Russia Looks With Envy At China's Economy

By Katie Stallard, Moscow Correspondent, in Blagoveshchensk

Blagoveshchensk translates as the "city of good news", but there has been precious little of that for the Russian economy lately.

The value of the rouble has plummeted and the country is heading into recession, hit by the falling oil price and Western sanctions.

Russia's sovereign credit rating has been downgraded to one notch above junk level.

The government says inflation could reach 17% this year, but people we spoke to on the streets of Blagoveshchensk in the Russian Far East said prices in shops were already spiralling.

"The prices have really jumped here,"  said 75-year-old Valentina Kirrilova.

Spiralling prices are hitting home on the Russian side of the river

"It's awful, horrible. I can come to a shop with 1,000 roubles (approximately £10) and it's not enough to buy anything."

An elderly couple said prices were rising "for everything".

From the riverside in Blagoveshchensk, they can look across to the gleaming towers of Heihe City in China.

The two great powers are separated by just a few hundred metres, the breadth of the frozen Amur River.

There were plans to build a bridge to make this a trade gateway between Russia and China.

But, as with so much of the Russian economy, the promised development has so far failed to materialise.

Instead, you take an old bus over a temporary pontoon bridge - in summer everything has to go by boat.

This time last year Russians found shopping on the Chinese side cheap, but now it's the other way around - the rouble buys you half as much.

Restaurant owner Dmitry Gudzovskiy says business in Russia is 'impossible'

Lubov Pikolova moved here from Russia five years ago. She works in one of Heihe's hotels and sees better prospects in China.

"We have non-stop crises in Russia," she explained.

"We always have to pay for this or for that. It's not easy economically to live in Russia, so many people are trying to leave it."

Others are coming for health care. In a Chinese dental clinic we found a number of Russian patients.

"Many Russians are coming here for dentistry because it's high quality," patient Inna Sergienko said.

"The prices are low and they are excellent doctors."

Back on the Russian side, we met businessman Dmitry Gudzovskiy, who runs two Chinese restaurants in Blagoveschensk.

He outlined the problems of doing business in Russia - the endless battle with bureaucracy, and to stay on the right side of the many laws.

There are plans to boost trade by building a bridge to Heihe City

"Not a single businessman will tell you on camera that he is paying bribes, but you should guess yourself," he said.

"You cannot do everything correctly in business, it's just impossible. If you will act as it is written in law you should stop your business right now and just go home.

"I think that the biggest problem of the Russian economy is that there is no dialogue between the Russian government and businessmen, they don't talk to us, they treat us as vassals."

Down by the Amur River, a bronze Soviet border guard stands to attention, a monument to a lost empire.

While the oil price was high, it was easy to believe President Vladimir Putin was rebuilding that power, reclaiming Russia's place in the world, but it doesn't feel so convincing here now.

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