China, Russia ink currency swap, energy deals
October 13, 2014, 12:29 pm

Chinese Premier Li Keqiang and his Russian counterpart Dmitry Medvedev chaired the joint cabinet meet of the two countries in Moscow on 13 September 2014 [Xinhua]

Chinese and Russian Premiers Dmitry Medvedev and Li Keqiang have held the 19th Regular Meeting of the Heads of Government in Moscow during which 40 inter-governmental agreements were signed.

The two allies have also signed a massive currency swap deal worth $24.4 billion. The agreement was inked between the People’s Bank of China (PBOC) and the Russian Central Bank on Monday “to facilitate bilateral trade and investment”.

The agreement lasts for three years and can be extended if both sides agree, the PBOC said on Monday in a statement on its website.

Beijing is keen on substituting the US dollar with the yuan in all of China’s trade with other countries. The Chinese currency now trades directly with the Japanese yen, the Australian dollar, the Brazilian real, the EU’s euro, the New Zealand dollar and many other currencies.

Meanwhile, the signing of the gas agreement on Monday in Moscow was a “pre-condition” for the entry into force of the $400 billion East Route natural gas deal to export 38 billion cubic meters of gas to China for 30 years, signed in May earlier this year between Russian state energy giant Gazprom and the China National Petroleum Corporation.

“Over the past six years, trade between Russia and China has almost doubled, from $40 billion to $90 billion,” said Medvedev.

Moscow is looking to increase trade and banking cooperation with Beijing, even as it battles new rounds of sanctions imposed by the EU and US over the Ukraine crisis.

During Li’s Moscow visit, Russia’s sanctions-hit banks Vnesheconombank, VTB, Rosselkhozbank have attracted financing by Exim Bank of China, Russian media reported. The European Union had earlier in July published a law to cut off financing for five major Russian banks over Moscow’s alleged support for separatists in eastern Ukraine.

On Monday, the Russian Federal Space Agency also signed an agreement with the Commission for the Chinese Satellite Navigation System on cooperation in global navigation systems.

The two sides also signed a deal on a $500 Million Financing mandate between Russia’s OAO MegaFon and the China Development Bank.

Meanwhile, Russia and China have also begun talks on building an additional natural gas pipeline to China via a western route.

“Russia and China may agree on Russian gas deliveries to China via the western route in 2015,” said Medvedev after his meet with Li.

In a meeting earlier on Monday with chairperson of the Russian Federation Council Valentina Matviyenko, the Chinese Premier said cooperation between the two countries “is developing for the benefit of our peoples and for the interests of ensuring stability on the planet and preserving peace in the region.”

Putin will meet the visiting Chinese Premier on Tuesday, said a Kremlin statement.

Putin said, earlier this year, that Russia-China ties “will significantly affect the contemporary architecture of international relations”.

“It is absolutely clear that we will be expanding collaboration with China. Our trade with the United States is 27.5 [billion], but trade with China is 87 billion, and it is growing. And experts will agree that China is gradually becoming the number one economic power. The question is when it will happen: in 15, 20 or 25 years. But everybody understands that it is inevitable,” asserted Putin.

In 2012, Putin included China in his first foreign trip after assuming the Russian presidency. Xi Jinping also chose Moscow as his first state visit as China’s head of state.

TBP and Agencies