Putin in Beijing: testing new political course

Putin in Beijing: testing new political course

Though Vladimir Putin planned his two-day visit to Beijing (from October 11 to 12) as the current Prime Minister in the result but arrived there as the future president. It is quite symbolic that in his new status Putin made his first foreign to China where he definitely could not avoid speaking about changes in the Russian foreign policy, which is by all accounts turning towards the East.

The receiving party, which traditionally gives Putin a warm welcome, has seized the shift of Moscow’s foreign policy and the commonality in setting strategic tasks on the global level…Beijing was very touchy upon the fact that the US’ Senate approved the bill aimed at making China revaluate Yuan. In such conditions the task to “reform the current institutions and first of all global financial institutions such as the Internationally Monetary Fund and the World Bank”, which was openly assigned by V. Putin, as well as the increasing role of BRICS countries in these processes set the guidelines for the Sino-Russian strategic partnership.

Among the goals of the visit the representatives of the Russian delegation mentioned signing a memorandum on co-operation in the modernization of the two economies. This document can be regarded as a unique one. Until recently, Russia was inclined to see only the US and other developed Western states as the source of advanced technologies for modernization of its economy. The attitude to China’s level of technological development was mainly skeptical.  The new Sino-Russian document is similar to the EU-Russian program “Partnership for modernization”. Speaking about certain sectors for cooperation it should be noted that Russia is the leader in nuclear energy, space and aircraft building industry, but in high-speed railway transport, shipbuilding, production of energy generation equipment China has left Russia far behind. 

It should be noted that misbalance in Russia-Chinese is a serious drawback of the bilateral trade exchange. Indeed, the volume and growth rate of the trade turnover are impressive. In 2010, trade turnover was $59 bln and in 2011, according to preliminary estimates, it may grow up to $70 bln and even higher. According to the most optimistic forecasts it will reach about $80 bln. China sets the goal to increase trade turnover with Russia up to $100 bln by 2015 and up to $ 200 bln. by 2020. However, according to Russia’s Economic Development Ministry, over the last few years more than70% of the income from Russian exports to China fell to the share of mineral products, timber and pulp and paper products. The share of machines and equipment in Russian exports to China does not exceed 5%, while more than half of the Chinese exports to Russia are machines and equipment. According to the results of 2008, China’s exports of machinery exceeded Russian 20 times!

Nevertheless, there have been some attempts to make the bilateral trade more balanced. Trying to move the Russian-Chinese economic ties beyond energy supplies Putin has signed deals in different sectors of the economy - from mining industry to space explorations for a total sum of $7 billion. Other branches of the economy which were mentioned during the talks in Beijing are aircraft building, nanotechnologies, biotechnologies, IT, medicine. The Joint entry to the global markets is a new trend. “If we want to receive a significant share of the global market, we should join our forces for example in the design and production of wide-body passenger planes. We should unite our financial and technological resources”, -Putin said in an interview with Chinese reporters.

Oil and gas issues were the most sensitive part of the bilateral talks. According to Deputy Prime Minister Igor Sechin, Russia and China have settled the price dispute over supplies of Russian oil to China. “We have found the decision, based on the market economy. This decision is in line with the current situation on the market and can be adjusted on market economy basis”. Sechin also said that China’s debt to Russia for oil supplies will be paid in compliance with the documents, the involved parties are to sign in the coming days”. As for gas relations between the two countries, the slow convergence of the positions is underway. Russia and China are about to complete talks on terms of gas supplies, Putin said. The parties have made a significant progress on the price issue, Sechin added.

The price dispute is a complicated but resolvable issue. What is important here is the scale of the deal: a 30-year contract for the supply of up to 68 billion cubic meters of gas a year. The contract is not a unique one but it should open for Russian gas companies not only the Chinese market but the market of the entire Asian- Pacific region, creating the largest market for the Russian gas in the East. It is not a coincidence that during talks in Beijing the Russian Prime Minister said that it is necessary to give Gazprom an opportunity to work on the Chinese domestic market, otherwise the strategic partnership in energy sector is impossible. In return the Russian Prime Minister responded to the concerns of China to receive the Russian gas via the Eastern route: “We are studying options for gas supplies along the Eastern route – this is the area around the city of Vladivostok. We have just completed a pipeline network from Sakhalin through the city of Khabarovsk to the city of Vladivostok. Provided that the volume of gas pumping grows it will be possible to speak about the implementation of this (Eastern) route”, - Putin said.

Everything points at important changes in Russia’s “Eastern policy”. “The trend to see the Asian component of the Russian foreign policy as a way to prove something to the West still exists today”, the chief editor of the magazine “Russia in global politics” Fyodor Lukyanov says. “But now it is no more relevant due to one simple reason - however Moscow’s relations with America and Europe are China has become Russia’s main neighbor. Today a lot depends on this neighbor and in future almost everything will depend on it. What Moscow simply can’t afford today is not to have good relations with China and not to develop a carefully planned policy in this direction. This policy should be independent, not as a derivative from the current situation with the US”. There have been signs of more intensive interaction between Moscow and Beijing on the international arena. Both parties are concerned with the fact that a notorious “Arab spring” may shake economic positions of Russia and China on the Middle East. This is where the decision of Moscow and Beijing to impose veto on the Western draft of the resolution by the UN Security Council against Syria comes from. A well-known Indian diplomat and political writer M.К. Bhadrakumar also mentions the US’ anti-missile expansion, as well as plans on revival of “Big Central Asia” strategy and intensive activities of Americans in the Caspian Sea region to common concerns of Russia and China. “Moscow and Beijing will regard it useful or expedient to coordinate their stances”,- the Indian expert writes. (1)

Judging from the current atmosphere in the Russian-Chinese strategic partnership, Putin’s position at the coming talks in the US in many ways will be based on the common vision of international issues Russia shares with China.


Igor TOMBERG, Head of the Centre of Energy and Transport Research of the Russian Academy of Sciences’ Institute of Oriental Studies, Doctor of Science, Economics, Professor

(1) Moscow and Beijing would see the need for calibrating their political response to a common challenge. http://www.atimes.com/atimes/Central_Asia/MJ08Ag01.html

Tags: Gazprom  China  Middle East  Russia    Putin