China's main interest in Russia is as a supplier of arms and commodities, primarily oil and gas to fuel China's rapidly expanding economy. After meeting with his counterpart, Hu Jintao, Putin said a new gas pipeline system, called the Altai, could be built to deliver gas from western Siberia to China. Another system would deliver gas from eastern Siberia for a total of up to 80 billion cubic meters per year.
Most Issues Settled
An unnamed member of the Russian delegation told reporters the projected pipeline could cost $10 billion and go into service in 2011. He added that financing is unlikely to pose problems. He also noted that Gazprom and its Chinese counterparts have agreed on a price for deliveries but did not elaborate. Gazprom CEO Aleksei Miller told Interfax that deliveries could start in six years and that the prices were based on the going rates for "hydrocarbons in Asia."
Of at least equal importance to China is getting a firm commitment from the Russians about extending to its frontier a branch of the planned oil pipeline from eastern Siberia to the Pacific. Russian oil exports to China currently are limited by the capacities of the two countries' rail systems and stood at about 7.7 million tons in 2005. The Russian decision in 2004 to build an oil pipeline across Siberia to the Pacific was largely seen as a victory for Japanese interests over those of China. Beijing has since sought to persuade Moscow to build a "spur" line to bring oil to China.
Moscow Aims To Please
On March 22, Putin indicated that Moscow has tried to respond to Beijing's wishes. He announced that "The Russian Federation and China have taken the decision to construct an oil pipeline system from eastern Siberia to the Pacific coast," Putin said. "Transneft and the Chinese National Petroleum Corporation signed a protocol [on March 21] to research the issue and construct a branch of the pipeline to...China. I have no doubt that this project will take place, and it will allow us to increase significantly the supply of oil from Russia to China."
"The practical implementation of [the oil-pipeline] project will begin in the next few months," Russian Foreign Minister Sergei Lavrov added. "The Chinese side is aware of this. The related technical and economic feasibility study will be conducted jointly, as quickly as possible."
Rosneft head Sergei Bogdanchikov said he hopes the pipeline will be completed "at the end of 2008."
An Imbalanced Relationship
It is not clear whether the Russian pledges will be sufficient to satisfy their partners. Some Chinese trade officials have publicly complained in recent weeks that the Russians have given them mixed signals on the pipeline project and, perhaps more importantly, have shown little understanding of how the market works. Such an assessment seems all the more remarkable in that it comes from Chinese and not Western sources.
London's "Financial Times" wrote on March 22 about Putin's visit that "there is a temporary coincidence of material interests between Russia and China, but it is superficial, and the results have yet to yield lasting benefits for either country or the world at large." Moreover, China's economy is 2 1/2 the size of Russia's and growing at a much faster pace.
The volume of Sino-Russian trade is 2 percent of China's total foreign trade, or 1/10th the amount of China's trade with the United States, 1/9th of that with Japan, 1/8th of that with the European Union, and 1/6th of that with South Korea. Putin has sought to promote sales of Russian industrial goods, but China is not much interested in anything except commodities and arms. It does not take much looking in the Russian press, moreover, to find articles suggesting that imports of Chinese goods are threatening whole sectors of Russian industry, or that it is unwise to sell weapons to a large and dynamic country that poses a potential strategic and demographic threat to Siberia.
Is Moscow A Major Asian Player?
Prior to Putin's arrival in Beijing, the official media of both countries sought to paint the present and future of bilateral political, economic, and military relations in rosy terms. The countries share an interest in the "stability" of Central Asia and in promoting "multipolarity" in the Far East to offset U.S. dominance. Moscow is trying to raise its international profile by playing an active role in the Iranian nuclear issue, while China has taken on a similar role in respect to North Korea.
But Moscow wanted to use the public display of Putin's visit to reaffirm its role as a major player in a dynamic region of the world, a prospect that, however, seems wishful thinking. The fact that Russia accounts for only 2 percent of China's trade volume underscores the point, as does the fact that Putin's hosts seemed interested in little besides gas and oil. A glance through recent issues of the influential Hong Kong-based monthly "Far Eastern Economic Review," moreover, reveals mention of Russia's role there only in passing in articles dealing with larger issues. Articles on the regional impact of China, India, Japan, or the United States abound, but none on Russia.