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. Last Updated: 07/27/2016

Chinese Banks Offer $2Bln in Loans

Itar-TassChinese President Hu Jintao shaking hands with First Deputy Prime Minister Dmitry Medvedev as President Vladimir Putin watches in the Kremlin on Monday.
President Vladimir Putin welcomed Chinese President Hu Jintao into the lavish halls of the Kremlin on Monday to oversee the signing of several multimillion-dollar investment deals and to exchange niceties on relations between the two countries.

Among the deals signed in the presence of the two leaders were $1 billion in loans for VTB Group to finance the exports of Russian commodities and goods to China over the next eight years. The loans will be evenly split between the China State Development Bank and the Export-Import Bank of China, VTB president Andrei Kostin said.

The China State Development Bank signed an investment deal worth up to $1 billion with the Krasnoyarsk region and Vneshekonombank, or VEB. Krasnoyarsk Governor Alexander Khloponin praised the agreement as "an important stimulus for the development of the east Siberian economy."

The investment is part of a $1.5 billion loan that VEB earlier received from the Chinese bank, VEB chairman Vladimir Dmitriyev said. One-third of the money has been spent to promote Russian exports, and the rest could go to Krasnoyarsk, he said.

In another banking deal, Gazprombank secured a $100 million loan from the Export-Import Bank of China to finance imports of the Chinese equipment, technologies and services, Interfax reported.

Hu, who on Monday kicked off a three-day visit that also marks the Year of China in Russia, is reciprocating a visit by Putin to Beijing last March for the Year of Russia in China. The two leaders are expected to oversee the signing of agreements worth more than $4 billion, highlighting China's hunger for Russian energy resources and trade deals.

Welcoming Hu to the Kremlin, Putin said the two had met six times last year and singled out progress they had made in arms trade and other areas of military cooperation.

Putin added, "Today's negotiations once again confirm the strategic nature of Russian-Chinese partnership."

Hu was equally upbeat in his assessment of Russian-Chinese relations, which he said, "are developing only upward."

The leaders lavished praise on each other, with Putin calling Hu "dear guest and friend" and Hu reciprocating with "my big friend."

Dmitry Medvedev, the first deputy prime minister and co-chair of the organizing committees of the Year of China in Russia and the Year of Russia in China, also participated in Monday's talks.

As they watched the business deals being signed, Putin and Hu picked up pens at one point to sign a political declaration that would ease cross-border deals for businesses and entrepreneurs, effectively allowing the further expansion of Chinese business in Siberia, generally seen as a sticking point in Russian-Chinese relations.

Hu said the joint political declaration was aimed, among other things, at promoting "multi-polarity and democratization" of foreign relations, in comments possibly aimed at the United States.

Hu said the Year of China in Russia was a "unique opportunity to develop a peace-loving concept of a centuries-old friendship." Putin said that up to 200 events would be held this year from St. Petersburg to Vladivostok to promote China in Russia.

On Tuesday, Hu and Putin are to meet again to open the National Exhibit of China at the Crocus-Expo center outside the Moscow Ring Road. More multimillion-dollar agreements are to be signed there, including an agreement by Rosneft to supply a unit of China Petrochemical with 60,000 barrels of crude per day by rail, Interfax reported.

Russian Railways CEO Vladimir Yakunin said before Monday's signing ceremony that Russia was ready to ship 15 million tons of crude to China this year.

"We are completely optimistic. We don't have any problems here," he told reporters.

Nikolai Manvelov, a Rosneft spokesman, declined to comment on possible deals when reached by telephone earlier in the day.

Hu is scheduled to leave for Tatarstan late Tuesday in what would be his first trip to the oil-rich republic. Hu is to meet Tatarstan President Mintimer Shaimiyev in Kazan on Wednesday, said Lira Tazetzinova, a spokeswoman for Tatarstan's trade department. She said it was unclear whether the visit would yield any deals with regional oil firm Tatneft.

"This will be a fact-finding visit," Tazetzinova said.

Chinese carmaker Great Wall has said it intends to assemble vehicles in Tatarstan.

Despite suspicion toward the Chinese in the Far East, economic benefits could overcome potential differences, said Peter Westin, chief economist at MDM Bank.

"We have a looming demographic crisis in Russia," he said. "Chinese businesses could improve the economy in the region."

Trade between the two nations has been "one of the fastest-growing bilateral flows," Westin said.

Russia has been buying a lot of Chinese machinery and equipment, with Chinese imports to Russia growing by 716 percent from 1999 to 2005, Westin said.

Russia estimates bilateral trade reached $29 billion last year, while China puts the figure at $33 billion. The two countries aim to almost triple bilateral trade to $80 billion by 2010.