Russian and Chinese Banks Exchange Views on Business Cooperation after COVID-19 Pandemic

State Development Corporation VEB.RF held a major two-day conference on Monday and Tuesday for Russian and Chinese banks and development institutions on boosting cooperation between Russia and China while overcoming the coronavirus pandemic, which seriously hinders economic and financial turnover of the two countries. According to the survey of 200 Russian companies operating in China or having Chinese partners carried out by VEB.RF shortly before the conference, 81.8% of the companies have plans to promote Russian-Chinese cooperation over the next year.

The conference participants discussed expanding the trade, economic and project finance, prospects for settlements in national currencies, co-financing of green economy projects and development of national green finance systems.

“Promoting banking partnership between Russia and China, expanding cooperation and regular experience exchange will help us to increase mutual investment flows and accelerate specific projects,” VEB.RF’s Vice-President Zarina Tsekoeva said at the opening of the seminar.

Deputy Director of the CDB Moscow Representative Office Meng Zhaogang emphasised that despite the global economic recession caused by the pandemic, bilateral trade in the first half of 2020 decreased only by 5.6% to 49 billion US dollars and in general maintains its pre-crisis level. “VEB.RF is our long-standing and most reliable Russian partner. We are promoting bilateral and multilateral cooperation under the SCO and Union Pay. Undoubtedly, our collaboration helps to build strong relationships between Russia and China,” Mr Meng Zhaogang said. According to Mr Zhaogang, areas for joint investment with the highest potential include the power sector, mining, chemical production, infrastructure construction, and high technologies.

The Chinese partners have shown the greatest interest in trade and project finance, especially in VEB.RF’s Project Financing Factory designed to reduce macroeconomic risks inherent in complex and risky projects, thus making them safer for investors. VEB.RF’s Senior Vice-President Sergei Evdokimov said that VEB.RF was ready to participate in projects having payback periods up to 20 years. VEB.RF is currently considering the increase of such periods up to 30 years. “In addition to reducing risks for project participants, VEB.RF can provide up to 40% of the total project funding, with the rest of the funds to be provided by commercial banks and project initiators,” he said. Foreign investors including Chinese investors may also participate in the Factory projects.

Russian participants have been most interested in the track record of the Chinese partners in green finance. VEB.RF is actively involved in developing the national green finance system with due consideration for the experience of Chinese colleagues, who were the first to create such system in 2015 and are constantly upgrading it.

Vice-director of Green Finance Research Center, Tsinghua University Center for Finance and Development Cheng Lin said that Chinese green finance standards have undergone some updates over the recent years. “Since 2016, China has been issuing green bonds, and over four years such bonds have accounted for 20% of the Chinese bond market. This year we expect the new version of requirements applicable to Chinese green projects and bonds. The State Council of the People’s Republic of China has approved the creation of pilot zones to implement green projects involving Chinese state banks, agencies, ministries and municipal authorities. Such zones are located in seven cities including Guangzhou, Shenzhen, Beijing, and Suzhou,” Mr Cheng Lin added.

On the Russian side, apart from VEB.RF, the conference participants included Gazprombank, Sberbank, Far East Development Fund, Russian Export Center, Russian Trade Company in China Hua No E San, EXIAR (the last four are members of VEB.RF Group), representatives of the Bank of Russia and Russian-Chinese Investment Fund, etc. On the Chinese side, the participants included the Bank of China, China Development Bank, ExIm Bank, Agricultural Bank of China, Industrial and Commercial Bank of China, Bank of Harbin, etc. In total, more than 80 conference speakers and attendees from 32 Russian and Chinese institutions took part in the event.