Chinese Businessmen are Now Investing Heavily in Lake Baikal

As you must know, tourism is an incredibly profitable sector of any economy. It is also an important sphere of international relations that leads to an ever growing trust and mutual understanding between peoples and nations, while its successful development in any state contributes greatly to the growth of prestige of this player on the international stage. All this is especially true when tourists from China are concerned.

In recent decades the income growth in China has reached such a level that a certain part of China’s population is now capable of traveling abroad on a regular basis, leaving hundreds of billions of dollars in other states. Therefore, it is not surprising that a number of states across the globe are now competing as major destinations for tourist flows from China.

A considerable progress in this competition has recently been made by Russia. The strengthening Russian-Chinese cooperation that has only been strengthened over recent years, and a considerable simplification of the visa regime make Russia particularly attractive. In addition, the geographical proximity of the two states makes Russia even more attractive, since such destinations as Lake Baikal generate massive profits for Russia’s economy. Over the recent years the number of tourists from China arriving to the Irkutsk Oblast to visit the lake doubles every year. The number of tourists who visited it as part of the visa-free regime in the period of January-September of 2016 increased by 40% compared to the same period in 2015.

In the nearest future the number of Chinese tourists visiting Lake Baikal every year should reach the mark of 3-5 million people. This number can be achieved to the fact that the flight from Beijing to Irkutsk takes just 3 hours. Just recently a delegation of Chinese businessmen visiting Irkutsk announced that major Chinese companies would invest heavily in the local hotel business and the development of health tourism, along with the creation of cruise routes across Lake Baikal.

Last October this trend was intensified by the commitment that Russian and Chinese companies have made in the development of tourism clusters in the Irkutsk Oblast. Russian and Chinese businessmen are determined to transform Baikal in one of the centers of international tourism. The implementation of this project will take up to eight years, with the first five being spent on the creation of modern tourist facilities and related transport and logistics infrastructure. The first site in the Baikal region, which will soon undergo the process of complete transformation will be the Baikal Pulp and Paper Mill that was closed in December 2013 .

Until recently, the tourists prefer to stay as far away from he mill as the possibly can since since it was commonly known as the largest polluter of Lake Baikal that was dumping up to 30-40 million tons of wastewater the lake, while being harshly criticized by environmentalists. However, on December 28 2013 (just three days after the closure of the mill), Russia’s Prime Minister Dmitry Medvedev signed a decree on the establishment of a tourist site in the place of the former mill.

The now empty buildings and the infrastructure that supported the mill will be put to good use by Russian and Chinese businessmen that will also create thousands of jobs. However, the project must obey harsh environmental rules to succeed. Supporters of the project argue that its successful implementation will not simply lead to the economic growth of the entire region, but will also have a positive impact on the ecology of the region. In their view, if the beauty of the lake will start generating incomes, then businessmen will be interested in preserving the lake themselves. It’s been reported that China is prepared to invest up to 11 billion dollars in this project.

Irkutsk region has long interested in attracting investment from China. In turn, Chinese companies have long been interested in the spread of their businesses across the Russian territory, and the tourist industry can be but a starting point for the rapidly growing cooperation.

At the moment, the main task of the authorities of the Irkutsk region – is to establish a comprehensive taxation system for Chinese entrepreneurs. If this is done, the region can get considerable profit from the activities of Chinese companies on Russia soil.

Moreover, the tourism cluster in the Baikal project could become a major part of the Chinese mega-project known as the New Silk Road. As you must know, this road will connect Europe and Asia, covering a better part of the entire Eurasia. Baikal could become an important transport hub in this network. This development can bring big investors to the Irkutsk Oblast. For example, it is been reported that the Shanghai Cooperation Organization is interested in the development of tourism and logistics in the Baikal region.

Thus, it is clear that China has ambitious plans related to Lake Baikal, which go far beyond the mere tourist business.

Sofia Pale, PhD, Research Fellow of the Center for South-East Asia, Australia and Oceania of the Institute of Oriental Studies of the Russian Academy of Sciences, exclusively for the online magazine – “New Eastern Outlook.”