Economic conference underlines growing China and Russia ties

Vladimir Putin and Xi Jinping headed to Saint Petersburg on Thursday to attend an international economic forum where the Chinese leader was the guest of honour.

Mr Xi, who is on a three-day state visit to Russia, is leading a delegation of more than 1,000 Chinese businessmen and officials attending the prestigious international event in a signal of much-needed support for the Russian investment case.

Bilateral ties between the two nations have strengthened since 2015 since the US and the European Union began heaping sanctions on Russia as punishment for its aggression in Ukraine. China's confrontation with Donald Trump's administration over trading terms has bolstered the alliance further, with both sides alienated by US policies.

Mr Putin's and Mr Xi's shared aversion to US global dominance has cemented a strong bond between the two men. Their positions on Syria, Venezuela and Iran – areas where the US has clashed with Russia – are "either close or fully coincide", the Kremlin said this week.

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Speaking in the Kremlin on Wednesday, Mr Xi described Mr Putin as his “best friend and a good colleague” and pledged that mutual support between their countries would continue. Russia’s president returned the compliment, declaring that Russian-Chinese relations had “reached an unprecedented level” of “global partnership and strategic co-operation”.

Oil and gas

The personal bond between Mr Putin and Mr Xi – the two leaders have met almost 30 times since 2014 – has facilitated stronger economic and military ties between Moscow and Beijing. China has been importing growing volumes of Siberian oil and gas, providing Russia with billions of dollars of export earnings and an alternative outlet to the increasingly wary energy markets in Europe.

Russian roads and railways are carrying increasing volumes of goods from China to Europe and the Chinese People’s Army is looking to Russia for advanced military technology.

But while trade turnover between the two nations has risen to $108 billion (€96 billion) a year, the economic relationship is asymmetrical. While China is one of Russia’s top trading partners, Russia ranks only 10th among China’s trade partners.

The large Chinese presence at this week's Saint Petersburg conference comes as Russia, facing weak economic growth and escalating western sanctions, struggles to attract foreign investment. Mr Xi's attendance is ample compensation for the absence of other prestigious guests such as the US ambassador to Russia, Jon Huntsman, who has skipped the event to protest against the controversial detention of American businessman Michael Calvey, who is under house arrest in Moscow awaiting trial for an alleged fraud.

There are some signs that fraying relations with the US could spur Russia and China to broaden economic co-operation . A deal signed during Mr Xi's visit will see China's Huawei technology, which has been banned by the US as a security risk, help develop 5G networks for Russia's MTS telecommunications group.

Industrial manufacturing

And while US car maker Ford has just closed its Russian venture, China's Great Wall Motors is moving in with the launch this week of a $500 million assembly plant in the Tula region that it says is the biggest ever Chinese investment in Russian industrial manufacturing.

While Russia is eager for more Chinese investment it's also wary of becoming over-dependent on its increasingly powerful neighbour. Mr Putin's press spokesman , Dmitry Peskov, downplayed the extent of Russia's pivot to China ahead of Mr Xi's visit this week.

“I can’t say that Russia has pivoted to the east. I hope that will never happen,” he told Russia Today television. “The eagles of the Russian emblem looks in two directions, to the west and to the east. This is a natural measurement of Russia’s approach.”

China may also have reservations about involvement with Russia. Chinese officials made clear that two giant pandas delivered to Moscow zoo this week are a loan, not a gift. However, Mr Putin, accompanying Mr Xi on a visit to inspect the animals’ new home on Wednesday, appeared delighted by his friend’s panda diplomacy.

“We know this is a sign of special respect and trust in Russia,” he said. “Talking about pandas always brings a smile to our faces.”