Primorsky Krai – Heilongjiang Free Trade Up 72.8% In H1 2022

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Russia-China trade gateways in China’s far north offer opportunities for regional investors 

The trade volume between Russia’s Primorsky Krai Far Eastern region and China’s Heilongjiang Pilot Free Trade Zone has reached 13.503 billion yuan (US$1.96 billion) in the first half of 2022, growing by 72.8% year on year, according to China’s customs administration.

Heilongjiang Province is located in northern China and shares a 4,195  kilometer-long border with Russia’s Primorsky Krai (province), Zabaykalsky Krai, Khabarovsk Krai, Amur Oblast, and the Jewish Autonomous Oblast. It includes the Trans-Siberian railway route leading south to Beijing, and several other border crossings.

Of these, the Heilongjiang Pilot Free Trade Zone is the largest. It was established in 2019 and consists of free trade areas within the Chinese cities of Harbin, Heihe, and Suifenhe – all of which share border crossings with Russia.

The Free Trade Zone has suffered in the past – opening just before Covid, and was subsequently closed for some time, while logistics issues also created delays in its full implementation. These now appear to have been resolved, with the final result being a significant resumption of trade and a growth in demand.

Harbin is the Provincial capital of Heilongjiang and is the transportation hub for goods transit by rail across Russia via the Trans-Siberian route, leading ultimately to Moscow. This is the main centre of the Free Trade Zone operations to and from China and Russia.

Heihe services imports and exports to and from Russia’s Amur Oblast, and marine transit along the Amur River. It has several cooperative projects with Russian companies in sectors including transportation, resources, culture and tourism. The first road bridge connecting China and Russia has been completed here, spanning 1,284 meters across the Amur River, connecting Heihe with Nizhneleninskoye. When fully operational, annual cross-border passenger flows between the two cities is expected to reach 1.4 million, with cross border freight volumes reaching 3 million tons. A cross-border cableway that spans the river is also close to completion.

Suifenhe is just 190km from the Russian Primorsky Krai capital, and major port city of Vladivostok and is the biggest Sino-Russian cross-border trade hub in Heilongjiang. Opened in 2011, Heilongjiang customs officially approved the establishment of a free trade market in Suifenhe to promote cross-border trade in the city. Under the policy, Suifenhe residents can each buy duty-free commodities to the value of 8,000 yuan (US$1,250) per day, equivalent to a potential annual purchasing power per person of US$456,000. By 2020, Suifenhe’s free trade zone with Russia was open to businesses from 14 more countries, including from Mongolia and South Korea, turning the zone into a regional cross-border hub.

The total foreign trade volume of the free trade zone reached 69.084 billion yuan (slightly less than US$10 billion) at the end of June 2022, accounting for 12.8% of Heilongjiang’s total foreign trade. 16,539 new enterprises have been established in the period from 2019, an increase of 96.8% compared with the number before the opening of the free trade zone.

The zones have utilized US$340 million of foreign capital (mainly Russian), about 19.7% of Heilongjiang’s total as at the end of June 2022.

Russian and other investors looking to establish operations in Heilongjiang may contact Dezan Shira & Associates. The firm provides foreign investment market intelligence, legal, tax and compliance issues in China and has 13 offices throughout the country. Please contact Maria Kotova at china@dezshira.com

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