A week before today's repeat parliamentary elections in Moldova, China signed an agreement to loan $1bn (￡600m, €700m) to this cash-strapped, resource-poor country, nearly tripling Moldova's external debt and issuing a direct challenge to the US and Russia for economic and political influence in this last outpost of elected Communist rule in the former Soviet Union.

Beijing's move comes after Russia's recent agreement-in-principle to loan $500m to Moldova and as payments from the US Millennium Challenge Account have yet to reach $25m. The Chinese loan is double the planned Russian credit and beats by $300m the maximum that the MCA could offer. Moreover, the Chinese terms are highly favourable: a 3 per cent annual rate over 15 years with a five-year grace period on interest payments, and no human rights strings attached.

The money will be funnelled through Covec, China's largest construction company. It will ostensibly be put towards infrastructure and projects such as energy modernisation, water systems, treatment plants, the industrialisation of agricultureand the creation of high-tech industries, which Moldova sorely needs.