Chinese automobile manufacturer in talks for Russian plant: Advisor

A Chinese automobile manufacturer is in talks to set up an assembly plant in the Russian city of Yaroslavl, Russia's top economic advisor said, during a state trip to promote trade and commemorate war dead.

Russian president Dmitry Medvedev laid a wreath on Sunday at a Soviet soldiers' memorial in Dalian, a port contested by Russia, Japan and China decades ago, before travelling to Beijing to discuss bilateral partnership with senior Chinese leaders.

Mutual trust between the two nations has never been stronger, Medvedev told the People's Daily, the mouthpiece of the Chinese Communist Party, adding that Russia sees its foreign policy as playing a balancing role between continents and interests.

Trade between China and Russia reached $25.5 billion in the first six months of this year, after growing by more than 30% a year since 2001.

Economic advisor Arkady Dvorkovich said talks with the Chinese automaker are still in the discussion stage, with no contracts to be signed on this trip. He did not identify the firm.

"Quality standards must be equal for all cars, no matter whether they are made in Russia, in China or in Europe," Dvorkovich added.

Top international carmakers including Ford, GM and Nissan have set up assembly lines in Russia to tap a car market that briefly overtook Germany's as Europe's largest, but the top-selling models are low-cost options such as the Ford Focus.

Private Chinese automaker Geely in January opened a complete knock down (CKD) assembly line with a Russian partner in Cheressk, after suspending operations in 2008 following changes in Russian import duties. Geely said at the time that sales of its cars in Russia had doubled in 2009.

An executive familiar with Geely's Russian operations said that he was not aware of plans for a new plant. Calls to other Chinese automakers were not immediately answered.

"We are talking to a number of foreign investors regarding our plans to create a auto components production cluster," said Alexandra Lileyeva, spokesperson for the regional governor in Yaroslavl, which lies about 250 kilometres northeast of Moscow on the Volga River.

Medvedev also called for more cooperation in designing civil aircraft and investing in ports and high-speed rail.

"The Russian economy's demand for large-scale replacements of many pieces of outdated equipment and the modernisation of many sectors in the heavy and light industries, energy, and transport will only grow," Medvedev said, according to a translation of an interview provided by the Kremlin.

"In this regard, Chinese products could occupy their own competitive niche in our market, especially with effective loan support from Chinese banking institutions," he said, in remarks that were not included in the published Chinese version.