5Чарльз Р. Айриш — директор Восточно-Азиатского центра юридических исследований, Почётный профессор права Волкман-Бэском, Университет Висконсин-Мэдисон, США.
СОВЕРШЕНСТВОВАНИЕ ПРАВОВЫХ УСЛОВИЙ РАЗВИТИЯ ЭКОНОМИЧЕСКОГО СОТРУДНИЧЕСТВА МЕЖДУ ДАЛЬНЕВОСТОЧНЫМ ФЕДЕРАЛЬНЫМ ОКРУГОМ РФ И СТРАНАМИ АЗИАТСКО-ТИХООКЕАНСКОГО РЕГИОНА
В статье исследуются возможные способы модернизации законодательства и экономического сотрудничества между Дальневосточным федеральным округом Российской Федерации, состоящим из 9 субъектов РФ, и странами Азиатско-Тихоокеанского региона (АТР). Дальний восток России и страны АТР обладают комплементарными характеристиками. Дальневосточный федеральный округ представляет собой обширную малонаселенную территорию богатую многими природными ресурсами, такими как газ, нефть, золото и серебро, древесина и т.д. Большинство стран АТР, несмотря на высокий уровень развития промышленности, не обладают необходимыми природными ресурсами. На сегодняшний день существует лишь несколько примеров удачного использования комплементарных качеств этих двух регионов. Дальневосточный федеральный округ по-прежнему испытывает нехватку инвестиций. Торговая отрасль также недостаточно развита. Превращение Дальнего востока РФ в международный центр торгово-экономического сотрудничества потребует значительных преобразований. Во-первых, необходимы развитие и модернизация инфраструктуры девяти субъектов РФ, входящих в состав ДВФО. Во-вторых, необходимо укрепить экономические отношения с динамично развивающимися странами АТР. Однако существуют некоторые правовые препятствия для достижения поставленных целей развития ДВФО. Указанные препятствия можно условно разделить на две категории: международные и региональные проблемы, а также внутренние проблемы РФ. Основным препятствием международного характера является участие России во Всемирной торговой организации и региональных торговых соглашениях, таких как Транс-Тихоокеанское партнерство и Региональное всестороннее экономическое сотрудничество. Наиболее существенными внутренними проблемами РФ являются коррупция и чрезмерные, повторяющиеся бюрократические процедуры. В числе возможных способов преодоления указанных препятствий и экономической интеграции ДВФО можно назвать совершенствование законодательства и административной практики, создание благоприятного инвестиционного климата и осуществление программ по борьбе с коррупцией. Также необходимо сочетать политику либерализации экономических отношений с зарубежными странами с определенным ограничением иностранного присутствия в экономике Дальневосточного федерального округа РФ.
Ключевые слова: Дальневосточный федеральный округ РФ, страны АТР, природные ресурсы, экономика, инвестиционный климат, правовые условия.
Charles R. Irish, Senior Director, East Asian Legal Studies Center, Volkman-Bascom Professor of Law (emeritus), University of Wisconsin-Madison, USA.
MAKING MORE OF RUSSIA'S TILT TOWARDS ASIA: IMPROVING THE LEGAL ENVIRONMENT FOR BROADER ECONOMIC COOPERATION BETWEEN THE RUSSIA FAR EAST AND ASIA
The essay discusses ways of improving the legal environment in the Russian Far East to make better use of economic cooperation between Russia and Asia. The RFE and the Asia
Pacific Region have extraordinary complementarities. The RFE is a vast sparsely populated area that is a home to many natural resources: oil and gas, coal, zinc, lead, silver and gold, timber, etc. The APR on the other hand is heavily industrialized and lacking in many important natural resources. In a few notable instances, the RFE has exploited its complementarities with the APR but still there are not enough foreign business people willing to trade and invest within the RFE. Becoming an international hub for economic relations will require two major steps. First step is to develop and modernize the infrastructure of the nine provinces that make up the RFE so that it becomes an attractive center for expanded economic relations with the APR. Second step is to strengthen economic relations with the dynamic economies of APR. However, there are some legal barriers facing the RFE in its efforts to become more integrated into the economic opportunities of the APR. These obstacles fall generally into two categories: international and regional obstacles, and domestic obstacles. The first category includes Russian membership in the WTO, and regional trade agreements, for example the Trans-Pacific Partnership and the Regional Comprehensive Economic Partner. The major domestic obstacles are corruption, excessive and overlapping bureaucratic procedures. There are a few things that can be done to overcome the above mentioned barriers and better integrate the RFE into the APR. Among them are amending laws and administrative practices, creating a favorable investment climate, and implementing a program to combat corruption. It may also be politically necessary to balance liberalizations with some restraints on foreign access to the RFE.
Key words: the far Eastern Federal district of the Russian Federation, the countries of the Asia-Pacific region, natural resources, economy, investment climate, legal conditions.
The Russian Far East (RFE) and the Asia Pacific Region (APR) have extraordinary economic complementarities. The former is sparsely populated with an abundance of natural resources, while many parts of the latter are densely populated, heavily industrialized, and generally lacking in many important natural resources. The RFE and the APR do make some use of these complementarities, but what is notable is how little of the full potential for economic cooperation is being realized. The purpose of this essay is to examine how the legal environment in the RFE can be adjusted to make better use of the complementarities between the RFE and the APR. The conclusions of this essay are twofold:
• Russia should consider participating in either the Regional Comprehensive Economic Partnership (RCEP) with China as the dominant partner or the Trans-Pacific Partnership (TPP) where the US has a large measure of control over the agenda. Given the current political dynamics, Russia is likely to be more comfortable as part of RCEP than the TPP.
• The most effective strategy for integrating the RFE into the APR is to establish Vladivostok as a free trade zone. Because Moscow is somewhat wary of heavy reliance on private sector development and also fears that unrestrained openness for foreign partners could affect Moscow's control over the RFE, it may be politically necessary to balance liberalizations with some restraints on foreign access to Vladivostok and the RFE.
1. Introduction: Russia and Asia Pacific Region.
In September, 2012, Russia hosted the APEC Summit on the new campus of Far Eastern Federal University on Russky Island in Vladivostok. Bringing the 7,000 APEC participants to Vladivostok demonstrated the increased importance Moscow attaches to its relations with Asia [1]. The APEC Summit was intended to showcase Vladivostok and the Russian Far East (RFE) as the new Russian bridge between Europe and the vibrant economies of Asia.
Russia's tilt towards Asia has two components. The first component is to develop and modernize the infrastructure of the nine provinces that make up the RFE so that it becomes an attractive hub for expanded economic relations with the APR [2]. The RFE is a vast area about two-thirds of the size of the US and 36 percent of Russia's total area, but it contains only 6.3
million people [3]. During the 1990s, after the collapse of the USSR, the national government largely ignored the RFE, its population declined by 15 percent and it lost 90 percent of its industrial base, as well as the substantial presence of the Russian Pacific Fleet and the Russian Air Force [2, supra note 2]. In the last decade, Moscow has attempted to reverse the decline by devoting about US$30 billion in state investments in stimulating the RFE's economy and new infrastructure, with most of the investment directed at urban improvements in Vladivostok [2, supra note 2]. The two new bridges, airport renovation, major new roads, and the expansive, newly constructed campus of Far Eastern Federal University in Vladivostok are the result of these investments.
The second component of Russia's Asia strategy is to strengthen economic relations with the dynamic economies of APR. The APR certainly is deserving of the increased attention. While the US struggles with a gridlocked national government, bloody and costly entanglements in the Middle East, and a tepid domestic economy, and the European Union lurches from one financial crisis to the next and faces stagnant economic growth rates, the APR stands out as the most economically dynamic part of the world. Among the more important attributes of the APR are:
• Most of the world's economic growth is produced in the region. In the last two decades, China alone has accounted for 40 percent of the increase in global GDP.
o China's growth rate has moderated, but still is 7.9 percent per year.
o Thailand, Indonesia, Malaysia, and the Philippines all have growth rates in excess of 6.0 per year and many other countries in the region have growth rates well in excess of the global average.
o Meanwhile, the EU has negative growth rates and the US rate is a relatively anemic 1.7 percent [4].
• The APR has the three largest economies in the world - the US, China and Japan.
• The APR is home to about 40 percent of the world's population, has some of the largest, most affluent markets in the world, and accounts for about 55 percent of the world's GDP.
• The APR also is dominated by market based economies which generally support the free movement of trade and investment flows.
Enhanced economic cooperation between Russia and Asia is made especially attractive because the most dynamic Asian economies often lack the primary resources that the RFE has in abundance, while the Asian economies have the capital and technical expertise to assist in development of the RFE. In other words, the RFE and the Asian economies have precisely what the other party needs: the RFE and the Asian economies have remarkable complementarities.
Of course, Moscow's tilt towards Asia involves much more than making better use of the economic opportunities presented by the RFE's geographic location. It appears that Moscow's tilt has at least three major policy underpinnings:
• To strengthen Moscow's control over its eastern territories and discourage outsiders from meddling in RFE's affairs;
• To make clear that Russia is intent on establishing the RFE as an integral part of the APR and an attractive option for expanded economic exchanges with the APR; and
• To reverse the population outflows and economic decline in the RFE, both of which are critical to the success of Moscow's ambitions in the APR [2, supra note 2].
2. Russia and the APR: Extraordinary Complementarities.
In addition to having an attractive geographic location, the Russian Far East has the good fortune to have an abundance of the resources in short supply in many of the other economies in the APR. The most dynamic and highly industrialized economies of the APR typically are lacking in natural resources, so their economies are sustained through imports of natural resources and manufactured components and exports of high value finished goods. Japan, South Korea, Taiwan, and Hong Kong, for example, all have built their economic prosperity on the importation of large quantities of natural resources and other primary products which have been
fabricated into high value finished goods for export. China's demand for imported primary products is so great that it has driven the price of raw materials to exceptionally high levels and made Australia, the source of many of China's raw material imports, one of the richest countries in the world.
Meanwhile, the RFE is home to many of the resources in such short supply in the affluent economies of the APR.
• The oil and gas reserves around Sakhalin Island are one of Russia's most valuable resources.
• The RFE has large deposits of coal.
• There are commercially viable deposits of tin and complex ores containing zinc, lead, copper, and silver in the RFE.
• The current world market price of gold means that the gold deposits in the RFE are getting more attention.
• Primorsky Krai has Russia's largest deposit of boron.
• Deposits of germanium exist in the RFE but apparently are not being exploited.
• Several deposits of phosphorites have been discovered in the coastal regions of the RFE.
• The rivers in the mountainous regions of the RFE have considerable potential as sites for hydropower plants.
• A large portion of the RFE is forested so the region has large timber reserves.
• Fishing stocks seem plentiful.
• The potential for tourism, especially high end eco-tourism is very considerable, but largely undeveloped. Salmon fishing in Kamchatka and Taimen fishing in Sakhalin and Primorsky Krai are good examples.
In contrast to the resource poor economies of many of the countries in the APR, the RFE has an absolute advantage in natural resources. In other words, there are great complementarities with many of the other parts of the APR.
3. Complementarities of the RFE and the APR.
In a few notable instances, the RFE has exploited its complementarities with the APR:
• Sakhalin-2 is one of the world's largest integrated, export-oriented oil and gas projects, as well as Russia's first offshore gas project. Sakhalin Energy Investment Company Ltd., the project operator, is owned by Gazprom, Shell, Mitsui and Mitsubishi. The project infrastructure includes three offshore platforms, an onshore processing facility, 300 kilometers of offshore pipelines and 1,600 kilometres of onshore pipelines, an oil export facility and a liquefied natural gas (LNG) plant. Almost all of the gas from Sakhalin-2 has been sold under long term contracts to consumers in the APR [5].
• China is the dominant trading partner for the border provinces of the RFE. The Chinese import metals, coal and timber from the RFE and in exchange supply foodstuffs, clothing and electronic products to the inhabitants of the RFE [2, supra note 2]. With the growing cooperation between the two national governments, this trade is likely to expand. In 2009, then presidents Dmitry Medvedev and Hu Jintao agreed to link the development of China's northeast provinces with development in the RFE [2, supra note 2]. Most recently, new Chinese President Xi Jinping made Moscow his first foreign destination after taking office in March, 2013. During their meetings in Moscow, presidents Xi Jinping and Vladimir Putin concluded a series of agreements, including an agreement under which Russia's state controlled oil giant, Rosneft, has agreed to supply China with a million barrels of oil per day, which will make China Russia's number one consumer of oil. China in turn is providing Rosneft with US$30 billion in loans to assist in Rosneft's acquisition of the Russian-British joint venture TNK-BP [6].
• Japanese automaker Mazada has opened its first foreign assembly plant in Vladivostok. When operational, the plant is scheduled to produce 50,000 vehicles per year [7].
• Although it seems to be on a relatively small scale, the RFE has high end tourism that offers some of the best fresh water fishing adventures in the world in Kamchatka, Sakhalin Island and Primorsky Krai. The potential for all forms of nature tourism within the RFE is extraordinary. The two Chinese provinces closest to the RFE, Jilin Province and Heilongjiang Province, have a combined population equal to about 50 percent of the entire Russian population and the newly affluent Chinese are increasingly looking outside of China for their tourist destinations.
But an important question is why there are not many more examples of the RFE making good use of its complementarities with the APR. In other words, why aren't there more foreign business people willing to trade and invest within the RFE? This question is even more notable because East and Southeast Asia have become much more closely integrated within the last decade. Whereas once the export economies of East and Southeast Asia looked almost exclusively at the North American and European markets, they now increasingly trade and invest among themselves. In the last decade, for example, China has displaced the US as the number one trading partner of Japan, Taiwan and South Korea and many of the countries in Southeast Asia. At the same time, intra-regional trade within the Southeast Asian countries has grown enormously, so that now many of the Southeast Asian countries trade more within the region than they do with North America or Europe.
So, why hasn't the RFE become more integrated with the economies of East and Southeast Asia and the APR more generally?
Certainly, there have been political obstacles to greater economic integration with the APR. Moscow is worried that the enormous population imbalance between the RFE and the Chinese regions on its border may lead to de facto (or worse) dominance of the RFE by the Chinese. Moscow also may fear that unrestrained private sector development with foreign capital and technical expertise will undermine state directed development plans. There are, however, also a number of legal obstacles to greater integration and it is the legal obstacles that will be the focus of the balance of this essay.
4. Legal Obstacles to Greater Economic Integration with the APR.
The legal obstacles facing the RFE in its efforts to become more integrated into the economic opportunities of the APR fall generally into two categories: (i) international and regional obstacles, and (ii) domestic obstacles.
International and Regional Obstacles. The World Trade Organization. One of the most formidable obstacles for the RFE was that Russia was the last major economy not a member of the WTO. In August, 2012, however, after 18 years of negotiations, Russia entered the WTO. Russia was 156th member of the WTO and its entry is likely to have a major impact on the Russian economy, including the economy of the RFE. Russian membership in the WTO also removes a significant barrier to the RFE's goals of greater integration with the countries of the APR, most of which are already WTO members.
But Russia's WTO membership is only the first step towards the more comprehensive market based liberalizations that need to be made if the RFE is to be a full economic partner in the APR. Even after joining the WTO, Russia has maintained its massive state subsidies for domestic industries, especially for agriculture, the automobile industry, and Soviet-style "Monogorods" or towns dependent on a single factory or industry. Under its accession agreements, the state subsidies are to be phased out over a seven year period [8]. In addition, importers complain that they still face uncertain import procedures and a wide array of nontariff trade barriers when exporting to Russia, making Russia an unpredictable and nontransparent market. Export regulations, the protection of intellectual property rights and the environment for inbound investment also are cited as areas that are well short of being fully compliant with WTO standards [9]. So, Russian laws and administrative practices will have to undergo major additional changes to make Russia a fully fledged member of the WTO.
Regional Trade Agreements. The stagnation of the Doha Round of multilateral trade negotiations over the last decade has caused many countries to look for alternative ways to expand international trade and investment. Largely because of lack of progress in the Doha Round, bilateral and regional trade agreements that go beyond the trade liberalization measures in the WTO have proliferated. Since 2010, Russia has a customs union with Kazakhstan and Belarus and in September, 2012, a free trade agreement between Russia and the Commonwealth of Independent States became effective. Russia also is negotiating or contemplating free trade agreements with India, Vietnam, Norway, and New Zealand.
Meanwhile, in other parts of the APR, bilateral and regional trade agreements have been actively pursued. The effectiveness of these multiple and oftentimes overlapping agreements may be in doubt, but intra-region trade and investment have increased sharply in the last decade. As mentioned earlier, the APR has become much more closely integrated and many of the countries in the region do more business within the region than they do with their historic trading partners in North America and Europe.
While there are a great many bilateral and regional trade agreements in the APR, two regional agreements now being negotiated are likely to have the greatest impact on Russia's effort to promote the RFE as an integral part of the APR. The two agreements are the TransPacific Partnership (TPP) and the Regional Comprehensive Economic Partner (RCEP).
TPP's origins can be traced to the Trans-Pacific Strategic Economic Partnership (also called the P-4), signed in 2005 by the governments of Chile, Singapore, New Zealand and Brunei Darussala [10]. The objectives of this group of four small countries were threefold: first, to establish a free-trade area with unprecedented market access by agreeing to eliminate all tariffs by 2017; second, to create the first free-trade link specifically between the APR and South America; and finally, to provide a template for the expansion of free trade throughout the region by allowing additional countries to adhere to the agreement [10].
When the US joined the P-4 in 2008, the objectives became much more ambitious and contentious. Now, with the US negotiators largely dominating the agenda, TPP is seeking to become a comprehensive agreement that goes well beyond the WTO rules with the elimination of all tariffs and government commitments to significant regulatory reforms on domestic policy issues [10]. Although the TPP negotiations are secret, leaked documents and the comments of trade negotiators indicate that participating states will be obligated to provide strong protections for foreign investors, greater safeguards for patent holders, limitations of subsidies for state-owned enterprises, and more aggressive enforcement of environmental and competitions laws [10]. With the recent addition of Japan to the TPP negotiations, the TPP countries now include the original four members of the P-4, the US, Australia, Malaysia, Peru, Vietnam, Canada, Mexico, and in March, 2013, Japan.
TPP was originally scheduled to be concluded by the end of 2012, but negotiators now estimate that the agreement will be finished in late 2013. The recent addition of Japan to the negotiations, however, may push the completion date to sometime in 2014.
RCEP has a very different origin than TPP [11]. In November, 2012, at the East Asia Summit in Phnom Penh, the ten member countries of ASEAN agreed to launch the RCEP negotiations. ASEAN has bilateral and regional free trade agreements with non-ASEAN countries, such as China, South Korea, Japan, India, Australia and New Zealand, which are separate from one another. The basic idea underpinning RCEP is to harmonize all of these free trade agreements into a single regional economic agreement. RCEP also is intended to establish deeper economic integration than the existing free trade agreements by liberalizing more trade in goods, eliminating trade barriers, gradually liberalizing trade in services, and establishing a more hospitable environment for inbound foreign direct investment [12]. The countries now participating in the RCEP negotiations are the ten member countries of ASEAN (the Philippines, Singapore, Brunei, Malaysia, Indonesia, Thailand, Vietnam, Cambodia, Myanmar, and Laos) plus China, Japan, India, South Korea, Australia and New Zealand.
The RCEP timetable is to conclude the negotiations sometime in 2015. Given the volume of free trade agreements to be coordinated and the ambitious goals for expanded trade liberalizations, 2015 may be an overly optimistic goal.
China is not included in the TPP negotiations and the US is excluded from the RCEP negotiations. Between TPP and RCEP, however, every major economy in the APR is represented, with only two notable exceptions: Taiwan and Russia. Taiwan is excluded because of China's efforts to isolate the island and force the island into a closer relationship with China. Russia, however, is free to pursue participation in either TPP or RCEP. Given the political tensions between Russia and US and the breadth of economic cooperation between China and Russia, it seems that participation in the RCEP negotiations is now the more attractive option for Russia. Of course, as several countries who are members of both groups have clearly demonstrated, becoming involved in the RCEP negotiations does not foreclose later participation in TPP if that become politically and economically more palatable.
Domestic Obstacles. Excessive, Overlapping, and Opaque Bureaucratic Procedures. Foreign and domestic businesses complain about excessive, overlapping and opaque bureaucratic procedures. This is recognized as a problem not just with federal government regulations, but also at the state and local level. Too often regulations affecting businesses require much more than is necessary to achieve the government's regulatory objectives; in many instances, the regulations duplicate what is required elsewhere; and quite often the regulations are confusing or contradictory so that businesses do not know what is required of them.
The World Bank's 2013 Doing Business Guide [13] ranks Russia 112 out of 183 countries in terms of ease of doing business. In cross border transactions, Russia is ranked 162nd, which reflects the considerable administrative barriers applicable to imports and exports. In dealing with construction permits, Russia is ranked 178nd. Russia also receives low rankings for starting a business, closing a business, and in the protection of investors.
Corruption. Corruption is a systemic problem in Russia and continues to be a major obstacle to improving the climate for business and investment. Despite federal-level efforts to combat the issue, corruption remains a daunting challenge throughout Russia, including the RFE. In Transparency International's 2012 Corruption Perception Index, Russia was ranked 133 out of 176 countries. In spite of repeated statements by the leadership in Moscow about the importance of cubing corruption, little changes in the way business is conducted and the government's law and regulations are administered.
5. Conclusions.
What can be done to better integrate the RFE into the APR?
At the international level, membership in WTO is going to help. But WTO membership should only be a beginning. Many laws and administrative practices have to be amended to make Russia a full member in the WTO.
In addition, because of the proliferation of bilateral and regional trade agreements in East and Southeast Asia and the APR more generally, many countries in the APR now have moved beyond the trade liberalization measures of the WTO. The two most notable regional trade agreements now being negotiated are RCEP and TPP. As mentioned earlier, because of the current political dynamics, Russian may be more comfortable participating in the RCEP negotiations which are dominated by China rather than TPP where the US is the most prominent member. Whichever agreement Russia chooses is probably less important than its visible participation in the negotiations. It is a central component of Russia's efforts to economically integrate the RFE into the APR that Russia be an active participant in the region.
Within Russia, the good news is that the legal environment affecting domestic and foreign business enterprises is improving. In May, 2011, then President Medvedev said that creating a favorable investment climate was the first priority for Russia. He said that corruption, flaws in the legal system and administrative barriers must be countered if a normal investment
climate is to be created in Russia. He also said that various measures are being taken to solve these problems, including a program to combat corruption. Although the fruits of these statements are not yet apparent, they provide a base for some optimism, especially when combined with the recent efforts to make the RFE more attractive as an economic hub for the APR.
The World Bank's 2013 Doing Business Guide also indicates that the business and investment climate in Russia is improving. The World Bank examined the trend for doing business in Russia over the last five years and found that the business and investment environment is improving.
The 2009 decision of the Russian Supreme Arbitrazh Court also gives reason for optimism. In the case of Rentpool B.V. v. OOO Podyemnye Tekhnologii, the court confirmed the enforceability of a Dutch judgment in the Russian Federation. Previously, foreign judgments were enforceable in the Russian Federation only if there was a reciprocal enforcement treaty. In the Rentpool B.V. case, the Supreme Arbitrazh Court said that foreign judgments also could be enforced based on principles of reciprocity and comity among nations. This decision may open the way for enforcement of foreign judgments form the United States, the United Kingdom, and many other countries.
So, there are reasons to be optimistic about the future of the business and investment climate in the Russian Far East. But here, Russia and the United States are similar. US policy makers note the improvements in the domestic business climate and they take comfort in the improvements. But the world around the US and Russia is not static. Unfortunately, what the US policy makers fail to acknowledge is that the rest of the world is changing, and in fact, it is changing at a quicker pace than in the US. So, even as the US is making improvements in the way it does business, the major competing economies in the world are changing at an even faster rate, with the consequence that the US is falling farther and farther behind.
This is the same fate that may befall the Russian Federation, including the RFE. Because the other countries in the APR are improving their business and investment environment at a faster rate, Russia and the RFE risk being left farther and farther behind the neighbors in the region. The US and Russia both must be aware not just of need for absolute changes, but of the need to accelerate the introduction of those changes to keep pace with the other countries in the region.
After Russia's entry into the WTO, the two most serious legal obstacles to the RFE's economic integration into the APR are excessive bureaucratic procedures and corruption and, of course, they both feed on each other. In spite of repeated statements by government at all levels about the importance of dealing with red tape and corruption, the problems remain largely undiminished. Until the national, state and local governments get serious about dealing with these problems, the RFE's aspirations for greater involvement in the APR will remain largely unrealized in spite of the substantial resources the federal government devotes to building up Vladivostok.
One dramatic step that could be used as way to attack both red tape and corruption would be establish Vladivostok as a free trade zone. The elimination or simplification of trade and investment procedures would reduce red tape and at the same time diminish the opportunities for corruption. Because Moscow is somewhat wary of heavy reliance on private sector development and also fears that unrestrained openness for foreign partners could affect Moscow's control over the RFE, it may be politically necessary to balance liberalizations with some restraints on foreign access to Vladivostok and the RFE. Although there many free trade zones around the world (but none in Russia), China's experience in establishing the Shenzhen Special Economic Zone may be the most relevant to Vladivostok as a free trade zone. The Shenzhen Special Economic Zone was created in 1980 just as China was embarking on a new path of "capitalism with Chinese characteristics." China chose Shenzhen because it was attractively situated next to Hong Kong so it could serve as a hub for the movement of trade and investment through Hong Kong and into China, and vice versa. It also is important that China created the Shenzhen Special Economic
Zone at a time when the Chinese leadership was not completely comfortable with the introduction of market oriented trade policies and a greater openness to private sector foreign investment. The fact that in its 30 + years as a special economic zone Shenzhen has grown from a sleepy fishing village to an economically vibrant city of more than 10 million people also may justify a closer look at the Shenzhen Special Economic Zone.
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