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Russia says nearly half of its reserves are frozen, depending on relations with China.


© Reuters. FILE PHOTO: A child holds the national flags of Russia and China before the welcoming ceremony for Russian President Vladimir Putin outside the Great Hall of the People in Beijing, China, June 25, 2016. REUTERS / Kim Kyung-Hoon

By Mark Trevelyan

LONDON (Reuters) – Russia said on Sunday it was counting on China to help it withstand the blow to its economy from Western sanctions, which it says has frozen almost a year. half of its gold and foreign currency reserves.

“We have a portion of our gold and foreign exchange reserves in Chinese currency, denominated in yuan. And we see what pressure Western countries are putting on China to limit mutual trade with China. Of course, there is pressure to limit access to those reserves,” said Finance Minister Anton Siluanov.

“But I think that our partnership with China will still allow us to maintain the cooperation that we have achieved, and not only maintain but increase it in an environment where markets are not satisfied. Western schools are closing.”

Western countries have imposed unprecedented sanctions on Russia’s financial and corporate systems since the country invaded Ukraine on February 24 in a special military operation.

Siluanov’s comments in a television interview mark the clearest statement yet from Moscow that it will seek help from China to cushion the impact.

The two countries have deepened cooperation in recent times as both have come under intense Western pressure on human rights and a host of other issues.

Russian President Vladimir Putin and Chinese President Xi Jinping met in Beijing on February 4 and announced a strategic partnership they say is aimed at countering US influence, describing it as a friendship without limits.

Sanctions on Russia’s reserves have become one of the most painful for the Russian economy.

A month ago, Siluanov said Russia would be able to withstand sanctions thanks to its ample reserves and was even considering offering Eurobonds to foreign investors as market volatility eases.

On Sunday, he said the sanctions had frozen about $300 billion of the $640 billion Russia has in its gold and foreign exchange reserves.

Mr. Siluanov also said Russia will fulfill its state debt obligations and will pay rubles to creditors until state reserves are not frozen.

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