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BFA: Russia Counts on Chinese Money to Improve Its Infrastructure
   2016-03-28 11:00:13    CRIENGLISH.com      Web Editor: Liu Ranran

By Olga Sorokina

Russia's Far East Development Fund (FEDF) calls for more support at the annual Boao Forum for Asia. Russia landed 20 infrastructure projects worth about $9 bln in capital investment, Moscow is ready to invest $700 mln in realization of the agenda, planning to search for the rest of the funds in China.

Economic difficulties caused by Western sanctions after the Ukraine crisis made the vector of Russia's interests shift from the Euro-Atlantic area to Asia.

On March 23, 2016 the St. Petersburg International Economic Forum (SPIEF) held a panel session entitled "New approaches in the Russian economy: localization and innovations". SPIEF was organized by the Roscongress Foundation jointly with the Boao Forum for Asia. The projects discussed include an airport in Russia's Far East city of Habarovsk, Eastern Ore Mining company project in Sakhalin island, a large Russian island in the North Pacific Ocean, the construction of the Golden Mile amusement park, the development of a large number of mineral deposits in Amur Oblast and Heilongjiang, Lake Baikal mineral water project for the Chinese consumers etc., according to Russia's news agency TASS.

At the Boao Forum Russia aims to catch the wave of interest of the Asian Infrastructure Investment Bank and China's entrepreneurs.

"We have a long list, about 20 projects with estimated costs of $9 bln. We will allocate $700 mln from our funds. The Chinese partners may consider any of the projects, depending on their appetite. There are projects of a small and a large scale," the head of the Far East Development Fund Alexiy Checkunkov said in the interview.

Another project to be discussed is a next year's launch of Russian trade platform modelled after NASDAQ.

"We aim at establishment of a popular and advanced Pan-Asiatic IT system which would connect Russian companies and the Chinese investors. By it means anyone, willing to buy shares of a Russian company, can do that simply by using his smart phone", Alexiy Checkunkov concluded.

Following the agenda, the Far East Development Fund may suggest AIIB President Jin Liqun and Chinese partners cooperation in agriculture, metallurgy and construction. Needless to say, most of the projects were presented at the World Economic Forum last year, but didn't catch attention of Beijing.

Russia is trying to raise funds inviting Chinese to participate in development of recreation and tourism industry.

According to "Pronedra" news agency, Russian authorities are planning to attract $16 bln before 2020 in the "Montain air" priority development area in

Sakhalin, $3 bln to be invested in 2016. Last week the plans were ratified by Russia's PM D.Medvedev. The priority development area is positioned as a year-round recreation zone for the residents of Siberia, Russia's Far East and tourists from China.

Plans remain vague. Russia's search for money continues.

Many Russian analysts agree on return of privatization: Russia's economic crisis is so bad that President Vladimir Putin is now hoping to sell stakes in some of the nation's most prized businesses to raise money.

In fact, the major part of $8.3 bln worth projects fall into the category of federal level projects and reflects Russia's authorities' plans for privatization.

The Chinese investors will be suggested to become shareholders of "Rosneft" ("Russian Oil"), "Bashneft" (Russian oil company formed by the transfer of the oil related assets of the Soviet oil ministry in Bashkortostan to the regional government), "Alrosa" (the Russian group of diamond mining companies) and VTB Bank.

The successful accomplishment of the plan will not only bring money in Russia's budget but also secure Russia's role in the AIIB initiative.

Russia has already become the third largest player in the China-led Asian infrastructure and Investment Bank (AIIB), after China and India, but need funds to secure its role.

China is a leading trade and economic partner for Russia. Trade between the countries from January to September 2015 amounted to $ 50 bln, with Russian exports to China accounting for $ 24.8 billion, and imports at $ 25.2 bln. Russia's key exports are mineral fuels, oil and oil products, timber, non-ferrous metals, chemical products and crude ore.

However, according to PRC Ministry of Commerce, China's investment in Russian market decreased 20% in the last seven months, meanwhile China's investment abroad in Feb-March was up 70%.

During the Boao Forum China has signed agreements on capacity collaboration with dozens of countries, including developing countries along the Belt and Road Initiative. Participants evaluated business opportunities and agree that it will be easier to start working with Pakistan and Kazakhstan, as they have a greater demand in infrastructure than developed countries.

Still, special attention was given to developing potential for collaborating in Russia and China's innovative and entrepreneurial sectors.

Commenting on the outcome of the event, Anton Kobyakov, advisor to the President of the Russian Federation and Executive Secretary of the St. Petersburg Economic Forum Organizing Committee, noted that the event was constructive, having led to a number of agreements on further fostering partnership with China.

"We expect the Chinese delegation to be widely represented at our country's major economic forums. Our Chinese colleagues are showing a great deal of activity and interest in these events. On our part, we are also aiming for a continued and steady expansion of our bilateral partnership and the progression of Russian-Chinese relations, in light of new market conditions," Kobyakov said.

Boao Forum for Asia annual conference was held from March 22 to 25 in South China's Hainan province. The Conference is themed "Asia's New Future: New Dynamics, New Vision". More than 2000 participants from over 60 countries and regions attended the forum. The event features discussions on the macro-economy, innovation, the Internet, public well-being and culture.

Russia counts on Chinese money to improve its infrastructure and revive its fortunes. The dialogue on bilateral partnership will continue at the 20th St. Petersburg International Economic Forum, which is to be held on June 16-18, 2016.

(Photo source: Chinanews.com)

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