Anti-Sanctions? Putin Lifts ‘Limits’ And China Agrees To Increase Investment In Russia

china russia flags

Anti-Sanctions? Putin Lifts “Limits” And China Agrees To Increase Investment In Russia (ZeroHedge, May 10, 2014):

As Putin warned earlier in the week, they do not see the effectiveness of sanctions; but it seems he had something else in mind. By rolling back informal limits on Chinese investment, Putin has opened the door for significant capital inflows from his new best friend… and China has already agree to increase investment. While Putin is careful to note that the Chinese will not be allowed to invest in gold or diamond mining, or hi-tech projects, Russia hopes to lure cash from the world’s second-biggest economy into industries from housing and infrastructure construction to natural resources. Chinese President Xi Jinping and Russian President Vladimir Putin will meet in Shanghai May 20/21 and Chinese officials have already confirmed bilateral cooperation in the areas of investment and finance has made major progress as local currency settlement in two-way trade increases. Forget sanctions, just remove the US from the world trade equation…

As Bloomberg reports, Russian President Vladimir Putin plans to open the door to Chinese money as U.S. and European sanctions over Ukraine threaten to tip the economy into recession, according to two senior government officials.

The move would roll back informal limits on Chinese investment as Russia seeks to stimulate growth, said the officials, who have direct knowledge of talks and asked not to be identified as the information isn’t public. The government wants to lure cash from the world’s second-biggest economy into industries from housing and infrastructure construction to natural resources, they said.

The Chinese won’t be welcome in all areas: Russia plans to set “red lines” around significant gold, platinum-group metals, diamond mining and high-technology projects, the officials said.

Putin’s decision, coming as competition from U.S. and European financing slows, may offer China a good opportunity to gain access to Russia’s economy. Existing resource projects will probably be more appealing than starting from scratch, Moscow-based George Buzhenitsa, Deutsche Bank AG analyst said by phone on May 7.

“Given that China has a shortage of raw materials from iron ore to coal to copper, it may be extremely interested in gaining access to such projects in Russia,” Buzhenitsa said.

And China seems more than willing to step up…

China is ready to join with Russia to increase two-way investment, Chinese Vice Premier Zhang Gaoli said here Thursday.

Their talks were focused on bilateral investment and practical cooperation in the financial area, in preparation for the forthcoming meeting between the two heads of state.

Chinese President Xi Jinping and Russian President Vladimir Putin will meet when Putin attends the Fourth Summit of the Conference on Interaction and Confidence Building Measures in Asia (CICA), on May 20 and 21 in Shanghai.

Zhang said bilateral cooperation in the areas of investment and finance has made major progress. China has increased investment in Russia and become the country’s fourth largest source of foreign direct investment.

He said financial cooperation between China and Russia is growing as local currency settlement in two-way trade increases and consultations on a package of currency swaps are on-going.

Zhang expressed the hope that the two sides increase mutual investment via the China-Russia investment fund and carry out the first batch of investment projects as planned.

He said the two sides should increase investment in the forms of greenfield investment, equity investment, bond issuance and mergers and acquisitions.

Zhang asked the Russian side to help Chinese enterprises to invest in special economic zones in the Far East region of Russia.

Who needs sanctions when China is your friend? And it would seem no matter what card the US tries to play, Putin has a trump (for now).

 

3 thoughts on “Anti-Sanctions? Putin Lifts ‘Limits’ And China Agrees To Increase Investment In Russia

  1. First, thanks to Squodgy for a great website & article.
    Second, I sure wish the US had such leadership to protect it’s technology and precious metals from oversea greedy guts.
    Looking at this picture, which is anything but complete, I would warn Putin to be careful, the Chinese are not the world’s second largest economic power……they are deeply in debt, and their endless lies on how much they export has been exposed several times. Their claims are proved to be twisted, yet they continue the lies.

    China is in deep trouble. They base their GDP on what they build, not what they earn. Thus the endless amounts of ghost cities they have built that no Chinese native can afford. I estimate they planned rich customers and affluent Chinese would buy in. Unfortunately, that would not happen, there are not enough affluent Chinese to fill these cities, and the super rich have other countries with cleaner vistas to reside in.

    China’s climate is so terribly polluted, people with any money are leaving, not staying. They have days when it is so dark, wide screen TVs tell them if it is morning or night……much like London in the early 19th century when the coal dust was so dense, one could not see the sun during the winter.

    During the settling of the US in the 19th century, we had mining towns that were filthy, worked over and deserted when the lines of gold or silver were exploited. The towns were left to rot. Today, it has expanded to MFG countries or areas.

    In this new era of the 21st century, China appears to be the first “MFG area” that was used extensively, until greedy gut corporations found other nations willing to be exploited with cheaper labor made available. They have worked over Vietnam, Taiwan, and other countries, leaving even greater poverty and misery behind them.

    China is in deep trouble because it put all its hopes on exports. Until 2008, the US was the #1 buyer, but the fall of 2007-08, the Eurozone became their biggest buyer. After the Eurozone cut back due to the expanding world depression, China was really in trouble….they had not thought ahead like Putin, and were left worse off then when they started.
    I don’t see them as the #2 economy; many of their people are hungry, degreed engineers look for work at a dollar a day. They have hundreds of riots every day due to poverty and joblessness. When the riots start, the media is shut down, and it isn’t covered by TV or Internet. It doesn’t stop the facts, and it is a land overrun by people with no future.
    Their leaders have allowed China’s people to be exploited, their lands and water polluted by chemicals from greedy MFG concerns………..their air so terrible the people buy bags of clean air to breathe…….I can go on, but I think I have made my point.

Leave a Comment