Moscow has been engaged in "long term" discussions with Beijing but has been so far unable to strike a deal with Beijing in securing loans in the Chinese currency, the yuan, Russia's finance minister has said.
The comments by Anton Siluanov come as Russia seeks to pivot away from the West due to sanctions imposed by its full-scale invasion of Ukraine which has led to a huge boom in trade with China.
Momentum from Moscow to secure yuan loans has been gathering pace since 2014 when Russia's relationship with the West plummeted following Vladimir Putin's illegal annexation of Crimea.
So far, there has been little progress, and in September 2022, Russia's deputy finance minister, Timur Maksimov, said no agreement had been reached between the countries on such a move.
Moscow has been hoping to attract money from Chinese investors to offset Western capital which has disappeared due to the sanctions, but Siluanov told state news agency RIA on Monday that no agreement had yet been reached.
"Negotiations with Chinese partners have been going on for a long time," Siluanov said. "So far, there is no decision."
The latest round of talks between the countries took place at the end of last year, Siluanov said, without specifying whether progress had been made.
Newsweek reached out to the Russian Finance Ministry for comment.
Trade between Russia and China hit a record high in 2023, but there are cracks in the relationship with the main Chinese institution used by Russian importers, Zhejiang Chouzhou Commercial Bank, stopping operations in Russia for fear of breaking United States-led sanctions.
Moscow is trying to offset the freezing of 300 billion euros (US $323 billion) of Russian central bank assets by the EU and the Group of Seven nations.
However, Russia is finding it tricky to balance offsetting sanctions with a huge increase in military spending.
The Russian government faces a budget deficit of 1.6 trillion rubles ($17.5 billion), which should be covered by borrowing from the domestic market and the National Welfare Fund.
Assets in the fund have plummeted by 44 percent since the start of the war, from 8.9 trillion rubles ($100.4 billion) to 5 trillion rubles ($56.5 billion) according to a Bloomberg report of Russian Finance Ministry data last month.
As these financial problems unravel, Evgeny Suvorov, an economist at TsentroCreditBank, said Russia was vulnerable to any further economic crisis, especially if the price of its main export, oil, were to decline, The Moscow Times reported.
It comes the International Monetary Fund predicted that Russia's GDP would grow by 2.5 percent this year, but analysts have cast doubt on the health of the Russian economy, which is being driven by high expenditure on the military amid high inflation and worker shortages.
Update 02/26/24, 11:47 a.m. ET: This article was updated with additional information.
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Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
About the writer
Brendan Cole is a Newsweek Senior News Reporter based in London, UK. His focus is Russia and Ukraine, in particular ... Read more
