BOFIT Viikkokatsaus / BOFIT Weekly Review 2016/12
Chinese investors are interested in Russia’s natural resources and local market potential, but they see also many weaknesses and risks in Russia. E.g. an Ernst & Young survey last year found that Chinese firms see Russia’s regulatory environment and infrastructure as weaknesses. Biggest obstacles to investment relate to legislation, uncertain economy, the lack of investment guarantees and sanctions.
Some projects have moved forward recently. The Silk Road Fund has sealed the purchase of a 10 % stake in Novatek’s LNG project on the Yamal peninsula (CNPC already owns a 20 % stake). Sinopec has agreed to purchase a 9.9 % stake in the petrochemical company Sibur. Both Russian firms are involved in major investment projects that have received funding also from Russia’s National Welfare Fund. Gazprom has also taken sizable loans from Chinese banks. Gazprom needs funding for e.g. construction of the Power of Siberia natural gas pipeline to China and bringing gas production on stream in order to supply the pipeline. The Chinese have, however, also sold stakes in Russian enterprises (e.g. a stake in the Moscow stock exchange).