China promises Kremlin $2.6 billion to accelerate Russian economy
The Russia-China comprehensive partnership and strategic cooperation has reached a new level, said Russian Prime Minister Dmitry Medvedev after meeting with Chinese Premier Li Keqiang in Moscow.
Medvedev said that after the meeting he and Mr Keqiang signed a set of agreements consisting of nearly twenty documents, including commercial agreements and investment agreements.
Overall, China plans to allocate roughly $2.6 billion to projects that form part of the plan to accelerate the Russian economy by 2024.
The China Development Bank will contribute 12 billion yuan ($1.7 billion) to the financing of a new natural gas processing plant in the Russian Far East, announced VEB chairman Igor Shuvalov.
The plant, whose design is slated to begin this year, should be operational by 2023. Alongside the Chinese loan and the financing from VEB, the project will also receive financing from VTB Bank.
China has promised to invest another $420 million in the construction of icebreaker ships for the “Ice Silk Road” project, RIA Novosti reports.
The icebreakers will be built at the Zvezda shipyard, which belongs to RosNeft. The project includes two Aframax-class tankers (up to 120,000 tons), three 52,000 ton tankers and three gas tankers, Shuvalov noted, adding that VEB has “excellent relations with the State Development Bank of China”.
China will invest another $500 million in a joint technological investment fund with Russia. The fund will be founded by the Russian Direct Investment Fund and the China Investment Corporation, said Kirill Dmitriev, CEO of the former.
Dmitriev said that the goal is for the fund to have $1 billion in capital, which will be invested in projects to develop “high technologies”, especially artificial intelligence.
The Russian and Chinese partners will invest in the fund on a parity basis: $500 from Beijing and Moscow respectively. “We are uniting our efforts to ensure an innovative breakthrough in the economies of our countries,” said Dmitriev, adding that it “positively affects other spheres of bilateral economic relations”.
All previous attempts by Russia to attract Chinese investments in its economy have fallen through. In 2015, for example, Beijing refused to participate in the financing of the Power of Siberia gas pipeline, forcing a Russian company to independently finance the laying of a 2,000 km pipeline designed to supply China with 38 billion cubic meters of gas per year by the early 2020s.
Two years ago, China’s CEFC was offered a 14.16% stake in Rosneft, but the China Development Bank refused to finance the deal, and CEFC CEO Ye Jianming was later arrested on suspicion of economic crimes.
Russia later proposed to China a $155 billion Beijing-Berlin high-speed railway line, which was meant to become part of the Silk Road to Europe. However, after doing a feasibility study on the project at the end of last year, the China Railways Eryuan Engineering Group declared it unprofitable.
In January it was learned that China had declined to finance the $14 billion Amur gas plant. Russia had hoped that Chinese funds would cover 70% of the construction cost.
According to the Bank of Russia, China’s total direct investments in Russia have fallen by nearly a third, from $4.54 to $3.18 billion.