#Russia lays blame for severe #Deforestation at China’s door

In recent years, discontent about Chinese investors has been growing in Russia. This is especially the case within the forest industry. There are several regions in Russia that once were very rich in forests – Tomsk Oblast, Krasnoyarsk Krai, Irkutsk Oblast, Zabaykalsky Krai and Buryatia. 

Deforestation in these regions has been going on for decades. It has been happening by the Russians, forests were restoring and the volume of such deforestation did not exceed critical limits. According to Russian experts, the current volume in which the Siberian Forest is being massively destroyed and exported to China will not be restored in the foreseeable future. This fact causes large concerns and worries among both Russian officials and ordinary citizens, especially in the above-mentioned regions.

We decided to analyze the scale of Chinese business in this industry and understand whether the claims are justified.

Here are just a few examples:

Li Jian is the founder of the OOO Shay Tai company in the Tomsk Oblast which is involved in deforestation and lumber trade. He also owns another business in Siberia.

Another Chinese businessman going by the name Li Jian Jun owns the OOO Gina, a company located in the Republic of Buryatia which main activity is a lumber trade. He also owns OOO Proekt-1 (constructions in the Zabaykalsky Krai), OOO Omega (building materials trading), OOO EKSVUD, OOO Kristall and other companies.

In Krasnoyarsk Krai, where our colleagues have visited some of the most disastrous logging sites near Kansk city, almost the entire forest business belongs to Chinese interests. Someone by the name of Xai Min owns OOO TELKUN, OOO TEKHINMASH, OOO PARALLEL – 2001, OOO ONKOFF and other companies. This businessman owns big logging entities and is involved in large-scale deforestation. All the wood is exported to China. His company is also engaged in selling logging machinery to their own citizens so any businessman from China would have the opportunity to quickly start the forest business in Russia.

Yangxin Eurasia Group Co. Ltd. – a company established by Chinese citizens Ding Zhenyan, Tai Desheng and Wang was once located in Irkutsk Oblast: it was expected to become one of the largest Chinese investors in Siberia in 2011-2015. In China itself, this “group” was engaged in a quite an interesting business – they were buying liquid assets for rock-bottom prices while artificially overestimating the turnover and profit, inflating their value on the Shanghai stock exchange and then taking loans under these assets in the state Chinese Bank. 

They were prosecuted for a number of swindling cases. So, having taken the Chinese state loan of $100 million for the construction of a lumber processing plant in the Irkutsk Oblast and having received the status of a priority project in the forest industry of the Russian Federation as well as all of the corresponding benefits, Yangxin Eurasia Group Co. Ltd. has established OOO Evraziya-Lesprom Grupp company. 

As a result, the amount of investments in the project did not exceed $20 million, the rest of the money was simply stolen, the construction of the plant was not completed, damage to the ecosystem was caused, hundreds of people lost their jobs and the project was frozen indefinitely. 

A criminal case over the fact of theft was initiated and Ding Zhenyan was prosecuted. Other participants are either under investigation or hiding abroad. After that, with the help of Ding Hongmei, the daughter of convicted Ding Zhenyan and accompanied by his accomplice, criminal lawyer Maxim Ignatov, repeatedly convicted of fraud in Russia in 2015, the former founders of OOO Evraziya-Lesprom Grupp were replaced by two offshore companies – Far East Forest Industry Inc. and August Gold Limited.

Even later, with the direct participation and support of the same Maxim Ignatov and Ding Hongmei, the company was resold several times using crooked schemes that helped bypass the Russian legislation.

As a side note, Russian authorities had instituted criminal proceedings against this group. 

And once again, Irkutsk Oblast – Chinese businessman Shi Jin Lung owns large entities for logging, lumber processing as well as other businesses. He owns such companies as OOO AVT, OOO Biznes Tsentr na Gornoy, OOO Meridian, OOO AziaVneshTrans and others. 

Russian society is alarmed – Chinese companies are cutting down the Siberian forest and exporting it back to their homeland. Forests DO NOT RECOVER from this. In fact, irreparable harm is being done to the environment as well as to the Russian economy, which receives far less payments in large amounts to the state budget in the form of taxes and rental payments. 

In a recent interview with Russian Prime Minister Dmitry Medvedev, a journalist from Tomskoe Vremya TV channel by the name of Irina Minina asked Medvedev to comment on the problem of selling Siberian round lumber to Chinese. 

“How do we protect the forest from this vandalism, from illegal loggers and most importantly – from the mass export of round lumber to China? Is it possible that this is not a Governor’s issue, but a state one?” Minina asked. 

“It has become a trivial thing to say that the forest is our wealth. We are the largest forest-riched state, we must do everything to preserve this wealth for our descendants,” claimed Medvedev. “Because of this, I would like to say a few words about the document I have signed. This is a development strategy for the forest industry until 2030. The document identifies main priorities: first of all, the need of forest protection, protection from fires, other adverse factors, to establish a system for their recovery – this is probably the most important thing.” 

According to Medvedev, a new law has been was passed recently that establishes the following rule: if you log a hectare – you restore a hectare. Violation of such rule will result in punishment by warning or fine. 

“We need to focus on the added-value wood processing so that the domestic and export markets would get furniture and cardboard, paper and building materials, chemical products based on wood chemistry, and not just round lumber as it often happens in our country,” Medvedev said. The prime minister noted that bringing order to the industry is a state-scale task. 

In early November 2018, when answering the question about fighting illegal lumberjacks at the meeting of the Federal Council, the Minister of Natural Resources and Environment Dmitry Kobylkin invited China to restore Russian forests. 

“China is the main market for the export of lumber,” the minister claimed. 

According to the official, during a meeting with Natural Resources of China Minister Kobylkin  said that Russia can completely close timber export to China

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