Chinese Investment In Russia Picks Up Steam


Chinese Investment In Russia Picks Up Steam

According to the Chinese Ministry of Commerce, non-financial direct investments into Russia in 2014 increased by over 250% to more than USD 8 billion.

However, a lot of the contracts were signed back in May 2014, and currently, many still remain as just intentions.

Some examples beyond oil and gas:

  • Several Russian banks acquired financing from Chinese banks: VTB received a credit line of USD 2 billion; VEB, a leasing of USD 300 million; and VnesheconomBankhas, a framework agreement for USD 2 billion.
  • RusHydro and Sanxia signed a contract for the construction of two hydroelectric power plants in Russia.
  • Eurocement signed procurement contracts worth nearly USD 1 billion with China CAMC Engineering and other Chinese suppliers.
  • Great Wall Auto started building a plant in the Tula Region.
  • Volga Group created a JV with China Harbour Engineering (CHEC).The JV’s primary activities will be coal mining and logistics services, including the construction of a container terminal in the Far East region of Russia.
  • Huawei won a tender for the construction of optical fiber communications in the Far East region.
  • Chengdong investment acquired 6% of the Moscow Stock Exchange for USD 100 million.
  • The Russian Direct Investment Fund and China Investment Corporation jointly acquired a company that is responsible for the construction of a railway bridge over the Amur River.

2015 will see another wave of Chinese investments in Russian energy. Initiatives discussed in the media include:

  • Chinese banks funding the Yamal LNG project, which will include the construction of a liquefied natural gas plant.
  • Chinese investors entering into the Vankor oil production venture, one of the largest oil production projects in the country
  • Chinese investors entering the Udokan copper field.

Additionally, there will likely be a broadening of investments to other sectors, such as:

  • A new high speed rail line out of Moscow.
  • Entertainment projects such as theme parks in southern Russia.
  • Service infrastructure projects from airports to hotels to bring more Chinese visitors to Russia.
  • Agriculture projects in wheat, fish, pork, premium fruits and dairy, among other products
  • Technology substitution projects.

Read more of my views on my blog, Gordon’s View. And please follow me on Twitter.

Image credit: Mark Turner / Flickr

By |February 13, 2015|Categories: Gordon's View|0 Comments

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