In a strategic move to counterbalance the impacts of US sanctions due to its Ukraine invasion, Russia is seeking financial partnerships with China, as indicated by VTB CEO Andrey Kostin at the Belt and Road Forum in Beijing. These alliances could help mitigate the economic fallout from the Ukraine conflict and Western sanctions.
Kostin proposed a joint venture with China, a global leader in shipbuilding, to construct a new shipyard. This move comes as USC, traditionally focused on warships, is shifting its attention to commercial vessels in response to rising demand.
During the forum, President Putin detailed several bilateral projects including the North-South corridor in European Russia, the north-south transport artery through Siberia, and railways from Siberia to China via Mongolia. Kostin suggested these initiatives could be attractive to Chinese investors. He also mentioned a potential railway extending from Russia through Azerbaijan and Iran, all the way to Saudi Arabia.
Kostin emphasized the need for enhanced Russia-China infrastructure due to a 30% increase in trade between the two nations in 2022, reaching US$190 billion with an aim of achieving US$200 billion this year. He confirmed that Russia's infrastructure strategies align with China's Belt and Road Initiative (BRI), which Putin supports.
Despite US sanctions on Chinese companies suspected of Russian ties, Kostin expressed confidence that these will not deter Chinese entities from partnering with Russian companies. He highlighted the growing use of the yuan in Russian transactions and expressed interest in joining China's yuan-centered payment network, CIPS.
In an ambitious move, Kostin proposed the creation of a new international depository settlement hub. This would enable Russian companies to raise capital outside of America and Europe. The proposed hub reflects Russia's strategic pivot towards Asia and away from traditional Western markets amid escalating geopolitical tensions.
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