China to design new high-speed Russian railway between Moscow and Kazan

The £242 million design project is expected to give the Chinese state-controlled group an advantage in securing the £12.35 billion construction contract

China has agreed to design a high-speed railway between Moscow and Kazan in Russia, and will likely build the £12.35 billion project.

A unit of Russia’s state-owned JSC Russian Railways signed a contract Thursday with the design unit of China’s state-controlled China Railway Group to come up with the plans for a 770 kilometer high-speed rail between the two Russian cities.

China Railway Group will work alongside two Russian companies on the designs for a total cost of 20.8 billion rubles (£242 million) over the next two years.

After the designs are developed, a separate tender for the actual construction is expected to cost 1.06 trillion rubles (£12.35 billion).

Russian Railways President Vladimir Yakunin said in an interview on Friday at the St. Petersburg Economic Forum that China’s rail developers were likely to land that large contract also.

"It is quite likely," Mr. Yakunin said. "Of course the one who is participating in the planning has an advantage. This is obvious."

Political relations between Russia and NATO nations has deteriorated since the crisis in Ukraine, and the Kremlin has fostered new trade with China due to limited options with Europe and the United States.

Earlier this year, the two countries signed a financing agreement for up to $25 billion for Russian companies from Chinese banks.

In the middle of the Ukraine crisis, President Vladimir Putin struck a £237 billion deal for construction of a Russian gas pipeline to China.