The Chinese are calling all over the Lipetsk region

A new wave of Chinese expansion into the Lipetsk region. Angel Yearst Corporation, already present in the region, intends to build a plant for deep processing of grain worth more than 10 billion rubles. However, even the prospect of this project is ambivalent.

In January, a Chinese delegation visited Lipetsk and held talks with local officials headed by Governor Igor Artamonov. “A Chinese company will build a deep grain processing plant near Lipetsk,” TASS reported. But the head of the region, who actively blogs on Telegram, mentions this grandiose project in passing. Like, he went to look at social facilities in the Dankovsky district and at the same time stopped by the industrial zone, where the Chinese are going to expand production … The local press also unsubscribed in the same spirit: the Chinese want the plant, but we are still thinking. Why such caution? There is something.

Deal with Angel

“Factory for deep processing of grain” – sounds impressive. But we must understand that the first stage of such processing is the production of starch and molasses. And anyone who has been close to such production will remember it for a long time. By smell. Residents of Efremov in the Tula region complain about the eternal stench. There is an industrial cluster for processing grain, which is based on a Soviet starch factory, reconstructed and used by the American company Cargill. And in the Millerovsky district of the Rostov region, after the opening of the Amilko starch plant, local residents simply rebelled, demanding that the plant be closed and that they be able to breathe normally again. There are about three dozen such factories in Russia, and everywhere they can be found by smell.

The Lipetsk region has become a real Chinese enclave in the European part of Russia. It is reported that it is among the Russian regions with the maximum amount of Chinese investment.

Officials have a well-established scheme in this regard: they conduct lengthy investigations, find some alternative sources of stench. And so on until the most active and dissatisfied citizens simply leave, and the rest get used to it. Artamonov’s team already has a similar experience. In 2019, residents of the suburb of Lipetsk – Sselok – felt a pungent smell. It quickly became clear that a certain Chinese named Yan Chunyu rented a hangar in the old industrial zone and set up the production of cheap PVC shoes there. Social media exploded. Local officials, including the governor personally, hastened to declare that the entrepreneur opened the shop without permits. The Chinese had to retreat. However, a few days later he was seen in another suburb of Lipetsk – in Kuleshovka. The same workshop opened here and the same pungent smell appeared. People went to an unsanctioned rally, demanding a response from the authorities. Officials again promised to restore order, the FMS even detained three Chinese who had problems with documents. However, the workshop continued to work little by little. The attention of the villagers switched to another object – the situation at the nearby Tsentrolit landfill suddenly escalated. The stench was such that not only residents of Kuleshovka, but also several other villages began to complain.

Apparently, having been taught by this experience, Igor Artamonov is now acting cautiously, trying not to disturb the public with reports of Chinese projects, shifting the attention of the residents of Lipa to another plant of the same Angel Yearst company, which has been operating in the region for several years and produces yeast. The Chinese say they are going to invest another 2.6 billion rubles in its development and create 100 jobs. Here, however, there is a question: in the economy of which country will these investments go and from where will they bring highly paid workers? In any case, the yeast plant does not stink as much as the starch plant can stink, and that’s where the emphasis is shifted in the local media controlled by the governor. But if you look at the situation not from the position of local ecology, but from the point of view of state policy, then questions for the leadership of the region arise of a completely different order.

The fact is that the Lipetsk region has become a real Chinese enclave in the European part of Russia. It is reported that it is among the Russian regions with the maximum amount of Chinese investment. You can understand regional officials – they need to report on their work, show beautiful numbers, and since there are no other investors on the horizon, they have to focus on China.

But the question remains: what do Chinese enterprises give the Russians? The Chinese do not bring any super technologies with them. They do not launch the production of microprocessors, smartphones, cars or even robotic vacuum cleaners in Russia. So instead of high-tech production, we see shoes made of smelly leatherette.

The whole world knows about the attitude of the Chinese towards ecology: their cities are choking on smog, and their rivers shimmer with all the colors of the rainbow. At the same time, working conditions at enterprises are much worse than in Russia. So why lower the bar? These questions should first of all be addressed to Governor Igor Artamonov. But it looks like he has other priorities.

He was seconded to Lipetsk in 2018, and before that he worked in Moscow as a vice president of Sberbank. Rumor has it that his appointment was lobbied by bankers in order to have leverage on the head of the Novolipetsk Iron and Steel Works (NLMK) Vladimir Lisin. Either he tried to bargain on loans, or he tried not to pay dividends on free shares. That is why the financial lobby needed a person capable of using the policy of carrots and sticks in a conversation with the richest oligarch in the country. This version is confirmed by the fact that Artamonov and Lisin immediately had a poorly concealed conflict. Its visible result was the fact that in 2021 Lisin changed his residence permit from Lipetsk to Moscow Region. Thus, another region will now receive taxes in the amount of about 1 billion rubles from his personal income.

It is clear that the disassembly between the oligarchic clans can require a lot of energy. And the Chinese, meanwhile, are methodically working, tying up technological chains in the economy of the Chernozem region. The expansion of the Chinese into the region began more than 10 years ago, and under Artamonov it only intensified. Here is the news from a local website from 2009: “In the village of Lavy, Yelets district, 132 Chinese set up a greenhouse farm, which the locals called the “Chinese wall”, and intend to fill up the entire Central Black Earth region with cucumbers and tomatoes. Now more than 100 huge greenhouses have already been built in Lavy, each of which is 100 meters long and 12 meters wide.” And here is the message of Kommersant from 2020: CJSC New Age of Agrotechnologies in the Chaplyginsky district of the Lipetsk region has increased the capacity of its production of drip irrigation systems. The project cost the investor 160 million rubles. It was reported that the Industrial Development Fund of the Russian Federation intends to allocate a preferential loan for the project in the amount of 38.5 million rubles, and another 16.5 million rubles will be provided by the FRP of the Lipetsk region. CJSC New Age of Agrotechnologies is owned by Sun Tianshu (86% stake), CEO Qi Tao (10%), Vladimir Mikhailov (2%) and Xie Haibo (2%). It is engaged in the production of plastic plates, strips, pipes and profiles.

There is an interesting parallel here. At one time, the Chinese entered the Dnepropetrovsk and Kherson regions of Ukraine in the same way. First they supplied and installed drip irrigation systems, then they were engaged in “joint projects for growing vegetables,” as local officials said. And then the American press noticed that the Chinese control 10% of Ukrainian arable land.

However, in Lipetsk, the Chinese do not go in cycles in the agrarian and food sector. Last year there was news that a major Chinese manufacturer of refractory materials for metallurgy, Henan Xibao Meta*llurgy Materials Group, intends to locate its first plant in Russia in the Lipetsk SEZ. NLMK should become a consumer of their products. The launch of the first stage is scheduled for early 2023. Russian experts in the field of metallurgy estimate the possible volume of production at the Lipetsk site of Sibu Industrial at 50-100 thousand tons per year, in which case it will be able to take about 5% of the Russian market of metallurgical refractories.

Reference

In the Lipetsk special economic zones, the Chinese are already receiving significant preferences: income tax for the first 5 years is 2%, from 5 to 10 years – 7%, and then 15% instead of 20% under general conditions outside the SEZ. In addition, they are exempt from property and transport tax and land tax for 10 years. Also, residents of the SEZ are exempt from customs duties and VAT for the import and export of products.