(Equilibri.net, Apr 19, 2007) The strategic alliance between Russia and China, despite a number of still unresolved contentions, seem to be growing stronger. In addition to a shared anti-American stance the two countries are united through a series of collaborative projects in fields as diverse as the energy, military, and commercial sectors. If Moscow is looking towards the east, China looses no opportunities in opening economic agreements with Europe and with Russia, never hesitating to sign agreements with the ex-enemy.

Elisabetta Pesenti

Equilibri.net (19 April 2007)

Towards a partnership in the energy sector

Energy was without doubt the subject at the heart of the meetings held in Moscow between the 26 and 28 March. During Hu Jintao¡¯s official visit to Putin the two leaders discussed and agreed upon a series of joint projects in the energy sector. This confirms the ever greater similarity of the two country¡¯s interests in the field of energy resources. On the one hand is the Russian desire to increase the flow of energy exports towards the East while on the other there is the ever greater interest on the part of China in receiving them. The Moscow encounter ¨C organised in occasion of the ¡®Year of China¡¯ and the inauguration of a Chinese commercial exhibition in the Russian capital ¨C produced contracts for a value of almost 4,3 billion dollars for the export to China, over the next eight years, of Russian goods and services. Hu and Putin committed themselves to reinforcing cooperation in the energy sector and, in order to favour the export of Russian crude, signed memorandums of understanding regarding the railway sector. The visit, given the Chinese commercial exhibition, was symbolic and reached its objective: the two powers demonstrated that the new Moscow-Beijing axis is not simply diplomatic but commercial. A considerable number of Chinese and Russian companies were present and many signed highly significant partnership agreements: amongst those signed was that between the Russian Novolipetsk and the Chinese Tebian Electric Apparatus Stock which guarantees the supply of 94.000 tones of Russian electric steel over the next 5 years. The Rosneft petrol group will supply China with Kerosene and will participate in joint explorations of the Venin offshore deposits with the Chinese giant Sinopec (with 74,9% and 25,1% participations respectively).

The new Sino-Russian agreements, in addition to commercial and energy sector collaboration, provide for an important technology partnership: the space agencies of Beijing and Moscow have signed an agreement to jointly explore Mars and its satellite Phobos. The Chinese Government also has plans for significant economic investments in the aerospace sector: the project is to create a company for the production of large passenger aircraft capable of competing with the giants from the aviation world such as Airbus and Boeing.
From ¡®border enemies¡¯ to business partners

After decades of rivalry what induced the two ¡®giants¡¯ to trust one-and-other and stipulate agreements that barely a few years ago would have seemed utopian? What progress was made to allow for such changes? The geopolitical scenario witnessed a significant change when, in 2004, the two countries signed an agreement that paved the way for diplomatic collaboration in order to resolve the eternal border disputes.

Currently only 320.000 of the almost 5 million barrels of crude that Russia exports daily end up in China. Notwithstanding, trade between the two countries has increased fivefold over the last few years and, according to the latest analyses, has never been so abundant: in 2006 growth was the equivalent of 14,7% (a total of almost 33,4 billion euros), 140 million tonnes of Russian petrol were exported to China over which over 11 million by rail. In 2006 Russian exports to China by 21% and seem destined to grow. Beijing has signed an agreement which commits China to supplying Moscow with the support necessary to creating Special Economic Zones (SEZ) in Russia in order to strengthen trade and contribute to the development of China¡¯s north-eastern region. However important trade is with Russia it represents only 2% of China¡¯s overall foreign exports and only a small proportion of the value of trade with the United States. The recent agreements evidence both the will to collaborate in order to create new business opportunities and agree upon long-term investments, and the Chinese determination to seek new means of benefiting from the transfer of technological know-how.

All considered, despite the high symbolic value of Hu¡¯s visit to Moscow and the value of the agreements that were reached, China has as yet to obtain an agreement on the construction of an pipeline capable of delivering Siberian petrol directly to national territory (preference was given to the route towards the Pacific in order to supply Japan). Chinese penetration of Russian Siberia remains a particularly delicate theme for the Kremlin. The local economy is already partially in the hands of thousands of small and medium sized Chinese businesses who are considered as posing a risk to an area that has always been considered a free trade zone.

Within 2015 the Pacific bound pipeline should be able to transport 1,6 million barrels of crude a day from eastern Siberia to the Russian port of Nakhodka close to Korea; the possibility of Hu obtaining its extension to China seems remote.

Sino-Russian diplomacy towards the United States

At a diplomatic level Hu and Putin seem to be in agreement as regards the most pressing international issues, especially as regards American policy. The two leaders made a series of joint declarations and agreed to common guidelines. Both maintain the same position on Korea and have declared that they will continue, if only through diplomatic activities, to support the denuclearisation process.

As regards the question of Iran¡¯s nuclear intentions and Tehran¡¯s refusal to stop uranium enrichment activities, both Russia and China have expressed a common wish to tackle the issue through peaceful means and negotiations. Both countries have used their veto powers in the UN Security Council to limit the application of further sanctions against Iran. The Sino-Russian strategy towards Iran is one of partial support, the objective being that of limiting US power in the region by contrasting it. This new ¡®anti-American block¡¯ seems to come from the common desire to strip the US of resources and political influence and, most obviously, economic power.
Conclusions

The results of Hu Jintao¡¯s visit to Moscow confirm in a number of ways just how complimentary China and Russia¡¯s economies are. The Beijing-Moscow axis (Chinese production ¨C Russian energy resources) seems to be capable of moving the economic balance towards the east, and of creating a solid base upon which the two countries can develop common policies through which limit American influence in Asia.