The exercise is not the first time Russian and Chinese forces have trained together, but it is the first time the exercises have been held in Russia and they are by far the largest to date.
Officials say future exercises will grow both in scale and frequency.
"Peace Mission 2007" is being seen as a display of strength against the West and comes a day after the meeting of leaders from the six-nation Shanghai Cooperation Organisation (SCO) in Bishkek, Kyrgyzstan.
The bill for the exercises is mostly being footed by Russia, but the symbolism of the event is expected to strike a chord well beyond the region, particularly in Washington.
|Russia's President Putin and other SCO |
leaders watched the exercises [AP]
The SCO was established in 2001 by Moscow and Beijing to foster security and economic ties in central Asia.
But the group is increasingly being seen as an eastern power block aimed at curbing US dominance in world affairs.
At their meeting in the Kyrgyz capital, SCO leaders underlined their opposition to perceived US hegemony.
The concluding communique issued at the end of the summit included what was seen as a thinly-veiled warning to the US to stay out of the region.
"Stability and security in Central Asia are best ensured primarily through efforts taken by the nations of the region on the basis of the existing regional associations,'' the statement said.
Attending the summit as an observer was Mahmoud Ahmadinejad, the Iranian president, who lashed out what he called US "interference" in the region.
Al Jazeera's Moscow correspondent, Jonah Hull, says Friday's military exercises will also be closely watched by the United States, albeit from a distance.
|The SCO is increasingly being seen as a |
counterbalance to US influence [AP]
He says Washington is keen to improve its own ties in the strategic and energy rich central Asian region, but the presence of Ahmedinejad at Thursday's summit meeting showed the US is clearly losing ground.
Ahmedinejad also had observer status at last year's summit of the SCO in Shanghaim and there is now talk the group may consider inviting Iran to join as a full member at some point in the future.
Our correspondent says another US concern to come out of the SCO meeting is the increasingly warm relations between Russia and China.
The two former Cold War rivals have developed what they call a strategic partnership, with the curbing of US dominance in world affairs topping their shared interests.
The SCO grew out of a regional effort in the mid-1990s to reduce military forces along common borders between China, Russia, Kazakhstan, Kyrgyzstan and Tajikistan – the so-called Shanghai Five
Joined by Uzbekistan, the six countries formally established the SCO on June 14, 2001.
Since then the group has rapidly evolved from a little-known regional body, to one attracting growing international attention as it focuses on military and economic cooperation in the Central Asian region.
Several other nations have been given observer status in the SCO, among them powerful regional states Iran, India and Pakistan, alongside states such as Mongolia and Turkmenistan.