China backs Putin's idea of developing Russia's Far East

[IceWizard]

Sat Sep 5, 2015 | 5:43 AM EDT
By Katya Golubkova

[b]VLADIVOSTOK, Russia (Reuters) -
Chinese Vice Premier Wang Yang said on Saturday that Russia's push to revamp its run-down Far East region coincided with Beijing's strategy, backing President Vladimir Putin's drive for new sources of growth.

At the Eastern Economic Forum in the Pacific
Port of Vladivostok on Friday, Putin promised
favorable business conditions and state support to Asian and domestic investors willing to come to Russia's most remote land.

"The Far East development strategy coincides
with China's strategy of north-east rebirth,"
Wang said. "(The) Russia-Chinese partnership
will definitely bring generous fruits."

But for Putin's campaign to attract Asian funds
to Russia, timing may be his worst enemy: the
slowdown in the Chinese economy poses risks.

Putin's turn to Asia comes at a time when
relations with the West have hit their lowest
since the Cold War, following Moscow's
involvement in the Ukraine conflict.

Russia needs money badly - sanctions and
falling oil prices have hit the economy hard,
with gross domestic product expected to fall 3.3 percent this year after growing 0.6 percent in 2014.

China's growth, meanwhile, is slowing and its stock market falling, forcing Beijing into rate cuts and a yuan devaluation to buttress the
economy.

Ian Ivory, a partner at Golstblat BLP, said the
Chinese slowdown will hardest affect emerging markets which are providers of raw materials.

"Russia is another classic example that will feel the pain, and China will be a further negative drag on the Russian economy," Ivory said in e-mailed comments.

Andrey Kuzyayev, a former head of overseas
operations at Lukoil, Russia's No.2 oil producer, played down the worries, saying the
development of the Far East was not a
temporary whim, but a long-term goal for the
country.

"We need to make up time we have lost," he
said. "Cycles in any economy are the norm, not deviation. There will be a slowdown but
obviously there will be acceleration later."

Chinese government's growth target is 7
percent this year, down from 7.4 percent in
2014 and the slowest in a quarter of a century. Wang's address to the forum on Saturday was
short and he left immediately afterwards, in the
middle of the session, followed by Chinese
officials, including Wang Yilin, chairman of the
board at China National Petroleum Corporation.

"This was unexpected but this was okay, we
managed," said Boris Titov, chairman of the
Russian part of the China-Russia Friendship
Committee for Peace and Development. "The first session was delayed and they (the
Chinese delegation) had already a briefing
scheduled."

A CNPC official, who was accompanying Yilin
but declined to give his name, said only: "The
schedule has changed."


(Additional reporting by Denis Dyomkin; Editing by Lidia Kelly and Alison Williams)