A novel 'one island, two countries' solution to a territorial dispute in Heilongjiang on China's northern border could be about to pay dividends. The deal with Russia, consummated two years ago, sees the two nations sharing Heixiazi Island, long deemed undisputed Chinese territory. Such pragmatism is rare. The 327 square kilometre sedimentary island, where the Heilong and Wusuli rivers (known as the Amur and Ussuri in Russian) meet, was spoken of for decades as the reason that the Russian bear and the Chinese dragon could not get along. Since Russia handed back about half the island, Heixiazi has been seen as a symbol of a new spirit of economic co-operation. Officials are scrambling to draw up plans to develop the Chinese side of the island. Among their ideas are a free-trade zone, tourist resort, hotels and a shopping centre. They say the island is poised to become another investment hot spot, attracting capital from Japan, South Korea, Taiwan, Hong Kong and Macau, as well as from wealthy people on the mainland. 'Heixiazi Island will become another large tourist resort like Hainan and a large border town like Shenzhen,' said Fuyuan county chief Wang Jutang . The island, called Bolshoi Ussuriysky in Russian, was seized by the Soviet Red Army in 1929. For the past two years, the part of the island handed back to China has been under military control, with garrison stations the only structures and patrolling soldiers the only sign of activity on the wild landscape. Signs warn that it is a 'prohibited military zone, not accessible to visitors'. But officials are proceeding with ambitious development plans for the Chinese sector, even though talks with Russia on a joint development plan for the island are continuing. Under a plan worked out by the provincial planning agency and approved by the National Development and Reform Commission, the island will become a business and leisure hub in five years. The local government plans to invest 10 billion yuan (HK$11.6 billion) in development projects on the island and has earmarked more for infrastructure. Although Fuyuan county has a population of only 200,000, the partial return of the island triggered the building of an airport and 169 kilometres of railways. New roads and a deep-water harbour on the Heilong are also being built. An industrial park of about 13 square kilometres is planned, which the authorities hope will become home to factories making products for the Russian market. Local businesses are focusing on the opportunities that will be unleashed when a road across the island connects it to Khabarovsk, one of the largest cities in the Russian far east. Under an agreement to further co-operation, both countries agreed to joint development of boundary rivers, bridges, ports and connecting highways, rail lines and other infrastructure. Heilongjiang officials say Russia also plans to build more infrastructure in Khabarovsk. Hou Wei , deputy director of the Heilongjiang Tourism Administration, said both governments supported the plan and had agreed to speed up talks which resumed in late September. While China has seen territorial disputes in eastern and southern waters flare up this year, there are growing signs of goodwill across its northern border, with officials and soldiers saying people on both sides have become friends in recent years. 'We often exchange greetings and gifts when we come across the border, where we are separated by two-metre-tall wire netting,' said one soldier who drove Hong Kong journalists on a tour of the island earlier. But some can't erase memories of the fierce border war in 1968, when Mao Zedong mobilised the whole nation to prepare for nuclear war with the 'Arctic polar bear'. 'We cannot celebrate until we get all the territory back,' said one tourist. The island, under de facto Russian control but claimed by China, was the major point of the dispute between China and Russia in border negotiations. Talks began in 1964 and were suspended a few years later when the border war broke out. They resumed in 1987 when both nations were eager to forge closer ties in the face of growing assertiveness by the United States-led Western alliance. In 1999, then-president Jiang Zemin and his Russian counterpart, Boris Yeltsin, signed a border treaty in Moscow acknowledging all the treaties signed between the Qing dynasty and Russia. Jiang ceded more than a million square kilometres of land. Up to that point, Chinese communist leaders had denounced those treaties as unfair and declared them invalid. In October 2004, President Hu Jintao and the then Russian president, Vladimir Putin, signed a supplemental agreement to return half of Heixiazi Island to China. In autumn 2008, Russia turned over part of Heixiazi to China along with the whole of Yinlong Island, known in Russian as Tarabarov Island. The ceremony was low-profile, with only junior diplomats, local officials and border officers from both countries in attendance. 'Why was it such a stark contrast between the ceremonies for the return of Hong Kong, Macau and Heixiazi Island?' the tourist asked. 'The communist government was glorified over the return of the British and Portuguese colonies, and thus staged high-profile ceremonies. 'Here, they feared they would be denounced and shamed as being as weak and incompetent as the Qing dynasty for accepting equally humiliating treaties and thus were very low-key in an effort to keep the event from having widespread exposure.' Some overseas Chinese were furious at the signing of the two border treaties. Critics said they ended any hope of China reclaiming the lost land and condemned Beijing for selling out their homeland. But officials see the new spirit of co-operation as ushering in a new era of development for the northeast. 'We have lagged far behind Guangdong in the past three decades because of the southern province's openness to trade and investment from Hong Kong and newly emerging economies in nearby Southeast Asia. Now we will catch up because of our link with Russia,' said Sun Yao , the Heilongjiang vice-governor in charge of foreign trade. Sun said Heilongjiang's economy was larger than Guangdong's three decades ago but was now less than a fifth the size. 'I can assure you that Heilongjiang will catch up with Guangdong in the next three decades because of the great potential of this region and Russia's far east thanks to both regions' rich resources and complementary economies,' Sun said.