Russia and China Eye $5.5bn Deals

October 12, 2009

Russia is hoping to sign deals worth $5.5bn (£3.5bn) with China as Prime Minister Vladimir Putin visits Beijing.

The deals may lead to Russia selling more oil and gas to China - the world's second-biggest energy user.

About 30 contracts in infrastructure, energy, mining, transportation and telecoms have been lined up.

Russia is keen to bolster its economy, which President Dmitry Medvedev has said will decline by 7.5% in 2009 - far worse than earlier predicted.

Currency ambition

Trade between Russia and China has risen from less than $10bn to more than $50bn annually over the past six years.

The heart of the relationship is Beijing's thirst for Russian energy - oil and gas make up more than half of Russian exports to China.

Earlier this year, Moscow signed a $25bn agreement to help fund a pipeline to supply oil from Siberia to China. In exchange, China was guaranteed a 20-year supply of crude oil.

However, Moscow is also keen to boost exports of machinery, especially aviation equipment and nuclear power plants - though analysts say that China's appetite for Russian goods other than energy and raw materials is limited.

The countries hope to expand the amount of business they do in their own currencies, rather than the US dollar. However, currently only about 1% of their dealings involve roubles or yuan.

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