MOSCOW'S CHINESE DIASPORA A WIN-WIN FOR RUSSIA AND

C O N F I D E N T I A L SECTION 01 OF 03 MOSCOW 002722 SIPDIS E.O. 12958: DECL: 11/02/2019 TAGS: PGOV PHUM PINR ECON ETRD KCOR SMIG TIP RS SUBJECT: MOSCOW'S CHINESE DIASPORA A WIN-WIN FOR RUSSIA AND CHINA REF: MOSCOW 1910 MOSCOW 00002722 001.2 OF 003 Classified By: Political Minister Counselor Susan Elliott. Reason: ¶1. 4 (b). ¶1. (SBU) Summary: There is a Chinese population in Moscow, and recent events (including the closure of Cherkizovsky market) have brought some aspects of the relationship between the Chinese and Moscow into the public eye. The Moscow City government, while benefiting from Chinese cheap labor to fill Russia's labor gap, has largely ignored Moscow's estimated 100,000-strong Chinese diaspora. By contrast, the Chinese government, with an interest in aggressively expanding trade with Russia, has facilitated the growth of Moscow's Chinese workers through financial assistance. This is a win-win situation for the two governments, but many of the Chinese who are living illegally in Moscow suffer a bleak existence. While the Chinese mafia remains active in Moscow, the corrupt Moscow city government turns a blind eye to a range of illicit Chinese activities. End Summary. Chinese in Moscow -------------- ¶2. (C) Mukhammad Amin Madjumder, President of the Federation of Migrants of Russia, told us that more than 100,000 Chinese live in Moscow. Our sources revealed that there are four main groups of Chinese workers in Moscow: traders, investors, low-wage workers in "legitimate" economic areas, and trafficked workers. Vilya Gilbras, a history professor at the Institute of Asian and African countries, told us that nobody really knows the number of Chinese in the capital. He explained that the Chinese may register anywhere in Russia, but they generally migrate to Moscow. They move so frequently that it is nearly impossible to accurately document their numbers. Russia's unregulated border with Kazakhstan, which is longer than the border with China, is one major path into Russia, and ultimately to Moscow. The Chinese are mostly from the border areas close to Russia. Estimates are that 75 percent are in Moscow legally and 25 percent are here illegally. Chinese Groups and Interests -------------- ¶3. (C) One large group of Chinese in Moscow is the traders who have stalls in markets. Many of these individuals are small business owners who have used their life-savings to purchase goods, often gray- or black-market, for resale in Russia. This business requires both Chinese and Russian corruption, including customs officials, local officials, and allegedly both Russian and Chinese mafia for "protection" and the "right to operate." According to Madjumder, the Russian government is corrupt, and in Moscow the police, the Federal Migration Service, and customs all receive bribes. He maintained that the Moscow city government does not have a China policy but that the Moscow city government revolves around corruption and business interests. Nevertheless, the traders perform a function as the Russian population looks to these markets for cheap goods. The Moscow city government has allowed them to operate, but when Moscow Mayor Yuriy Luzhkov wanted the land under Cherkizovsky market for housing, they were immediately dispersed (reftel). Gilbras told us that the main goal of many Chinese laborers in Moscow is to stockpile huge sums of money by expanding into the Russian market and selling cheap Chinese-made goods. According to Gilbras, although some of the illicit cross-border Chinese activities are sensitive and the Chinese government is aware of them, the Moscow city government does not bother to investigate them. ¶4. (C) Even after the recent closure of the vast Cherkizovsky market, there are at least four active Chinese markets in Moscow. Yelena Burtina from the NGO Civic Assistance told us that many immigrants re-established their small businesses at different markets after the Cherkizovsky crackdown. The newspaper Vedomosti reported that a "New Cherkizovsky" market, the Balashikha Wholesale and Retail Trade Complex, opened in a northeast suburb of Moscow. Similarly, the Federal Migration Service reported that 1,000 Chinese traders from Cherkizovsky would move to the Moskovsky retail market. Madjumder told us that about 3,000 Chinese are currently working in a number of major trade centers near urban highways. Some Chinese have fanned out to the Moscow Oblast while others are continually searching for work. The authorities recently closed Moscow's Sevastopol market due to illegal trade, and the Russian police profited by confiscating Chinese goods and selling them. Moscow Mayor MOSCOW 00002722 002.2 OF 003 Yuriy Luzhkov claimed that he was cleaning up the city when he closed some markets, but it seems that he was merely playing on nationalist sentiments in the run-up to local elections, since he did not comprehensively address the issue of illegal Chinese trade. ¶5. (C) Chinese investors are another group that the Russian government would like to encourage to invest in Russia. In August 2009, the Russian-Chinese Center for Trade and Economic Cooperation signed a billion dollar deal with Jin Yuan, a Chinese real estate company, which plans to invest in commercial real estate in Moscow. Chinese investors also have questionable business practices, but could be a source of needed investment in areas like construction or commeQrciaQl development at a time when many Russian companies cannot access financing to complete projects. ¶6. (C) A third category of Chinese in Moscow is the construction workers and other low-wage workers in "legitimate" economic areas, some of whom appear to be trafficked, while others appear to have come of their own volition looking for economic opportunity. They perform a function that Russian workers do not want to perform; heavy manual labor at a low wage. This group benefits Moscow when the economy is growing, but not when the economy slows down. ¶7. (C) Finally, a fourth group is the Chinese workers trafficked into Russia. This group includes brothel workers and, it is rumored, a number of individuals in construction and other low-wage jobs. This group gets no respect from either the Russian or Chinese government, and appears to be at the mercy of the Russian and Chinese mafia and coyotes. Madjumder confirmed that the Chinese mafia, a highly organized billion-dollar business, is active in Moscow. He cited the example of Moscow city, where Chinese work, but live in harsh conditions, such as in enormous crates located on Moscow city property. ¶8. (C) According to Gilbras, the Chinese used to run their own brothel on Prospect Mir for Chinese clientele. Today, there are still many Chinese prostitutes in Moscow. Gilbras confirmed that there is also trafficking of Chinese women, but it is difficult to say if the problem is very prevalent. He said that the Chinese men in Russia find poor women in Chinese villages and lure them to Moscow to work as prostitutes. The Russian Government does not have a national coordinating body for human trafficking issues. Nor does it provide dedicated funding or services to assist trafficking victims. For these reasons, reliable information on the number of people trafficked to Russia, including in Moscow, is difficult to obtain. Winners and Losers -------------- ¶9. (C) Clearly, corrupt officials on both sides of the border and in numerous agencies (customs, immigration, local officials who control retail permits) benefit from these gray- and black-market activities. Gilbras argued that it is not in the GOR's interest to complain about Moscow's Chinese workers directly to the Chinese government. Russia is in the midst of a demographic crisis that has caused a labor shortage and it has an unemployment problem during the current economic downturn. In October 2009, the Moscow Labor and Employment department reported 195,000 vacancies and 77,400 unemployed citizens registered. According to Gilbras, although the Russian population is generally anti-Chinese, the Russians are fond of the many inexpensive Chinese products available in Moscow. Many Chinese workers in Moscow do not speak Russian and are unqualified for most well-paying jobs, but they can trade. Gilbras observed that the Chinese government financially assists the Chinese in Moscow as part of its plan to increase business opportunities. ¶10. (C) Regarding the rest of the winners and losers, Chinese and Russian mafia members not only gain, but appear to coexist peacefully. Some Chinese workers do benefit in that they receive earnings they presumably are not able to receive in the depressed border regions where they originate, but arguably at a high price, given the difficult working and living conditions. The trafficked workers, both in the sex trade, but also in the low-wage areas, lose out all the way around. There is potential for Chinese investors to gain or lose, depending on conditions. They tend to be a savvy bunch and not overly concerned with keeping their hands clean, but they have relatively few investments in Moscow, which hints at the possibility that they do not think they can keep control of their investments. Chinese workers in Moscow are MOSCOW 00002722 003.2 OF 003 a mixed bag, but a lot of their activities seem to be less than above-board. Social Problems -------------- ¶11. (C) Svetlana Kurchenkova from the New Eurasia Foundation told us that Russians do not respect the human rights of Chinese migrants in Moscow. The public chamber in Moscow and the Moscow city ombudsman follow migration issues only tangentially. The Chinese regularly encounter problems with housing, medicine, social welfare, and insurance. Burtina added that the Chinese face problems living in Moscow due to being illegal and working illegally. Obtaining children's education is yet another hurdle. Once the Chinese are in Moscow and they encounter problems, it is difficult to return to China because it is too expensive to go back. Comment -------------- ¶12. (C) The case of Chinese shady business in Moscow is yet another compelling example of the Moscow city government allowing illicit business interests to flourish. It demonstrates how the corrupt Moscow city government seems to focus on those issues in its financial interest. Moscow could better address its labor shortages if the Moscow city government developed a more humane policy, showing respect for human rights and labor laws and treating the migrants with dignity, rather than exploiting them as cheap labor. Beyrle