By Andrey Ostroukh
MOSCOW--Russia and China signed economic deals and a financing
agreement for up to $25 billion for Russian companies from Chinese
banks, as Moscow looks to seal closer ties with its southeastern
neighbor given its standoff with the West.
President Vladimir Putin and his Chinese counterpart Xi Jinping
oversaw the signing of an agreement here allowing domestic
companies to raise funding from Chinese banks against guarantees
provided by Moscow, which is cut off from global capital markets by
Western sanctions. The two countries also signed a preliminary deal
for Russia to supply gas via a pipeline to China, although key
details remain to be resolved, as well as agreements in aviation
and farming.
"Today, China is our key strategic partner," Mr. Putin said,
seated alongside Mr. Xi as the deals were signed.
Mr. Xi is the highest-profile foreign leader in Moscow for
Russia's celebrations Saturday of the end of World War II. Western
leaders aren't attending the event after Russia's annexation of
Crimea and support for separatist militants in eastern Ukraine.
Facing Western economic sanctions, Moscow has touted a turn
eastward, saying it would seek Asian investors to reduce reliance
on Europe and the U.S. But results have been mixed. Russia was
disappointed last year that Chinese and other Asian investors
didn't jump in to the void left by Western creditors. The financing
deal, signed Friday by the Russian Direct Investment Fund, the
Russia-China Investment Fund and China Construction Bank, appears
to represent a typical example of China's hard bargaining, leaving
Russia bearing all the risk.
The agreement will allow Russian companies, struggling to repay
foreign debts, to raise up to $25 billion in the next two to three
years at lower costs than on the domestic market, the spokeswoman
for RDIF said.
The state-run RDIF will provide around $1.5 billion to the
financial partnership, co-financing future deals and acting as a
warrantor in case of possible defaults.
"We will focus on companies that are not under formal sanctions
but are having difficulties attracting money. We plan to help
companies that as a result of the current geopolitical situation
are experiencing problems attracting liquidity," RDIF chief Kirill
Dmitriyev said in televised remarks.
"We see excellent opportunities with many Russian companies
seeking debt financing from overseas markets, and it is of mutual
interest to leverage the strong capital of Chinese banks and
financial institutions, which have active plans to invest
internationally," Hu Bing, president of the Russia-China Investment
Fund said in a statement.
But there was no evidence of a breakthrough on energy deals,
which the Kremlin has placed at the center of its hoped-for
eastward turn. Russian state gas giant Gazprom signed a preliminary
agreement with China National Petroleum Corporation on supplying 30
billion cubic meters of natural gas to China via the so-called
"western route," which would allow it to divert gas from fields
that currently serve Europe. But there was no indication of
progress on the key issue of price. Gazprom Chief Executive Alexei
Miller declined to provide any details on the timing of the
project.
Russia wants to sell more gas to Asia as Gazprom is facing
competition and regulatory pressure in Europe. But progress has
been slow, and analysts question the economic viability of the
"Strength of Siberia" pipeline, planned to take gas to eastern
China in a deal signed in May 2014 worth $400 billion.
Speaking in the Kremlin after meeting with Mr. Xi, Mr. Putin
touted China's status as Russia's largest trading partner, as well
as the countries' "common heroic past" in World War II.
As a part of plan to boost the trade in rubles and the yuan,
Russia's largest lender Sberbank agreed with the China Development
Bank Corporation to set up a facility agreement worth 6 billion
yuan ($970 million) for trade purposes.
Among other deals signed on Friday, Russia and China agreed to
set up a $2 billion agriculture fund to invest in agricultural
projects in both countries.
Moscow has also secured a deal to supply up to 100 Russian-made
Sukhoi Superjet aircraft to both Chinese and Southeast Asian
markets over the next three years, the RDIF said.
Russia and China also signed a framework cybersecurity deal. The
two countries agreed not to conduct cyberattacks against each
other, as well as to jointly counteract technology that could
create political or social disturbances.
Olga Razumovskaya contributed to this article.
Write to Andrey Ostroukh at andrey.ostroukh@wsj.com
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