Is China shifting investment focus to Russia?

If you wondered where the Chinese will focus much of their investments next, here is the answer: Russia. The news from last week’s visit to China by Prime Minister Putin is highlighted by the announcement that China will ramp up investment in Russia, including building and operating it’s own strategic assets on Russian soil.

Prime Minister Vladimir Putin and his Chinese counterpart Wen Jiabao following bilateral talks in China.

During the Putin visit, China committed to the creation of a $1 billion joint state fund designed to inject capital into the Russian economy. Experts say that the fund would be equal to the entire sum of all Chinese investments in Russia since the breakup of the Soviet Union.

This is in addition to the Chinese financing for construction of a new gas-fired power plant in Yaroslavl last month. Chinese corporation Huadian will control 51 percent of the project and Russian energy company TGK-2 will operate the plant.As reported earlier this year in the Moscow Times, China will provide financing and share ownership of multiple power stations in Siberia, a joint project with Russia’s private EuroSibEnergo. When completed the stations will generate electricity for consumption both in Russia and China.

Prime Minister Vladimir Putin met on 11 October with his Chinese counterpart Wen Jiabao in China.

Experts point out that this is part of a master plan by President Medvedev and Prime Minister Putin to expand Russia’s industrial base in an effort to ease reliance on gas, oil and other natural resources as the primarily engine for economic stability and growth.

According to the Moscow Times the State Statistics Service says that current Chinese investment in Russia totals around $1.1 billion.


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