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$1 Bln Moldova Loan Could Signal China Diversification

CHISINAU -- A London-based analyst has said that a $1 billion Chinese loan for Moldova could signal an intensification of Beijing diversifying its foreign reserves, RFE/RL's Moldovan Service reports.

Christopher Granville, managing director of the consultant group Trusted Sources, said the massive Chinese loan for Moldova is unprecedented in terms of its proportion relative to the size of the target country.

Granville, whose company specializes in emerging markets, said Beijing has lent money to numerous African and Central Asian countries before.

But he said the huge loan for Moldova, which was announced last month, might indicate that the Chinese are eager to accelerate the investment process by cutting bigger deals with more emerging countries.

China is estimated to have some $700 billion in reserves.

Moldova's Communist leaders have presented the Chinese loan, along with an earlier one from Russia of $500 million, as Moldova's way out of the world economic crisis.

The outgoing government said both loans will be used for infrastructure projects.

The loans still have to be approved by Moldova's new parliament, which could be dominated by the opposition for the first time in eight years.

Moldovan's budget in 2008 was $1.95 billion and its GDP was $10.63 billion.