June 21, 2016

More China Russia infrastructure and resource deals and new China investments and projects in Pakistan and Indonesia

A multibillion-dollar high-speed rail deal between China and Russia is expected to be signed during Russian president Vladimir Putin’s visit to Beijing this week, when the two nations are expected to extend military cooperation.

China’s foreign ministry spokesman Lu Kang announced on Monday the Putin would start his state visit on June 25.

Up to 30 trade agreements could be signed. China has recently confirmed plans to provide a 400 billion-rouble (HK$48 billion) loan to build a high-speed railway between the Russian cities of Moscow and Kazan.

In April, two Chinese state banks agreed to lend more than US$12 billion to develop a liquefied natural gas plant in the Russian Arctic, after more than a year of delays. Negotiations between the two sides were complicated by US sanctions against the project’s majority shareholder Novatek, which is partly-owned by Putin’s close ally and Russian billionaire Gennady Timchenko.



If implemented, the deal would make China the biggest consumer of Russian gas, importing 68 billion cubic metres annually.

The railway deal is expected to be signed, and the first batch of the loan for the gas deal is expected to be agreed upon during Putin’s upcoming visit, said Alexander Gabuev, a senior associate and the chair of the Russia in the Asia-Pacific Programme at the Carnegie Moscow Centre.

China is a large market for commodities… [and] a source for capital, technology, and infrastructure. Russia has an abundance of mineral resources, which requires capital, technology, and infrastructure. That’s a natural match

China will invest around 4.7 trillion yuan ($724 billion) in transport infrastructure projects over the next three years. The 2016-2018 plan from China's Ministry of Transport and National Development and Reform Commission (NDRC) will see China push forward 303 key transportation projects including railways, highways, waterways, airports and urban rail.

The investment plan would improve the country's high-speed transport networks and inter-city links to meet the demands of China's wider economic and social development.

The China led Asian Infrastructure Investment Bank (AIIB) has its war chest ready for action. Bank president Jin Liqun said on Tuesday that the bank has approved a $1.2 billion lending portfolio this year and will make those projects known on June 24.

Early projects are expected in Pakistan and Indonesia is also high on the list.





Developing the new Silk Road, if it works, could bring an economic prosperity to a vast and complex region often mired in poverty and religious violence. If it brings modernity, it opens the door for made in China technologies and brands that, for now, are largely closed due to lack of market depth along the Silk Road target nations.


SOURCES - Frobes, Reuters, South China Morning Post

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