Pipelines, Coal and Tourism: How China Is Reshaping Siberia’s Economy

Why Siberia matters to Beijing and Moscow

Siberia and the Russian Far East have become the most strategic stretch of geography in Eurasia, where wartime economics, energy security, and local livelihoods now intersect. Since Russia’s full scale invasion of Ukraine in 2022 and the wave of Western sanctions that followed, Moscow has leaned heavily on Beijing for trade, technology, and finance. China has in turn gained privileged access to a vast resource belt that runs from Transbaikalia to the Arctic coast. Bilateral trade reached about 244 billion dollars in 2024, and the two sides are working to expand rail and road links that move coal, oil, gas, timber, metals, and manufactured goods across their 4,200 kilometer border. The balance of advantage favors Beijing, and that asymmetry is increasingly visible on the ground.

For Russia, China is now the buyer of last resort for energy and commodities, and a supplier of vehicles, electronics, and critical components that Western firms no longer provide. For China, Siberia offers pipeline gas that does not depend on maritime chokepoints, steady supplies of raw materials, and growing regional influence inside the Russian Federation at a moment when the Kremlin’s focus is fixed on the war. The strategic picture is clear at the national level, yet the reality is most vivid in local projects, where promises of jobs and development collide with concerns about who benefits and who bears the cost.

An asymmetric partnership in numbers

Trade has surged, but it is uneven. Russia exports energy and raw materials, while China ships finished goods and technology. The Russian economy has also shifted toward the Chinese currency. Many contracts are now settled in yuan, Russian banks offer yuan savings, and companies use Chinese payment systems to route around Western restrictions. At the same time, pressure from secondary sanctions has made some Chinese banks more cautious. Export growth into Russia slowed in 2025 and compliance checks lengthened. Even with those frictions, China remains Russia’s economic lifeline, and Moscow’s bargaining power is weaker than before the war.

From coal pits to village roads, a local case study

The Zashulanskoye coal project in Transbaikalia captures both the scale and the trade offs at stake. The deposit is being developed by a joint venture between En+ Group, controlled by Russian businessman Oleg Deripaska, and China’s Shenhua Group. The plan stretches across a century of extraction. Russian authorities granted tax incentives, and the operation is designed to feed the Chinese market for decades.

From 2027, the venture expects to ship five million tons of coal to China every year, a flow comparable to about 500 truckloads each day. A new road is being pushed through to support the traffic. According to Ukraine’s Foreign Intelligence Service, that route runs just 200 meters from village gardens and 1.6 kilometers from the Yamarovka mineral water spring, cutting across forests that host rare plant species. Local residents argue that earlier commitments to limit environmental impact have not been honored.

Jobs were part of the sales pitch. Yet key positions at the site are held by specialized teams from China, while repeated attempts to reroute the service road away from sensitive areas have stalled in bureaucracy. The cedar stands near the route are being felled as preparatory work continues. It is a familiar pattern in resource frontiers. Revenues and cargoes move outward quickly, but promised benefits arrive slowly, if at all, for people who live closest to the mining and trucking.

Lake Baikal’s tourism boom, and who benefits

On the shores of Lake Baikal, Chinese investment is changing the face of tourism. Ukrainian intelligence reports, echoed by regional media, say Chinese entrepreneurs are buying land and building hotels along key stretches of the coastline. Irkutsk region officials are promoting routes tailored to Chinese visitors. Local operators say they are being squeezed out by larger, better financed entrants that offer package tours and control lodging, bus transfers, and catering end to end. Some Chinese investors reportedly refer to Baikal as their own lake, a phrase that inflames local sentiment.

Baikal is a UNESCO World Heritage site and the world’s largest freshwater reservoir by volume. It is also a fragile ecosystem. Overtourism, poor wastewater treatment, and unregulated construction can strain shorelines, wetlands, and fish habitats. The rapid buildout of hotels and new tour routes creates jobs and boosts tax receipts, but it brings heavy seasonal loads to villages with limited infrastructure. That imbalance feeds the feeling among residents that economic opportunity is slipping out of local hands.

Tourism as soft power

Tourism does more than fill buses and boats. It embeds language, signage, and business networks. Across the Amur River in cities like Blagoveshchensk, regional leaders have introduced deeper Chinese language instruction in schools and welcomed new cross border bridges and trade offices. These moves are presented as pragmatism. They also signal a widening acceptance among regional elites that their economic future is locked to China. For local communities around Baikal, the concern is whether standards, enforcement, and revenue sharing will keep pace with investment.

Trade numbers and the yuan effect

Russia’s import mix mirrors the retreat of Western brands. Chinese cars now dominate the Russian market. Electronics, appliances, and industrial components come increasingly from Chinese suppliers. On the export side, coal, oil, pipeline gas, and metals flow east, along with timber and agricultural products. The structure of trade makes Russia a price taker in many categories, particularly in bulk commodities where China can source alternatives.

The financial plumbing has also shifted. The yuan has replaced the dollar and euro in many transactions between the two countries. Russian firms have opened yuan accounts and issued yuan bonds. Settlement via Chinese systems reduces exposure to Western sanctions, but it exposes Russia to the policy choices of Beijing and to changing risk appetites at Chinese banks. In 2025, as secondary sanctions broadened, several Chinese financial institutions tightened compliance and restricted transactions with some Russian counterparties. Chinese exports to Russia saw a dip late in the summer, and Russian importers reported delays. The trend did not break the relationship, yet it showed how the new dependence can bite when enforcement pressure rises.

For consumers and small businesses in Siberia, the shift is visible in daily transactions. Retailers price goods in rubles, but wholesale contracts may be in yuan. Exchange rate swings change margins overnight. It is a workable system, and it keeps shelves stocked, but it relies on continued access to Chinese finance and logistics. If that access narrows, the shock lands first in far flung regions that have fewer alternate suppliers.

Pipelines and prices, who holds the leverage

The first Power of Siberia pipeline began delivering gas to China in 2019 from fields in Yakutia and Irkutsk. Volumes have climbed, with Russian officials projecting capacity around the mid 40 billion cubic meter range per year. The proposed Power of Siberia 2 would add another 50 billion cubic meters by sending gas from Yamal in Western Siberia across Mongolia into northern China. Russian leaders and Gazprom say a binding agreement is in hand, while Beijing has kept public statements cautious. Pricing, routing, and financing remain the core variables.

On price, Russia is in a weaker position than it was with Europe. Chinese buyers have pushed for discounts tied to lower logistics costs and to their willingness to sign very long contracts. Analysts note that China’s gas demand will grow less predictably than Europe’s did during the pre war period, because China is expanding renewables and nuclear power and is committed to peaking carbon emissions around 2030. That uncertainty gives Beijing leverage to ask for flexible take volumes and lower prices, placing the commercial risk on Moscow, which urgently needs to redirect gas that once flowed to Europe.

The global effect could be substantial if Power of Siberia 2 proceeds. Overland pipeline gas would displace some liquefied natural gas in China’s supply mix, dampening demand growth for LNG cargoes that the United States and Qatar aim to sell. It would also make China less reliant on seaborne routes like the Malacca Strait and the South China Sea, reducing its exposure to naval disruptions. For Russia, the prize is steady revenue and a narrative of resilience. The risk is a pipeline system tied to a single buyer that controls the terms.

Politics east of the Urals

China’s growing economic footprint is matched by a more assertive political approach in Russia’s east. Beijing has cultivated regional governors and business elites, encouraging them to sign trade pacts, open joint offices, and build roads and bridges that bypass Moscow’s crowded approval pipeline. A high profile gathering in northeastern China brought together hundreds of regional officials from both sides to ink agreements on logistics, agriculture, and industry. The format gives Russian regions space to tighten links with Chinese provinces with less Kremlin oversight.

In border areas, symbols of integration are now part of daily life. The governor of Amur region has promoted deeper Chinese language education in schools in Blagoveshchensk, and Chinese street signs have appeared in some public spaces. In 2023, China published official maps that drew protest from India and prompted a low key response from Moscow after public criticism. These episodes highlight a recalibration underway in which Russian leaders accommodate Chinese priorities to keep investment and trade flowing.

Local unease meets elite deals

Ordinary Russians east of the Urals often view these trends with mixed feelings. They want jobs and better infrastructure, yet they worry about environmental costs, cultural influence, and future bargaining power. The elites who manage budgets and large companies tend to see the deals as necessary and mutually profitable. That gap is shaping regional politics as much as economics. It also explains why some agreements get little coverage in national media, even as they quietly bind local economies to Chinese markets.

During a 2025 visit to Moscow for Victory Day, Chinese President Xi Jinping framed the alignment with stark language that resonated in Russia’s elites. He cast the partnership as a response to pressure from the United States and its allies.

China stands with Russia against what I call hegemonic bullying.

Migration myths versus realities

Ukrainian intelligence estimates that as many as two million Chinese citizens live in Russia’s Far East. Migration figures inside Russia are difficult to verify, and official statistics do not support the claim of mass settlement. Analysts who track the border provinces point out that the population of Heilongjiang in northeast China has fallen in recent years, and most out migrants head south within China rather than to cold regions across the Amur. The economic story is one of cross border commerce and investment, not a demographic wave.

The real footprint in Siberia looks like this: managers and engineers posted to resource projects, seasonal workers cycling through construction and agriculture, and tour operators and hotel staff in places like Baikal. China’s interest centers on resources, transport corridors, and currency links. Both countries face aging populations and low birth rates. Neither is sending settlers across the border in large numbers, and the harsh climate on both sides of the Amur is a natural brake on permanent migration.

That perspective does not negate local anxiety about land purchases or language instruction. It does suggest that the critical variables to watch are contracts, financing terms, and regulatory enforcement rather than migration statistics alone.

Environmental and social costs behind the contracts

Resource extraction in Siberia often arrives faster than the rules that should guide it. The Zashulanskoye project shows how quickly roads and felling crews move once approvals are granted, even as debates over environmental buffers and protected zones drag on. Cedar forests, wetlands, and meadows that host rare plants do not recover easily. Heavy truck traffic near a prized mineral spring risks damaging a resource that local people value for reasons that do not appear on a corporate ledger.

Social trade offs are just as stark. Companies promise employment, but high value roles frequently go to imported specialists who already know the machinery and the operational playbooks. Local hires may cluster in lower paid positions or in services that spring up around the project. Wage gains can be real, yet they can also be fleeting if global commodity prices fall or if the mine’s tax breaks limit revenue sharing with municipalities.

Transparency is a chronic problem. Contract terms that set prices, currency, and dispute settlement are often confidential. Deals that prioritize local currency settlement can reduce the threat of Western sanctions, but they can also complicate oversight by regional auditors. When the buyer and the financier sit across the border, local officials have less leverage to demand changes on routing, safety, or pollution controls.

Sanctions pressure and the next phase

Sanctions have reshaped the incentives of every player in this story. Russia has accelerated its pivot to China for trade and finance. China has deepened cooperation while avoiding direct exposure to penalties that could hit its own banks and firms. As United States enforcement widened in 2025, more Chinese banks raised due diligence barriers. Russian importers reported that some payments required extra steps or substitute channels. None of this has reversed the larger trend, but it has added friction and uncertainty to cross border business.

Infrastructure continues to expand. New bridges span the Amur. Border crossings have been upgraded. Rail lines and highways are being modernized to move cargo faster. The Northern Sea Route along Russia’s Arctic coast is attracting more Chinese vessels as ice free windows widen and insurance options improve. Even so, bottlenecks in rail capacity and port throughput limit how quickly trade can grow, and competition among regions for Chinese attention is intense.

What happens next will be visible in a handful of metrics. Watch the cadence of announcements on Power of Siberia 2, the realized volumes on Power of Siberia 1, the share of bilateral trade invoiced in yuan, and the scope of Chinese tourism in Baikal. At the local level, keep an eye on court challenges to road routing near mines and on environmental inspections around protected areas. Those are the places where the balance between growth and accountability will be set.

The Bottom Line

• Russia’s reliance on China has deepened since 2022, with trade near 244 billion dollars in 2024 and growing local currency use.
• At Zashulanskoye in Transbaikalia, a century scale coal project will send five million tons a year to China from 2027, with environmental and community concerns mounting.
• Chinese investors are expanding tourism capacity around Lake Baikal, displacing some local businesses amid fears of overtourism and weak enforcement.
• Power of Siberia 2 remains under negotiation. China holds leverage on price and volumes, while Russia seeks to replace lost European gas sales.
• China’s political influence east of the Urals is rising through elite level deals, education initiatives, and new cross border infrastructure.
• Claims of mass Chinese migration into the Far East are disputed. The dominant trend is economic presence, not demographic influx.
• Secondary sanctions have introduced friction. Some Chinese banks tightened compliance in 2025, slowing parts of the trade, but the partnership endures.
• Environmental safeguards and local job creation lag behind construction and extraction, fueling resentment and legal challenges in affected communities.