Russian President Vladimir Putin is in Beijing for the 3rd Belt and Road Forum for International Cooperation (BRF), where the Russian leader is expected to hold talks with Chinese President Xi Jinping on October 18.
This is Mr Putin's first trip to a world power since Moscow launched its military campaign in Ukraine in February 2022, and the Russian president's second foreign trip since the International Criminal Court (ICC) issued an arrest warrant for him. China is not a member of the ICC.
Mr Putin's visit to China comes at a time when the conflict in Ukraine continues to rage while the world's attention is focused on the Middle East where the war between Israel and Hamas is raging.
Besides prominent international issues, the two leaders will discuss details of bilateral relations, from trade turnover, investment, infrastructure, to energy cooperation and the use of local currencies in payments.
President Xi Jinping and his wife Peng Liyuan welcome international guests attending the 3rd Belt and Road Forum for International Cooperation (BRF) at a banquet on the evening of October 17, 2023. Photo: CGTN
In an interview with China Media Group ahead of his two-day visit to China, the Russian President said that Russia and China are developing bilateral relations primarily for the benefit of the two peoples, not for short-term political opportunism.
“The relationship between Russia and China… is not forced to fit the current global environment, nor is it the result of short-term political opportunism. Russia-China relations have been carefully and phasedly shaped over 20 years. At every step, both Russia and China have acted in their own national interests,” the Russian leader said.
According to Mr. Putin, Moscow and Beijing always take into account each other's views and interests. "We always try to reach compromises, even on complex issues inherited from ancient times. Our relations have always been driven by goodwill," the Russian President emphasized.
For its part, Beijing has rejected Western criticism of its growing cooperation with Moscow amid the conflict in Ukraine, insisting that the relationship does not flout international norms and that China has the right to cooperate with any country it chooses.
Trade - Investment
According to the General Administration of Customs of China, trade turnover between the two countries in 2022 increased by 29.3% compared to the previous year, reaching 190.27 billion USD - a record number for both sides during the period of cooperation.
Russia mainly exports energy resources, metals, timber, agricultural products and seafood to China. In return, China exports to Russia cars and trucks, consumer electronics, excavators, microprocessors, clothing, footwear and consumer goods.
According to China, in the period from January to September 2023, bilateral trade turnover increased by 29.5% with a total value of 176.4 billion USD.
Russian President Putin was the first guest to enter the banquet hall hosted by Chinese President Xi Jinping, October 17, 2023. Source: Sputnik
Regarding investment, according to the Russian Ministry of Economic Development, as of September 2023, Moscow and Beijing have jointly implemented 79 large-scale projects, with a total investment of about 170 billion USD.
According to the Chinese Consulate General in Vladivostok, Chinese investment in the Russian Far East exceeded $13 billion by 2022.
According to the Russian-Asian Union of Industrialists and Entrepreneurs, the main areas of Chinese investment in Russia are now replacing Western companies that left the Russian market due to sanctions.
Last month, Chinese Commerce Minister Wang Wentao said China-Russia economic and trade cooperation had deepened and become “more solid” under the “strategic guidance” of the two leaders.
Energy cooperation
Since the outbreak of the conflict in Ukraine, Russia, the world's top oil producer, has strengthened its energy ties with China , the world's second-largest oil consumer after the United States.
By the end of 2022, Russia ranked second in oil supplies to China, with 86.25 million tons (Saudi Arabia ranked first with 87.49 million tons).
In 2023, Russia increased oil exports to the Asian giant, with 60.6 million tons supplied to China in the first half of the year alone, up 25.2% year-on-year.
Russia supplies oil to China through three main routes: a branch of the Eastern Siberia-Pacific Ocean (ESPO) pipeline, tankers passing through Kazakhstan and from the port of Kozmino in the Far East.
Until recently, China received 7 million tons of Russian oil via Kazakhstan every year. Rosneft and China National Petroleum Corporation (CNPC) signed a deal in February 2022 to increase the shipments to 10 million tons of oil per year over 10 years. The contract is worth $80 billion.
Russian President Vladimir Putin and Chinese President Xi Jinping talk during a welcoming ceremony at the 3rd Belt and Road Forum for International Cooperation (BRF) in Beijing, October 17, 2023. Photo: Sputnik
In addition to oil, Russian gas flows directly to China via the Power of Siberia pipeline on its northern border with Russia. Launched in December 2019, Power of Siberia is expected to reach its full capacity of 38 billion cubic meters per year by 2024. The contract is worth $400 billion.
Gazprom supplied 10.39 billion cubic meters of gas to China via this pipeline in 2021, 15.5 billion cubic meters in 2022 and 22 billion cubic meters in 2023.
The Power of Siberia 2 pipeline project, which runs through Mongolia to the Xinjiang Uygur Autonomous Region in western China, is expected to transport 50 billion cubic meters of gas per year to serve the billion-people market. The project passed the feasibility study stage in January 2022, with a framework agreement signed by Gazprom and CNPC in November 2014. The gas supply contract has yet to be signed.
The third project involves the supply of gas from the Sakhalin Island shelf along the Power of Siberia 3 pipeline currently under construction to the cities of Dalnerechensk and Hulin (Far Eastern route). Gazprom and CNPC signed an agreement in February 2022 to supply 10 billion cubic meters of gas per year over the next 30 years via this route.
The volume of Russian pipeline gas supplies to China will reach 48 billion cubic meters per year when the Power of Siberia and Power of Siberia 3 projects reach full capacity.
The Power of Siberia and Power of Siberia 2 pipeline projects transport Russian gas to China. Photo: Table Media
Russia-China cooperation is also booming in the fields of coal, liquefied natural gas (LNG) and nuclear energy. Russia exported 6.5 million tons of LNG to China in 2022 (up 44% compared to 2021), with supplies increasing 2.4 times in value, exceeding $6.74 billion. Russian LNG supplies to China in the period from January to July 2023 increased by 62.7% year-on-year to 4.46 million tons.
The strategic program for cooperation development in the field of nuclear technology until 2030 was signed between the two sides in March 2023.
China is the world's largest coal importer. Russia and China signed a roadmap for developing coal cooperation in October 2014. According to Russian Deputy Energy Minister Sergey Mochalnikov, Russian coal exports to China have increased 2.6 times over the past six years to 67 million tons per year, with at least 85 million tons of Russian coal expected to be supplied to China by the end of 2023.
Agriculture - Transportation
China is Russia’s largest customer for food and agricultural raw materials. According to the Russian Federal Customs Service, Russian exports of these goods to China totaled $3.5 billion in 2021. China has traditionally bought a lot of fish and seafood (more than 30% of total food imports). Russian exports of vegetable oils, honey, chocolate, beer and ice cream have increased over the past five years. In 2015, China opened its grain market to Russian producers.
Russia's Uralkali company signed an agreement to supply about 3.5 million tons of potassium chloride to China from 2023 to 2025 on June 15, 2023.
The largest transport project between the two neighbors is the Europe-Western China International Transport Corridor. The highway stretches about 8,500 km, of which 2,200 km is in Russia, 2,800 km is in Kazakhstan, and 3,500 km is in China. Construction began in 2008 and is expected to be completed in 2024. The expected freight volume is 33 million tons per year. Some facilities are already in operation. Investment by Chinese companies is estimated at 150 billion rubles ($1.53 billion).
The first Russia-China road bridge across the Amur River (Heilongjiang) opened to traffic on June 10, 2022. Photo: ZUMA Press
The first road bridge across the Amur River, known as Heilongjiang in China, connecting the Russian city of Blagoveshchensk and its sister city Heihe, opened to traffic in June 2022. The construction concession agreement was signed in June 2016. The project is worth $369 million.
Moscow hopes that when fully operational, the bridge will see the traffic of about 4 million tons of cargo and 2 million passengers per year.
Payment in local currency
Bank of China was the first Chinese commercial bank to start settlement operations in renminbi and ruble in March 2003.
In March 2017, a yuan clearing and settlement center was opened in Moscow. There are several representative offices of Russian banks in China, as well as a branch of VTB Bank in Shanghai. About 60 Russian commercial banks have correspondent accounts with Chinese banks.
Since October 2017, a payment system in Chinese yuan and Russian rubles has been operating within the framework of the China Foreign Exchange Trading System (CFETS).
On June 5, 2019, an intergovernmental agreement on the transition to payments in each other's national currencies was reached between Russia and China.
In March 2023, President Putin announced that Russia and China conducted two-thirds of their trade in rubles and yuan .
Minh Duc (According to TASS, Reuters, Euronews)
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