China and Russia agree to jointly develop ‘Ice Silk Road’

 China's President Xi Jinping

China's President Xi Jinping will develop ‘Ice Silk Road’ with China. Credit: Shutterstock

China and Russia announced plans to jointly develop an ‘Ice Silk Road’ during a meeting between Chinese President Xi Jinping and Russia’s President Vladimir Putin in Moscow on 4 July.

The meeting of the leaders, which gave them the chance to discuss boosting ties between the two countries, is their third this year. This time, Russia and China will sign several contracts worth more than a total of USD10 billion.

President Xi made the two-day stop in Russia on his way to Germany, where a G20 summit is scheduled for later this week. During his visit, he said Russia is an important partner in the Belt and Road initiative and also urged the two countries to strengthen the Northern Sea Route co-operation in order to realise an ‘Ice Silk Road’.

China released the Vision for Maritime Co-operation under the Belt and Road initiative, which proposes three ‘blue economic passages’, China-Indian Ocean-Africa-Mediterranean Sea, China-Oceania-South Pacific, and China to Europe via the Arctic, which would be along Russia’s Northern Sea.   

President Xi told Russian local media that relations between the two countries were currently at their “best time in history” and President Vladimir Putin said Russia fully supported the Belt and Road initiative.

An investment fund worth more than USD10 billion was announced during the leaders' meeting, which Russian Direct Investment Fund and the China Development Bank (CDB) have agreed to establish. The money will be used on infrastructure projects in Russia and China, especially the projects related to the Belt and Road project.

The new fund will make ruble and yuan settlements and allow the two countries to make payments in local currencies for bilateral trade, which will further push RMB internationalisation.

The Chinese government and affiliated companies have been making steps towards successful commercial transit of the Northeast Passage above Russia in the past few years. Yong Sheng, a 19,000-tonne container ship operated by China’s state-owned Cosco group, was the first container vessel to make its transit along the Arctic shortcut between Asia and Europe. The vessel set sail on 8 August 2013 from Port of Dalian in northeastern China, bound for Rotterdam.

The energy-related matter is another main focus of economic co-operation between Russia and China, according to Putin. Chinese banks financed USD12 billion to the Russia’s Yamal LNG project in the middle of the Northern sea route, which can produce about 16.5 million tonnes of natural gas.

Russia’s Gazprom signed a sale and purchase agreement for natural gas with the China National Petroleum Corporation yesterday in Moscow.

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