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Russia and China Sign Broad Array of Bilateral Cooperation Agreements

Nov. 7, 2016 (EIRNS)—The many agreements signed today between Russian Premier Dmitry Medvedev and his Chinese counterpart Li Keqiang do reflect, as Medvedev put it, the depth of their strategic partnership, and their determination to positively affect the course of human development by linking the One Belt One Road Initiative with the Eureasian Economic Union.

Of interest was the agreement to increase the share of national currencies in settlements, given the yuan’s recognition as a reserve currency, as Medvedev pointed out. Li Keqiang emphasized that China intends to maintain the stability of the yuan exchange rate within a "reasonable range," as this is key for the development of bilateral cooperation. He firmly stated that, "the Chinese yuan is based on the economic power of China; in this sense, there is no ground for constant devaluation of the yuan." [emphasis added]

In this context, Russia is considering establishing a preferential trade regime with China, Medvedev said, although this will require hard work. "It requires agreements on a number of highly sensitive issues," he added. The Russian Prime Minister did say that the two countries will seek to increase bilateral trade to $200 billion over the next three to seven years.

Medvedev also said he feared a collapse of the World Trade Organization (WTO), and criticized efforts to establish the Trans-Pacific Partnership and the Trans-Atlantic Trade and Investment Partnership, as a replacement for the WTO.

Below are some of the agreements signed:

  • A joint Russia-China Venture Fund will be established to develop trade, economic investment, and scientific cooperation, RT reported;

  • Nuclear energy: the two heads of government announced the development of strategic cooperation on the use of nuclear energy for peaceful purposes;

  • Russia’s Rosneft and China’s Beijing Gas Group Co., Ltd agreed that Beijing Gas will purchase a 20% share in Rosneft’s Verkhnechonskneftegaz subsidiary. The deal will result in the establishment of a vertically-integrated structure for cooperation: the Chinese company acquires a stake in one of the largest deposits in Eastern Siberia with a developed infrastructure and the access to the Eastern Siberia-Pacific Ocean pipeline, while Rosneft, in turn, gets the possibility to enter the Chinese domestic gas market, including the end consumer, via swap gas supplies.

  • General Agreement on Cooperation in the Construction of an Industrial Complex in the Kabardino-Balkarian Republic;

  • Cooperation Agreement between Russian Railways and Yingkou Port Group Co., Ltd.;

  • Memorandum of Understanding Between Gazprom and China Development Bank on Possible Financing Projects;

  • Russia’s VEB Bank signed with China Development Bank to borrow almost $1 bn. for 15 years. VEB head Sergey Gorkov told RT that the agreement allows for "a special way of joint participation in investment projects... I’m sure the agreement will push the development of new projects in Russia’s economy."

  • Russian state bank VTB signed several agreements with China Development Bank on trade financing in yuan for three and five year periods;

  • Framework Agreement on the Sale of a Stake in Sibur Holding to the Chinese Silk Road Fund and China Development Bank International Holdings Ltd.

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