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Business news, 19.10.2004 12:40

Chinese to Invest in Road

china_investments The St Petersburg Times

By Galina Stolyarova

Staff Writer

Chinese investors may invest up to $1 billion in a high-speed toll road between St. Petersburg and Moscow, Economic Development and Trade Minister German Gref, said during during an official visit to Beijing last week.

"The final decision hasn't yet been taken but we have signed a preliminary agreement," Interfax quoted him saying. "Total investment may reach $1 billion."

Gref said the road was just one of several large projects in Russia that Chinese investors may support. China is considering investing $350 million in a major construction project in Moscow, he added.

The plan to construct a high-speed toll road between St. Petersburg and Moscow, which was unveiled by the Transportation and Communications Ministry last month, is scheduled to start next year.

Construction is expected to take about five years and cost some 180 billion rubles ($6.2 billion), the ministry said.

"Half of the funding will be provided by the government, while the other half should be covered by private investors," said Viktor Bukreyev, deputy head of the Federal Road Agency. "The investors will be granted the right to rent the adjacent lands for the long term."

The exact route of the toll road is being kept secret to prevent land-price speculation.

Some analysts expressed skepticism about getting foreign investors interested as several recent grand-scale transport projects, as, for example VSM high-speed trains between Moscow and St. Petersburg, ended in a miserable fiasco.

Chinese businessmen apparently don't find this experience, as well as general situation in the country, an intimidating factor.

Direct investment from China into the St. Petersburg economy totaled $2.4 million in 2003, according to the city's external relations committee. Chinese businessmen mainly invest in industrial, trade and transport projects.

Last summer the Chinese government gave its blessing to a plan to build a Chinatown in St. Petersburg. Five Shanghai companies are planning to build a mega-trade center in Krasnoselsky district in the southwest of the city. Involving $1.25 billion, the local China-town will cover 180 hectares, with business centers, hotels, recreation zones and apartment buildings.

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