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. Last Updated: 07/27/2016

$1Bln Contract to Build Sports Centers

A Chinese construction firm will sign a $1 billion contract next month to build dozens of sports complexes around the country.

The announcement about the agreement, the latest in a series of deals between Chinese construction firms and Russian contractors, will be timed with the groundbreaking of the Park Huaming business center in northeast Moscow, said Sergei Sanakoyev, head of the Russian-Chinese Center for Trade and Economic Cooperation. An official Chinese delegation will be on hand for that ceremony.

Sanakoyev declined to name the firm that will get the $1 billion contract.

The firm, however, appears to have been chosen based on a combination of cheap skilled labor and government intervention.

"They're leaders in high-rise construction," Artur Aleksandrov, deputy head of the Mirax Group contractor, said of Chinese construction firms.

"No firms in Russia or the near abroad can produce work of similar quality," said Aleksandrov, whose company contracted China State Construction and Yuanda Aluminum Industry Engineering for work on Moskva-City's Federation Tower.

Andrei Zakrevsky, vice president of Knight Frank, said these qualities made Chinese firms competitive globally.

Celebrations of 2007 as the Year of China in Russia also are playing a role by creating a better investment environment, said Vladimir Ponomarev, deputy head of the Association of Constructors of Russia. "Cooperation in construction is taking off on a massive scale in 2007," he said.

The situation could change, however, with the cost of Chinese labor becoming more expensive than alternative metal, concrete and wood workers from Ukraine, Moldova and Central Asia, Sanakoyev said.

Chinese workers at the Federation Tower site have complained of low pay, around 100 yuan (about $13) per day, safety standards and living conditions. Unlike their near-abroad counterparts, some are prepared to cut their losses and leave before their contract is up, saying better work is available back home.