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. Last Updated: 07/27/2016

Loan to China Seen as Part of Growing Ties

A report that Russia has offered China a low-interest loan of $2 billion to acquire two nuclear reactors was viewed by Western analysts Wednesday as a financially dubious sign of Moscow's intensifying courtship of Beijing.


Wu Yafeng of the Lianing Nuclear Power Corp. was quoted Wednesday by Reuters as saying the Russian government had offered China a 15-year loan at 4 percent interest and will supply the reactors, part of China's growing embrace of atomic energy.


The Russian government, however, could not confirm the offer.


"As far as I know, this is unconfirmed information," said Viktor Spasky, a department head at the Foreign Trade Ministry.


Roy Allison, head of the Russian and Eurasia program at the Royal Institute of International Affairs in London, said he did not consider the deal surprising "given Russia's emphasis on increasing trade relations with China."


But analysts questioned the economic wisdom of the loan, saying Russia could hardly afford to divert $2 billion to China given the government's need to focus on domestic reforms.


"You have to wonder whether [the loan] will help Russia to improve its economic situation," said Leonard Spector, director of Nuclear Non-Proliferation Project at the Carnegie Endowment in Washington.


"I don't think this is something the IMF would be keen on Russia doing," Allison said, noting that the International Monetary Fund on Tuesday had given formal approval to a $10.2 billion loan for Russian reforms.


The low-interest rate offered is standard in this type of international loan, Spector said.


Wu, the power plant official, brushed aside fears about the safety of Russian nuclear reactors, telling Reuters they "could pass" safety tests and were 15 to 20 percent cheaper than their Western counterparts, which China has also been developing. The overall project would cost $4 billion, he said.