By Sanjeev Sharma
New Delhi, March 26 (IANS) China and Russia’s ties have benefited both countries economically, and bilateral trade surged in the last year.
China now accounts for nearly a third of all Russian exports, and Moscow recently became Beijing’s top oil supplier, NPR reported.
Chinese President Xi Jinping called for expanding cooperation in sectors like energy and supply chains after a meeting with his Russian counterpart Vladimir Putin.
With his country facing withering Western sanctions, the Russian leader has had little choice but to accept the Chinese offers, analysts say, NPR reported.
“China’s domination of Russia is complete,” Sam Greene, a Russia specialist at the Center for European Policy Analysis, argues in a Twitter thread.
Greene describes the outcome of the talks as “remarkable” because the deals were so “one-sided” — with Russia offering raw exports but seeing little Chinese investment to Russia in return, NPR reported.
Thus far, China has not provided weapons or openly breached Western sanctions imposed over Russia’s ongoing invasion of Ukraine.
It has, however, helped shield Russia from Western efforts to isolate it, significantly increased exports of Russian oil, and become an even more crucial source for Russia of key inputs like microchips, Axios reported.
Russia is far more reliant on China than vice-versa, particularly since the invasion.
But Russia remains a key source of oil, arms and military technology for China, and a key diplomatic partner given its seat on the UN Security Council and like-minded approach to disputes with the West, said Alexander Gabuev, an expert on the Russia-China relationship at the Carnegie Endowment.
“It’s a very strong signal (from China) that, ‘we will continue developing this strategic partnership, and it doesn’t matter what the U.S. says about it,” Gabuev said.
“Putin tells his people he’s fighting for Russia’s sovereignty. In truth, he’s mortgaged the Kremlin to Beijing,” writes Greene, NPR reported.
A joint economic cooperation statement published after the visit stressed the two countries would seek to increase their use of “local currency”, such as the Chinese yuan rather than the US dollar, to settle cross-border trade, including for oil and gas.
The two countries are also increasingly ideologically aligned in their opposition to the US-led world order.
Russia is ready to increase settlements in yuan in its foreign trade, President Putin said on Tuesday during talks with Xi, RT reported.
“We are for the use of Chinese yuan in settlements between Russia and the countries of Asia, Africa, and Latin America. I am sure that these forms of settlements in yuan will be developed between Russian partners and their counterparts in third countries,” Putin said.
Two thirds of current trade between Moscow and Beijing is carried out in national currencies — the yuan and the ruble, the Russian President noted.
China’s trade with Russia hit a record high in 2022, growing by nearly a third amid Western sanctions against Moscow. Bilateral trade is on pace to hit over $200 billion this year.
The latest data from the Bank of Russia shows the yuan has become a major player in Russia’s foreign trade, with its share in the country’s import settlements jumping to 23 per cent by the end of last year from only 4 per cent in January 2022.
The yuan’s share in export settlements also surged, from 0.5 per cent to 16 per cent, RT reported.
In February, the Chinese currency overtook the dollar as the most traded currency on the Russian stock market for the first time ever, according to data from the Moscow Exchange.
Talks between Moscow and Beijing on building the Power of Siberia 2 natural gas pipeline that will double existing transit capacity are at “the final stages”, TASS news agency reported citing a senior Russian official.
According to Deputy Prime Minister Aleksandr Novak, China and Russia expect the deal to be struck by the end of this year, RT reported.
“Gazprom and China’s CNPC are finalizing their contractual obligations. A feasibility study and the project for the pipeline route through Mongolia are already underway. We hope, we are sure, that our companies will reach an agreement and sign the contract by the end of the year,” TASS quoted Novak as saying.
The Power of Siberia 2 pipeline is expected to supply 50 billion cubic meters of Russian gas to China annually from 2030 onwards.
Coupled with deliveries along the existing Power of Siberia pipeline, which became operational in 2019, it could bring China-bound gas deliveries to 100 billion cubic meters per year, RT reported.
The Power of Siberia 2 energy project was among the issues discussed during Chinese President Xi Jinping’s official visit to Moscow.
(Sanjeev Sharma can be reached at Sanjeev.firstname.lastname@example.org)