|Vinay Patel |||May 08, 2015 11:39 AM EDT|
Russia is keen to unlock the Chinese financing options for its local companies to boost its economy, and the Russian Prime Minister has also signed an agreement with his Chinese counterpart for the same.
Russia and China have a history of being together and supporting each other's economy. Even in the war of 1945, China and Russia were close allies that helped to secure the victory for their other colleagues. With the China's President Xi Jinping visit to Moscow currently in progress, the Russian analysts are hoping that the leaderships will work out a convenient mechanism that will facilitate the Chinese investment into the Russian companies. This finance is expected to propagate the growth of the economy in a major way. According to reports on FT, the facilitation of finance was one of the major things discussed by the two leaders.
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The report also states that China's President Xi Jinping and Russian head Vladmir Putin are soon to sign an agreement that will help in unlocking this financial potential. As per this agreement, the government backed Russian Direct Investment Fund and state owned China Construction Bank will start working in close cooperation to establish a channel that will facilitate the flow of finances into the Russian companies. At the same time, the agreement looks to secure the interests of China ensure that the world's second largest economy does not end up losing money by diverting its money towards the cash-strapped businesses of Russia.
The agreement, which will be signed in a soon-to-happen summit, will put Chinese investors in equity positions. This will ensure that in the unfortunate event of loses, the Russian companies would suffer the first blow securing the Chinese investors.
China is also keen to strengthen its military ties with Russia, according to reports on WSJ. Come this weekend, 102 troops from China will participate in the Victory Day parade to be held in Russia, indicating that the two countries are joining hands on the military front as well.
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