While the world watches Moscow’s ostentatious commemoration of 70th anniversary of the end of World War II this Saturday, the eyes of Russia’s politicians and bankers will be firmly fixed on China’s President Xi Jinping — or, more specifically, on his pen.
Xi, who will attend the WWII festivities as part of his three-day trip to Moscow, has already inked a number of deals this week cementing China’s investment in Russia’s floundering economy. While the two countries have played up Xi’s budding friendship with Russian President Vladimir Putin, experts say China is playing coy and stands to gain from Russia’s desperation. One went so far as to say Beijing has become Moscow’s “loan shark.”
As Western investors flee, Russian companies have struggled to obtain financing. To that end, Xi signed a $25 billion deal on Thursday that will allow China to lend to Russian companies at rates lower than what they can access domestically.
Moscow has been hit hard by a combination of low oil prices and economic sanctions imposed by Western countries after its annexation of Crimea.
China has driven a hard line on its gas dealings with Russia, insisting Moscow pony up more for infrastructure costs. Russia is hesitant precisely for the reasons it wants the deal in the first place: draining coffers and a lack of Western investment. Several experts told VICE News that China is happy to let negotiations drag on in an effort to extract lower prices from Russia for the gas.
Observers say China is better positioned in almost every way to benefit as Russia scrambles for liquidity. The $25 billion lending deal is just a drop in the bucket for Beijing, and, in the event of defaults, it will be guaranteed by the Kremlin's Russian Direct Investment Fund.
China Is Becoming Russia’s Economic ‘Loan Shark’ :: Schwartzreport
