Page 19 - bne IntelliNews weekly newspaper June 23

Opinion
June 23, 2017 www.intellinews.com I Page 19
The reason for the difference is that the Central Bank only accounts for direct transfers from a China-located bank while the China-sourced figures take into account the reports of China investors from all sources. Anecdotally, given the announcements of individual deals, the higher fig- ures also make more sense. What is not unclear is that the value of cross-border trade between the two countries has risen from $16bn in 2013 to almost $70bn last year and, with the completion of new projects under construction, is realistically set to reach $200bn early in the next decade.
Value-added processing
The focus of investment is still overwhelmingly
in hydrocarbon and extractive industries but we are seeing a shift away from direct investment into production and pipelines and into process- ing plants. The key hydrocarbon projects are
still the Power of Siberia gas pipeline, which will pump 38bn cm of natural gas to China starting sometime in 2019, the Yamal LNG plant, in which Chinese investors own a 29.9% stake, will start to send LNG to China later this year, and the 2nd leg of the Eastern Siberia Pacific Ocean (ESPO) pipe- line which will double direct crude oil exports into China’s heartland to 600,000 barrels per day when completed in 2018.
In addition, Chinese investors have proposed investing RMB6bn ($880mn) into building a petro- chemical complex on the Russian side of the bor- der and sending the products to China. This is the latest phase of investment from China and reflects Moscow’s stronger negotiating position as the economy returned to growth, and investment from other countries is picking up; it no longer has to sell raw materials cheaply for processing in China but is able to insist on value-added processing in Russian territory before exporting the products.
Recently the Minister for Regional Development reported that Chinese investors have proposed plans for 13 separate projects in the Far East with a value of $11bn. These cover extraction and processing of minerals, agriculture and transport projects.
Moscow is certainly keen to attract Chinese inves- tors into the Far East and is offering tax breaks and “administrative preference” for China-backed projects in the region, especially outside of ex- tractive industries. The $3bn invested by Chinese investors into the Primorye 1 & 2 Transport Cor- ridors, which helps Chinese exports use Russian port facilities on the Pacific Coast, is a tangible example.
The opening up of the Belt and Road network, which in February saw a 100-container train tran- sit Russia from China to London in 18 days, is also a potential game-changer in terms of China in- vestment. Officials in Beijing have stated that they expect, and will encourage, a lot more investment along the network routes to take advantage of more efficient transport links and local resources.
In 2016 China investors created tens of thousands of jobs in such sectors as auto-manufacturing,
CHANGES ARE GOOD
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