be "Russian" and nominally Moscow-controlled – but only nominally.

3. American and Japanese capital, despite 15-year attempts, still could not enter the oil and gas industry of Eastern Siberia and the RFE. The only exclusion is the Sakhalin sea shelf, where several joint U.S.-Japanese projects are under way. It is easy to understand that (a) Western oil companies will have no chance to enter the continental part of Russian Eastern regions and (b) even their positions at Sakhalin and prospective projects regarding the entire Sea of Okhotsk shelf will be challenged soon by the Chinese.

Pressure on Maritime Region Intensifies

The situation in this region (centered on Vladivostok city) is characterized by the following.

China in 2002 is using in the maximum available way two transport corridors:

1. Suifenhe (Chinese border city and Special Economic Zone) – Pogranichny (Russian border town) – Ussuriysk city – Vladivostok seaport and Nakhodka seaport. This transport corridor, including highways and railways, connects Heilongjiang province with the Sea of Japan.

   During the first half of 2002, the border crossing Suifenhe-Pogranichny became much easier – primarily for the Chinese side. China's physical presence in Pogranichny, Ussuriysk and elsewhere along this corridor is rapidly increasing. This increase is accompanied by the rapid development of an expansion base including Suifenhe city and adjacent counties of Heilongjiang province.

2. Hunchun (Chinese border city and Special Economic Zone) – Kraskino (Russian border town) – Zarubino seaport. This transport corridor, including a highway and railway (to be put in service by year's end), connects Jilin province with the Sea of Japan. China's physical presence all over this corridor is also sharply increasing and accompanied by rapid development of the expansion base, including Hunchun town and adjacent counties of Jilin province.

One can claim that China presently controls these two transport corridors; this, in practice, means the control – actually, the domination – of the entire southern, most-developed part of the Maritime region. In addition to other economic gains, control of these areas gives China unlimited access – both legal and illegal – to the herbal, animal and fish, timber and poly-metallic ore resources of the entire region. This is what has already taken place.

And the development of present trends and strengthening of Chinese domination in the southern part of the Maritime region will allow China's PLA, at some critical moment, to use these corridors for its own purposes. This is no exaggeration.

Let's consider several reports of August 2001-June 2002.

Pravda Web site, Aug. 7, 2001 – 'China to Invest in Siberian Forestry' (summarized):

The Russian timber-holding company Siblesprom, controlling a significant part of the timber industry in Siberia and the RFE, will dramatically expand cooperation with China. This project prescribes Siberian-RFE woods development within the framework of the Russian-Chinese intergovernmental agreement of Nov. 3, 2000, and recent talks between Siblesprom and the

Chinese side in Moscow.

The intergovernmental agreement provides opportunities for Chinese investment in Russia's timber industry. China wants to cut 2.5 million cubic meters of timber – principally pine, larch, cedar and birch – in Russia annually during the next 25 years, with 25 percent of it processed in Russia.

Presently, only about 5 percent to 7 percent of the wood-cutting area in Siberia and the RFE is used, and Chinese money could build bridges, roads and ports (mostly in the Maritime region).

In addition, according to new agreements (between the Chinese side and Siblesprom, approved by Moscow), China obtained the new transport corridor Hunchun (Chinese border point in Jilin province) – Kraskino (Russian border point at the southern edge of the Maritime region) – port of Zarubino (coast of Sea of Japan).

In first half of 2001, trucks carried 60,000 tons of pulp-chips from China to Japan via this route. Laying the railway Hunchun-Kraskino-Zarubino (to be put into service by the end of 2002) will allow landlocked Jilin province to transport 2 million tons of goods a year through the sea to Japan and South Korea.

Beijing-based China Daily, March 19, 2002 – 'Jilin Province Steps Up Development of Tumen River Area' (summarized):

Jilin province steps up the development of the Tumen River zone, i.e., Yanbian Korean Autonomous District bordering Russia and North Korea. Four billion yuan (US$481 million) will be spent to extend railways, highways and improve other infrastructure facilities in the area in the coming five years.

The province will accelerate the construction of the Chinese-Russian railway (Hunchun-Kraskino-Zarubinoport) and will largely expand marine and air transportation to link the area closer with the outside world.

Jilin province will add to the prosperity of its border city of Hunchun (inside the Tumen River zone), which is expected to have a population up to 500,000 by 2005. The city accelerates development of the export-oriented processing industry, to export more Chinese herbal medicine, organic food, wild herbs and beverage products to Japan, South Korea and Southeast Asia, and to export more light industrial products and articles for daily use to Russia.

So far, railways, expressways and highways have been built and air routes and sea courses have been opened that have linked the area with some frontier cities of Russia and North Korea. By the end of 2000, there will be 640 companies from 22 countries and regions invested in the area, involving actual foreign investment valued at $460 million. Russia and North Korea are also making vigorous efforts in building highways and setting up economic zones in their respective areas. (end of report)

Xinhua news agency, Harbin, March 22, 2002 – 'China and Russia Sign Cooperative Agreement on 'Suifenhe-Pogranichny' Cross-Border Trade Zone' (summarized):

Wang Limin, deputy head of Heilongjiang province, and Ivanov, deputy governor of Russia's Maritime region, jointly signed an agreement for establishing a cross-border trade zone between China's Suifenhe city and Russia's Pogranichny city, as well as for other projects. From this moment, the Suifenhe-Pogranichny cross-border trade zone has begun substantive operations.

Suifenhe is the largest land-border entry port in Heilongjiang province; in 2001, the city provided 73 percent of the entire Heilongjiang province trade with Russia (about $1.3 billion and about $1.8 billion, respectively; neither figure takes into account the "shuttle trade" as well as smuggling of all kinds and illegal weapons technology exports from Russia to China).

Each side drew up 2 square kilometers of land to form the Suifenhe-Pogranichny cross-border trade zone. Citizens from the two countries will cross the border with minimal formalities if any. Chinese citizens may import goods of less than 3,000 yuan (about $360) through the cross-border trade zone per day without paying import tariffs.

The Chinese side intends to spend about 2 billion yuan for construction in the Suifenhe-Pogranichny cross-border trade zone. The trade zone project will begin construction in April 2002, and the first phase of the project is to be completed in October 2002. Russia will also complete its infrastructure construction before the end of this year.

The completed Sino-Russian Suifenhe-Pogranichny cross-border trade zone will mainly engage in cross-border trade in order to promote the development of small-scale border trade, transit trade and processing trade, as well as to promote the industries of warehousing, processing, tourism, information and finance; it will become an even more important Chinese-Russian commercial center for import and export goods. (end of report)

Montreal Gazette May 18, 2002, p. B11 – Russell Working article (excerpts):

"Ussurisk – 100 km north of Vladivostok – has become famous for its Chinese market and trading hotels, where Russians from throughout the region come for bargains on everything from toys to fur coats. The Chinese market, Ussuri-Centre, has become a significant part of the regional economy, with its 1100 Chinese traders [in reality, this figure should be increased by at least five times].

"Ussuri-Centre opened in 1994. … The market has seen an enormous transformation since just three years ago. … Ussuri-Centre bustles with activity. Roads around it are jammed with cars and the market is crowded with buyers searching for everything. …

"In scores of cities from Omsk to Magadan, markets are brimming with Chinese traders. They live in dormitories in Blagoveshchensk, apartment blocks in Vladivostok and train cars in Ussurisk. Nearly 100,000 of them live in the Russian Federation illegally, federal officials estimate, and thousands more are there on tourist or temporary work visas." (end of report)

ITAR-TASS, June 7, 2002, Vladivostok):

Issues of cooperation in 2002-2003 and familiarization with work of the border guards of the Maritime region were in the focus of the visit of a military delegation from China's Jilin province. The Chinese military delegation, which has been staying in the Maritime region since June 4, is headed by Commander of the Jilin Military District PLA Maj. Gen. Yue Hulai.

Border guards of the Maritime region and Jilin province held talks and signed an agreement of cooperation in 2002-2003. Border guards of Jilin province spoke about the creation of 34 additional checkpoints on the Chinese-Russian border. This will make it possible to close the corridors on the Chinese territory, which are used by poachers to penetrate into the RFE. (end of report)

By the way, the last report indicates that local Russian army troops enjoy friendly relations with the PLA and won't oppose Chinese expansion of any form or on any scale.

Dr. Alexandr V. Nemets is co-author of "Chinese-Russian Military Relations, Fate of Taiwan and New Geopolitics."

Dr. Thomas J. Torda is a Chinese defense technology and language consultant with a Northern Virginia firm.

You may contact Dr. Torda at ThomasJTorda@cs.com.

Read more on this subject in related Hot Topics:
China/Taiwan

Russia

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