China-Russia discussing currency swaps package

May 9, 2014, 5:45 am

Top officials from China and Russia met on Thursday in Beijing to prepare for Russian President Vladimir Putin’s strategic trip to Shanghai next week even as the European Union prepares to initiate a fresh round of sanctions against Moscow

Chinese Vice Premier Zhang Gaoli held preparatory talks with his Russian counterpart Igor Shuvalov in the Great Hall of the People in Beijing.

Zhang told Shuvalov that China would stress on increasing the already vibrant bilateral investment between the two nations. China is Russia’s fourth largest source of foreign direct investment.

“Financial cooperation between China and Russia is growing as local currency settlement in two-way trade increases and consultations on a package of currency swaps are on-going,” said Zhang. This would remove the necessity for transactions to be settled in two foreign exchange trades via the US dollar.

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.

China will aim to boost investment via the China-Russia Investment Fund, singling out greenfield investment, equity investment, bond issuance and mergers and acquisitions, Zhang said.

Zhang asked the Russian Deputy Premier to aid Chinese enterprises in investing in special economic zones in the Far East region of Russia.

Large and medium sized Chinese firms have invested in such sectors as energy, chemicals, mining and agriculture in Russia’s Far East.

Russian Premier Dmitry Medvedev had said in October last year that Moscow would protect foreign investors in the region.

“Russia and China have already become partners in the Russian Far East,” Medvedev said.

President Putin is slated to attend the 4th Summit of the Conference on Interaction and Confidence Building Measures in Asia (CICA), on May 20 and 21 in Shanghai.

Deputy Premier Shuvalov said on Thursday Putin’s China visit will be of “great significance” for the two countries even as Moscow is battling Western sanctions over the Ukraine crisis.

The European Commission has prepared a third round of economic sanctions against Russia, European Commissioner for Trade Karel De Gucht said Thursday.

Foreign ministers of EU member states will meet on May 12 to discuss sanctions against Russia and Crimea-based companies.

Moscow’s BRICS allies, Beijing and New Delhi have both asserted that they are opposed to the Western sanctions against Russia.

TBP and Agencies