Russian Finance Minister Siluanov has openly expressed the desire for China to provide loans.
Despite Russia's loan request being over a year old, no agreement has been reached yet.
The specific amount Russia hopes to borrow and the collateral it might offer remain unknown to the general public.
After three months of negotiations, both China and Russia have not reached a consensus, indicating a lack of sufficient leverage to sway each other or potential political interference.
Russia's GDP grew by 3.6% year-on-year in 2023, surpassing expectations despite ongoing warfare and Western sanctions, showcasing its resilient growth trajectory.
Russia is gradually overcoming the impact of Western sanctions, adjusting international trade routes, and strengthening cooperation with neighboring allies to counter sanctions.
Despite these improvements across various sectors, Russia's single-structured economy faces challenges.
Firstly, the revival of the military-industrial complex plays a crucial role. With the outbreak of the Russo-Ukrainian War, Russia's military production lines have rejuvenated, meeting the immense demand for ammunition from both sides.
Russia has opened 16 missile production lines with 80,000 workers laboring around the clock, increasing military production tenfold since the outbreak of the conflict.
Secondly, Russia's position in the energy sector is paramount.
Since the Russo-Ukrainian conflict began, the EU has sanctioned Russia, including in the energy sector.
As a result, Europe faces energy shortages, causing prices to skyrocket. Russia, losing its European market, has turned to China and India for energy exports.
In 2023, Russia's oil exports to these two countries exceeded $100 billion.
Thirdly, Russia has strengthened ties with China.
By selling oil to China at extremely low prices and opening ports such as Vladivostok, Russia has enhanced cooperation with China.
China provides the market, while Russia purchases a large number of commodities such as drones, all-terrain vehicles, and large equipment from China, leading to a significant increase in bilateral trade volume.
However, despite these improvements, why does Russia still need to borrow from China?
The Russo-Ukrainian war, now in its third year, has left both sides in dire need of weapons and equipment.
Russia's defense industry is in full swing, but this requires financial support, involving expenses in materials, labor, and more.
In 2023, Russia's defense and military spending reached 900 billion euros, accounting for one-third of the national fiscal expenditure.
Furthermore, Russia is currently facing inflation and rising prices, severely affecting people's livelihoods.
Additionally, Russia's foreign exchange reserves have $300 billion frozen by the US and Western countries, half of Russia's total international reserves.
This indicates a lack of optimism from the US regarding Russia's fiscal situation.
With Russia's financial problems unresolved, China's loan request serves as an escape from US economic sanctions.
For China, lending to Russia is a favorable choice. Russia holding the yuan can avoid restrictions on euro and dollar trade while also promoting the development of Sino-Russian trade.
Additionally, with China's rapidly rising economy, the yuan's international status has increased, making it the fifth-largest reserve currency globally and the preferred currency for international payments.
Through lending to Russia, China not only boosts bilateral trade but also enhances the influence of the yuan internationally.
In conclusion, lending to Russia can alleviate its current economic difficulties and fiscal pressures while strengthening economic cooperation between China and Russia.
For China, providing loans to Russia is not only economic support but also a significant measure to promote the internationalization of the yuan and expand its international influence.
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