On March 22nd, shortly after assuming the post of President of the People’s Republic of China, Xi Jinping headed off to Moscow to meet with Russian President Vladimir Putin. Observers were watching the two leaders closely, looking to divine whether or not they could overcome past divisions to achieve a new level of cooperation in bilateral ties. What came out of the two leaders’ meeting and what does it augur for the future of Sino-Russian relations?
Three major areas appear to have been the focus: managing expectations about the relationship; expanding bilateral trade in energy and arms; and cooperation on international security affairs. Drawing on press reports from China and Russia we have attempted to determine how much progress was actually made on these issues at the summit.
Framing the relationship between Beijing and Moscow is an issue with both domestic and international implications for both countries. Domestically, Beijing’s leaders want to convey to their people that China’s rise is accepted and respected by major world powers. Similarly Russia, whose relations with major Western powers has deteriorated since the re-election of President Putin, appreciates the respect that comes from Xi Jinping’s selection of Moscow for his first visit abroad as China’s new leader.
Bilaterally, both Beijing and Moscow are looking to leverage their relationship to enhance their leaders’ standing domestically and maximize their influence among world powers. At the same time, they hope to avoid the costs they would incur if other states felt the need to counter-balance a renewed bond between Russia and China. Neither party seeks a world where their relationship is viewed as the second coming of the Sino-Soviet axis of the Cold War.
In the realm of bilateral energy trade, China’s goal is to acquire as much cheap and reliable energy as possible without relying too heavily on any single-nation source, which could be disrupted by an unexpected bilateral crisis. For its part, Moscow wants to retain as much leverage as possible over the price of the natural resources it sells and to avoid becoming dependent upon China as a destination for its energy exports.
Even in light of these differences, it is sometimes still surprising how limited energy sector cooperation is between China and Russia, despite Russia’s vast energy resources and China’s rapidly growing needs, the geographic proximity of the two states, and the strategic advantage of having an overland supply route invulnerable to U.S. Navy at-sea interdiction. Russia is just the fourth largest supplier of oil to China, supplying it with only 8% of its total oil imports. There is even less cooperation in the area of natural gas.
That may be changing. During the summit a great deal of fanfare was made over the conclusion of a deal to construct a pipeline to ship natural gas between the two countries. This was followed by an announcement that Beijing will extend a $2 billion line of credit to Russia’s politically well-connected natural gas giant, Gazprom, which could expedite a long-term supply contract.
Despite the progress, Rosneft CEO Igor Sechin said Russia and China still have not signed a final binding contact. The hold up once again is the pricing structure for Russian gas exports. Russia wants to set prices in line with the lucrative deals it has signed with European nations, while China believes the price should be set much lower. Disagreements about price have tripped up negotiations on a number of previous occasions so it is still possible the deal will fall apart before the end of 2013.
On the arms front, Beijing wants to pay as little as possible for advanced military technologies and hardware. Russia wants to increase its arms sales to China, but wants to avoid any deals that could compromise its own security.