Chinese set out stall for Russia: The city of Heihe is now booming thanks to a lively cross-border trade with the former Soviet Union. Teresa Poole reports

'THE RUSSIANS are coming]' And so they were: right on cue, at about 11am, brandishing huge empty canvas shopping bags, dwarfing the expectant Chinese stall holders and ready to do battle by pocket calculator as they examined the various goods and put the key question: 'How much?'

This border city of 130,000 people in the far north of China used to be on the front line. Just half a mile away across the frozen Black Dragon River that marks the boundary between the former Communist foes, one can see the belching factories and terraced houses of Blagoveshchensk in Russia. Between 1965 and 1984 there was no cross-border contact and Chinese and Soviet soldiers guarded the riverbanks. Now it is a front line for trade.

During the long winter the frozen river becomes an ice highway carrying early morning coachloads of traders across to the Chinese market. During the summer they come by boat. Companies barter cheap Chinese clothes for Russian trucks and raw materials. Heihe's women flaunt stylish fur-collared Russian coats.

When there is friction now it is commercial, not ideological. In place of old quarrels, a 'visa war' has broken out between the two sides over how to manage the cross-border floating population. In Blagoveshchensk, a huge influx of Chinese traders, some selling sub-standard goods, has caused ill-feeling. The number of Chinese pedlars turning up in far-flung Russian cities has also caused some disquiet. So, six weeks ago the Russian side announced that all visitors would need full visas rather than simple border permits. The Chinese retaliated. Meanwhile, the struggling Russian economy means its companies often fail to meet barter deal commitments or settle bills - Russian companies owe companies in Heilongjian province, which includes Heihe, at least pounds 45m.

Heihe is where Europe meets Asia - at around -25C for several months of the year. In the street market stallholders seek to meet the pent-up demand from the Russians: clothes, household items, television aerials, pocket computers games, it is all there. One 50-year-old Chinese woman said she had taken early retirement from teaching to sell sweaters. Other stalls sell Russian goods to Chinese visitors: old army coats, winter hats, watches, electric coffee pots, even the odd picture of the Virgin Mary.

But the cultures are alien. The Chinese complain about the boisterous Russians. 'They want good quality but offer a low price', but compliment them on their queuing. The Russians whinge about shoddy goods and sharp business practices but marvel at the wealth of consumer products. The Chinese assume any Westerner must be Russian, and become much friendlier when they realise one is not.

Heihe has been transformed. In 1984, Hu Yaobang, the reformist Communist Party general secretary, visited this frontier post of China: 'In the south there is Shenzhen (Economic Zone), in the north there is Heihe,' he pronounced. Heihe has not yet matched Shenzhen's explosive growth, but there has been a vast improvement from the days when there were shortages of drinking water, electricity and roads. Huo Qing Xian, at the Research Bureau of the new Economic Co-operation Zone, said: 'Before the opening started, the situation in Heihe was very bad. It was a backward economic situation, and transport was very bad. We also lacked educated people. The tension and bad relationship with Russia meant we did not pay much attention to good construction in the city.'

In a decade the population of the city area has doubled. Heihe last year had the fastest growth in the province after the capital, Harbin. Yao Yong Ren, at the city construction committee, said more building was going on in Heihe than at any other Chinese frontier centre, including Shenzhen.

Heihe and Blagoveshchensk are the biggest cities along the 4,600-mile border between China and the CIS states. Local frontier trade began on 2 September 1987. It was a case of 'watermelon' diplomacy, the Chinese fruit being bartered for Russian fertiliser. Trade levels boomed in 1991 and 1992, oblivious to Russia's political uncertainties. Heihe companies (not including private traders) last year handled pounds 250m of barter business. More than half the goods came from southern China.

Overall, trade between Heilongjiang and Russia has expanded 100-fold since 1987 and accounts for two-thirds of the province's total international trade. Heihe has ambitious expansion plans: a power station, roads, an airport and a new free trade area to straddle the border. But a bridge across the river has been delayed.

The mayor, Zhao Pei Xing, explained: 'It is because of the instability of the Russian situation. During my two years as mayor, the government officials in Amur state (on the Russian side) have changed three times. Each time they start at the beginning of negotiations with us about the bridge. At last they have agreed it is quite necessary.'

A model of Heihe's vision of its billion-dollar future is laid out on a table at the headquarters of the new economic co-operation zone on the east side of the city. It is a city planner's dream, an integrated pattern of offices, homes, factories, hotels and recreational services. The new economic zone flanking the east side will be a forest of service and processing industries, geared to the demands of the Russian market. And for those day trips across the river? The Black Dragon River will be slain by a cable car.

(Photograph omitted)