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China And Russia, Friends With Benefits

China And Russia, Friends With Benefits

Russian President Vladimir Putin’s recent visit to Beijing did not go without the customary commercial aspects. Along with Chinese President Hu Jintao, Putin signed agreements relating to security, energy, tourism, and commercial aviation, in addition to setting up a $4 billion fund to develop lumber, logistics, and infrastructure. The signing of the agreements was an inevitable and fruitful result for Russian delegation, which included six ministers and the presidents of the energy extraction and distribution companies Gazprom, Rosneft, and Tansneft. These developments are a strong suggestion that the world’s largest gas producer and the world’s largest energy consumer are on the verge of an agreement for the supply of natural gas. Long delayed due to disagreements over the price, the deal is likely done and lacking only details before being confirmed.

The visit solidified the already warm relations between the two countries. Trade has doubled in the past two years, and Russia is now the 10th largest exporter to China, sending mostly energy products and Siberian raw materials across its southern border.  The Chinese send back containers of commercial products, mostly consumer goods, and the two economies appear complementary and not in competition. The mutual collaboration has also led to more delicate relations of a military nature. After six days of joint naval exercises in the Yellow Sea, Russia and China inked new deals, which include anti submarine and anti pirate operations.

Putin’s words belie the importance of the partnership: “We favor the formation of an open and equal-minded security and cooperation architecture in the region, based on the principles of international law.” This all comes as the US is launching a new Pacific initiative. US Defense Secretary Leon Panetta has recently declared that 50-60% of the entire US Navy fleet will be stationed in the Pacific by 2020. On the political front, Washington is pushing the Trans-Pacific Partnership, drawing concerned reactions from Moscow and Beijing.

The alliances of the Asian theater are following pragmatic lines. The new Sino-Russian friendship, said to be the closest in recent memory, is undoubtedly stronger than the past. Just a few decades ago, when the two countries shared ideologies, tensions flared high enough to erupt in armed conflict. Today it is common interests that carry the day, but they are based on tactical convenience and, not shared ideals. The long border that divides the two countries separates too many interests to be declared pacified; the two giants consider their friendship instrumental, and therefore transitory. For now it is trade that keeps the peace, but the flow of goods cannot hide the existence of the divergences that have yet to be mentioned in official communication.

Alberto Forchielli

About Alberto Forchielli

Alberto Forchielli has written 282 post in this blog.

Alberto Forchielli, born in 1955 - MBA with Honors from Harvard Business School and BA cum laude in Economics from University of Bologna - is Founder, Partner, Managing Director, Investment Committee Member and Member of the Board of Mandarin Capital Partners; Founder and President of Osservatorio Asia, a non-profit Research Center focusing on Asia; Founder and President of Cleantech srl, a renewable energy company mainly focused on developing and managing utility-grade solar energy projects. From July 2012 he is Director of the Executive Council of CEIBS (China Europe International Business School) in Shanghai. Forchielli is an expert in international business development, particularly in China and India, thanks to his strategic abilities based on a 30 years experience. He publishes a weekly release: ‘Notebook from Shanghai’ on Radiocor Il Sole 24 Ore, the largest Italian Financial Press Agency. He also holds weekly interviews on China economy on Radio 24 - Il Sole 24 Ore and he publishes his own Blog on Caixin Media website in China: fugeli.blog.caixin.com/, and his own English blog: www.albertoforchielli.com. Born in Bologna, in his own operative background he experienced working and extensively living in several Countries all over the world: Singapore at Finmeccanica, Washington DC at World Bank, Luxembourg at European Investment Bank, Rome at IRI Group, Turin, Boston and London, Santiago and Lima at Mac Group, Hong Kong and Shanghai at Mandarin Capital Partners.

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3 Responses to “ “China And Russia, Friends With Benefits”

  1. pirugenia says:

    Will a EuroAsian block be a reality one day? soon? Will a EuroAsian currency rival the dollar?

  2. Bertie says:

    That seems unlikely.

  3. Chase says:

    OMG looks coool, but I can imagine Steve Jobs legal team alardey has the court documentation filled up for the concerned countries. cant w8 to see hows that gonna work out for miui.P.S. Gorilla Glass?

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