The other special relationship: China's Xi visits Russia

US economic and political actions against China and Russia are likely driving the two countries closer, analysts say.

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    Ahead of a state visit to Russia, Chinese President Xi Jinping described Vladimir Putin as his 'best and bosom friend'. Trade and economic cooperation are likely to be high on the agenda at their summit [File: Alexander Zemlianichenko/AP]
    Ahead of a state visit to Russia, Chinese President Xi Jinping described Vladimir Putin as his 'best and bosom friend'. Trade and economic cooperation are likely to be high on the agenda at their summit [File: Alexander Zemlianichenko/AP]

    Hong Kong, China - While much of the Western media have been scrutinising the so-called special relationship between the United States and the United Kingdom this week as their leaders met in London, another close - and growing - geopolitical and economic bond is receiving relatively little attention.

    China's President Xi Jinping is in Russia on a state visit to meet his counterpart Vladimir Putin, just as both countries feel the long arm of US trade and foreign policy hurting their interests.

    On a personal level, Xi and Putin seem to have a very special relationship indeed. In an interview with Russia's state TASS news agency, Xi said: "I have had closer interactions with President Putin than with any other foreign colleagues. He is my best and bosom friend. I cherish dearly our deep friendship."

    The two countries have long supported one another in the international political arena - at the United Nations on Syria and Iraq, for instance. Xi's visit marks 70 years of diplomatic ties between them.

    But much of the focus of Xi's latest visit is on their growing economic relationship. Xi will attend the 23rd St Petersburg International Economic Forum. Its theme this year is "Creating a Sustainable Development Agenda," and he is expected to deliver a speech on "China's important proposals in the field of sustainable development", which includes advocating multilateralism and improving global governance.  

    Agathe Demarais, global forecasting director at The Economist Intelligence Unit (EIU) says three issues are likely to dominate Xi's meetings in Russia: "North Korea, with which both Russia and China have a particular relationship; Russia's energy exports to China, in particular through the Power of Siberia gas pipeline that is being constructed in Western Siberia; and the respective relations of Russia and China with the US."

    Both Russia and China are facing economic challenges.

    On Tuesday, the World Bank lowered its growth forecast for Russia for 2019 to 1.2 percent, down from 1.4 percent. The US has led international sanctions against Russia over its military actions in Ukraine. But falling oil production and slowing bank lending are having the biggest impact on its economy, according to the World Bank.

    Meanwhile, tit-for-tat punitive trade tariffs between China and the US have hurt the confidence of businesses and consumers in China.

    A mutual rival

    Some analysts say the US's actions are likely driving China and Russia closer together.

    "Policymakers in both countries have actively tried to strengthen trade ties in recent years. And it's no coincidence that this surge in Russia-China trade has come at the same time that the US has tightened sanctions on Russia and concerns about the US-China trade war have intensified," Liam Carson, emerging Europe economist at Capital Economics, told Al Jazeera.

    Donald Trump
    Some analysts say a mutual rivalry with the US is driving China and Russia closer, politically and economically [Henry Nicholls/Pool/Reuters]

    "There has been a marked increase in trade between Russia and China over the past couple of years. The value of Russia's exports to China doubled between 2016 and 2018. While that was due partly to higher oil prices flattering the value of exports, non-oil exports also rose by almost 50 percent over this period," said Carson.   

    Bilateral trade topped US$108bn last year, a record high, spurred in part by China's need to find new markets for products as the trade war with the US rages.   

    According to data from China's National Bureau of Statistics, Chinese exports to Russia jumped 9.1 percent in 2018 to 316.7bn Chinese yuan ($45.8bn) while imports from Russia rocketed 39.4 percent to 390.9bn yuan ($56.5bn).

    The total value of China's imports from Russia rose faster than those of any other top trade partner in 2018.  

    But they still account for relatively small proportions of one another's trade.

    All told, 1.9 percent of all Chinese exports went to Russia in 2018, and Russia accounted for 2.8 percent of Chinese imports.

    By comparison, Chinese imports from the US fell 2.3 percent to 1,019.5bn yuan ($147.3bn), while exports to the US rose 8.6 percent in 2018 from a year earlier to 3,160.3bn ($456.5bn).

    Bruno Sergi, an author and professor of Russian and Chinese political economy at Harvard University, believes that a bolstered trade relationship will lead to an "informal alliance" in deeper hi-tech cooperation and a new strategic alignment.

    "It is fair to assume that the key topics of discussion will be the issues of keeping the stability and increasing the volume of foreign trade turnover of Russia and China, implementing joint fuel and energy projects, etc. Probably, standard solutions will be searched for and prospects for cooperation in the green economy and environmental protection will be discussed," Sergi told Al Jazeera.  

    Though Sergi thinks the oil and natural gas industry is part of the story, he feels this will not tie Xi and Putin into an international treaty any time soon.  

    Common ground

    China and Russia have had a complicated relationship in the past - they fought a brief border war in 1969 - but they have been drawing closer in recent years as their interests converge.   

    Sergi says there is "no doubt that" the two countries are closer together now than over the past few decades. He points to a recent agreement to make it easier to transport goods across their land border as a major achievement in this regard.

    Russia and China are likely to boost technology cooperation and use China's Belt and Road Initiative - a series of land and maritime infrastructure projects stretching from Asia to Europe - to facilitate future tie-ups, says Sergi.

    Second Belt and Road Forum in Beijing
    Russian President Vladimir Putin is a key supporter of Xi's Belt and Road Initiative [April 27: Sergei Ilnitsky/Pool/Reuters]

    The presence of a shared adversary has been a key factor in their renewed economic cooperation, analysts say.

    "I think that the aggravation of US-China relations objectively pushes Russia and the [China] to cooperate more closely with each other and in the conditions of today's confrontation, China and Russia have the opportunity to improve economic ties," Sofya Bakhta, marketing strategy analyst for Daxue Consulting, told Al Jazeera.  

    Bakhta believes the trade war challenges China's development in the areas of economic, energy and food security. And it is in these areas that Moscow and Beijing can strengthen cooperation.

    But not everyone is convinced that China's and Russia's troubles with the US are pulling the Cold War allies closer.

    "Despite headlines, Russia's much-trumpeted pivot towards Asia is so far not taking place, with little energy supplied by Russia to Asian countries and low levels of Russian exports to China (China absorbs 10.9 percent of Russia's exports, a far lower share than the EU)," said the EIU's Demarais.  

    "Conversely, China does not appear to prioritise cementing its relations with Russia, which it sees as a junior partner, partly for fear of further antagonising the US."

    She does, however, think one field where relations are evolving is in foreign exchange transactions.

    "Russia was one of the first countries in the world to ink a currency swap agreement with China, in 2014, for an amount of $24.5bn. Such an agreement makes it possible for Russia and China to conduct trade directly in renminbi and rubles, without having to use a third currency such as the US dollar. Such an agreement aims at strengthening trade ties; it also preempts potential US sanctions that target payments in US dollars," said Demarais.  

    Nuclear energy is another area where the two are helping one another.

    "This was underlined during the China-Russia summit in early June 2018, when Rosatom, the Russian state-owned nuclear energy company, signed four new nuclear power agreements - one of the largest deals in Sino-Russian nuclear cooperation," said Demarais.

    SOURCE: Al Jazeera News


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