Russia and China were to announce progress on a joint investment fund during a visit by the man expected to be China’s next premier, while their leaders hinted on Friday at differences behind a show of amity and common ground on global issues.
Chinese Vice Premier Li Keqiang (李克強), who is on track to succeed Chinese Premier Wen Jiabao (溫家寶) this autumn, met Russian president-elect Vladimir Putin and outgoing President Dmitry Medvedev during a trip that will also take him to Hungary and Belgium.
Progress raising capital for a US$4 billion fund seen as a boon for Russia’s efforts to attract Chinese investment was to be announced at a conference attended by Li yesterday.
Plans for the fund — a venture between sovereign wealth fund China Investment Corp and a Russian state vehicle — were announced in October and it is expecting to clinch its first deal in the summer.
“We see an opportunity to expand [the fund] because of other [investors around the world] exhibiting interest in participating,” Russian Direct Investment Fund CEO Kirill Dmitriev told reporters in an interview on Friday.
The fund plans to announce that the venture will finalize its “first closing” with US$2 billion raised in June, Dmitriev said.
“In June we will form it, and then in July/August we will do the first deal,” he said.
The Russian Direct Investment Fund was created to give major foreign investors greater comfort in Russia’s uncertain business environment and is investing with private equity, strategic investors and sovereign wealth funds.
Dmitriev said he anticipates it will take about 18 months to expand the Russian-Chinese investment fund to US$4 billion, with the balance of the capital raised from external investors, including others from China.
It is expected to invest 70 percent of its funds in Russia and up to 30 percent in China, Dmitriev said, adding that “the pipeline of potential deals for this fund includes industries such as forestry, machinery [and] logistics.”
Li held separate talks with Russian Prime Minister Putin and Medvedev, who are to trade places next month. In power since 2000, Putin won a March presidential election and will be sworn in to a six-year term on May 7.
Russia and China, veto-wielding permanent UN Security Council members, use their clout to blunt US power. They have moved in lockstep on Syria, vetoing a Security Council resolution that would have called for Syrian President Bashar al-Assad to cede power but supporting international envoy for Syria Kofi Annan’s peace plan.
At the same time, they compete for influence in Central Asia and struggle to hash out differences over energy supplies despite an apparent natural fit between Russia and the world’s fastest-growing energy consumer.
Meeting at Putin’s residence outside Moscow, he and Li called the nations close friends, but hinted at differences.
Li said through a translator that the “road is not always even, but I am sure that as good friends, neighbors and partners, we will always be able to find a solution and achieve success.”
Putin said that “as always in the course of big work there are issues which require additional attention, but we have learned to do it the way close friends do. We are looking for compromises and are finding them.”
Talks on Russian pipeline gas supplies to China fell apart late last year when China opted for additional deliveries from Turkmenistan, a rival producer in Central Asia, after years of stalemate over price.
Russia, in turn, is now shifting the focus of its Asian gas strategy toward liquefied natural gas, which is more expensive to deliver, but can be sold to any buyer, unlike pipelines, which bind seller and buyer.
The CEO of Russian gas monopoly Gazprom met China National Petroleum Corp chairman Jiang Jie-min (蔣潔敏) in Moscow to discuss oil and gas supplies to China among other things, Gazprom said, but no agreements were announced.
Meeting Medvedev, Li praised “colossal changes for the better,” saying he had seen “new Russian cities and towns” from his airplane window.
Putin has shrugged off warnings from politicians and analysts that faster-growing China may be a threat to Russia.
In an article in February, he said China is less aggressive globally than the US and that “the growth of China’s economy is not a threat at all, but a challenge that carries with it a colossal potential for business cooperation.”
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