World Economy

Russia-China Ties Reach Unprecedented Level

Russia-China Ties Reach Unprecedented LevelRussia-China Ties Reach Unprecedented Level

Relations between Russia and China have reached unprecedented heights, Russian President Vladimir Putin said Friday, ahead of the release of a film on Moscow-Beijing bilateral relations entitled, "Russia and China: The Heart of Eurasia."

"The relationship has reached a high level, the relations between our countries are, as we often say, [have reached] an unprecedented level," Putin said in an interview with the television channel Rossiya-24, Sputnik reported.

Chinese President Xi Jinping and Putin will devise a strategic blueprint for the future development of Sino-Russia relations, and show their determination to jointly uphold global peace and commemorate the outcome of World War II (WWII) during Xi’s visit to Russia.

As this year marks the 70th anniversary of the victory of the World Anti-Facist War, China and Russia, two main battlefields in Asia and Europe during the war, will both hold a series of celebrations, Xinhua said.

The celebrations are of great significance and have attracted worldwide attention as they shows the high regard China has for Russia both as a strategic partner and friend, and vice versa.

The China-Russia relationship has been fruitful in the past. During the past two years, their heads of state have met eight times, reaching a series of important consensus on bilateral cooperation in all areas.

As Russia has decided to develop its Far East, China is stepping up its efforts to further open its west while pursuing an overall opening-up to the outside world. This has brought a rare historic opportunity to link the two countries’ development strategies.

"The 'One Belt, One Road' initiatives can be combined with the Eurasia Economic Union and Europe-Asia Economic Integration to complement and promote each other. Russia is negotiating actively with China on how to conduct effective cooperation under the framework of 'One Belt One Road' initiative and find areas interesting and beneficial to both sides," Li Hui, China's ambassador to Russia said recently.

Natural Resources

Russia is wary of becoming little more than a supplier of natural resources to China’s industrial machine — a humiliating position for a country that until recently saw China as backward.

As long as Russia could sell to Europe all the gas required to keep the Russian economy growing, it could put deals with China on hold. These included plans for two gas pipelines from Siberia into China that were announced in 2006 and then quietly dropped as the two sides bickered over prices.

For China it is a golden opportunity to gain greater access to Russia’s natural resources, at favorable prices, as well as to secure access to big infrastructure contracts that might have gone to western competitors and to provide financing for projects that will benefit Chinese firms.

Investment Bank

The Russian Direct Investment Fund (RDIF) and CITIC Merchant, the merchant banking arm of the CITIC Group, a Chinese state-owned investment company, have signed an agreement on the creation of a joint investment bank, RDIF has informed RIA Novosti.

According to RDIF CEO Kirill Dmitriev, the deal, to be signed during the upcoming visit of President Xi Jinping to Russia, will help attract Chinese capital to Russia and will also make it easier for Russian companies to enter China's markets.

Investment Fund

The Russian Direct Investment Fund (RDIF), the Russia-China Investment Fund (RCIF) and the government of China's Heilongjiang province have agreed on the creation of a special investment fund for agriculture projects, RDIF head Kirill Dmitriev has told RIA Novosti.

"The sides intend to form a special investment fund of $2 billion, our share is a minor one, it will be mostly the money of institutional Chinese investors, including those with significant experience in investment in the agricultural sector," Dmitriev said.

According to the RDIF CEO, up to 10 projects are currently being considered, including several new ones on the development of the agriculture sector in the Far East.

Russia and China are also mulling several projects aimed at boosting China's financing of the activities of export-oriented companies in Russia.

RDIF and the China Construction Bank (CCB) have developed "a mechanism of joint investments" that involves more risk but is expected to generate more gains, Dmitriev told RIA Novosti, adding that 5 projects have already been actively developed with "reliable borrowers" who have realized that European banks are impeding the lending process.

The two countries have also worked to boost mutual payments in national currencies.

Last month, Chinese Foreign Minister Wang Yi stated that the trade turnover between China and Russia is likely to reach $100 billion in 2015.