Planned rail link to boost ties with Chinese

RUSSIA is seeking to build a high-speed rail link to further bolster ties with China after agreeing on the biggest natural gas supply deal in history.

Russian Railways plans a high-speed link from Moscow to Beijing that may require as much as 2.8 trillion roubles (R668 billion) of investment to reach the border, says Alexander Misharin, the vice-president at the state-run company.

It would cut the trip from Moscow to Beijing to 30 hours from more than five days presently, says Misharin.

As Russia’s economy slides towards recession and relations with the US and Europe deteriorate amid the Ukraine conflict, the world’s largest energy exporter is turning to China for trade and financing.

Natural gas exporter Gazprom reached a $400bn (R4.8 trillion) deal with China in May to build a pipeline – similar in cost to the rail link – and start supplies after more than a decade of talks.

“We are essentially creating a new transport network that could be compared to building the Suez Canal in terms of scale and significance,” Misharin said. Chinese banks and companies had shown interest in the project, on a concession basis, to carry freight and passengers from Asia to Europe, he said.

Last month, during Chinese Premier Li Keqiang’s visit to Moscow, a delegation signed accords including high-speed rail co-operation, a three-year 150bn yuan (R267bn) localcurrency swop deal and a double-tax treaty.

Increasing dependence on China may not bolster Russia’s economy. With the rouble near a record low and foreign investment disappearing, luring Chinese cash may deepen Russia’s reliance on natural resources and derail government efforts to diversify the economy, while negotiations on oil and gas deals have stumbled over pricing.

The rail route would stretch 7 800km to 8 000km, depending on whether it ras through Kazakhstan, Misharin said.

The Russian section alone will cost 2.5 trillion to 2.8 trillion roubles, and the line will need as many as 170 specialised freight and 400 passenger trains. Russian Railways now plans to start work as early as next year and complete construction in 2019. – Bloomberg