The Russian economy is expected to grow by 3.5% to 4% in 2013 according to investment research published in October by Sberbank, Russia’s largest bank. Every sector of the Russian economy requires significant investment and presents valuable opportunities for Chinese manufacturers to export their products to Russia.
There is a strong appetite for Chinese financial investment in Russia, yet despite the opportunities, reports indicate that so far there has been relatively little mutual investment activity. Russia is exporting raw materials to China. What investment there is in China by Russians has been done by the largest Chinese natural resources companies. The China Investment Corporation (CIC), the largest investment fund in China, and the China International Trust and Investment Corporation Securities (CITIC Securities), the largest investment company in China, have reportedly been in discussions in Moscow with Russia’s leading companies including Rosneft, Gasprom, Vimpelcom, the Russian Railways, Rusnano, Lukoil and VTB Bank.
In the future, the likeliest areas for Chinese investment into Russia appear to be:
- transportation, warehousing and logistical centres for the sale in Russia of machines and equipment, electronics, agricultural products and construction materials;
- railroad, roads and other large transportation infrastructure projects to create modern lines of communication with China through Kazakhstan via Russia to Europe, and also investment in Russia’s industries in Siberia and the Russian far east, and to create new pipelines and rail connections to deliver Russian products to China;
- office centres and other commercial real estate in Russia’s major cities; and
- high-speed trains in Russia.
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Vlad Zabrodin is the managing partner at Capital Legal Services in Moscow and St Petersburg. He can be contacted at +7 812 346 79 90 or by email at vzabrodin@cls.ru
Derek Bloom is a partner at Capital Legal Services in Moscow. He can be contacted at +7 495 970 10 90 or by email at dbloom@cls.ru
