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Currency, United States Finance

'Best time in history' for China-Russia relationship: Xi and Putin boost ties

Strategic ties between Russia and China were appraised in glowing terms as Chinese President Xi Jinping wrapped up a two-day state visit to Russia, concluding with at least $10 billion in agreements.

Xi, who met with Russian President Vladimir Putin during the trip, told Russian media that relations between the two countries were currently at their “best time in history.” The Chinese president also said Russia and China were each other’s “most trustworthy strategic partners,” Xinhua reported.

“China-Russia relations do appear to be smooth right now, but relations between those two major power neighbors have had a long history of ups and downs,” said Ja Ian Chong, an associate professor at the National University of Singapore, adding that changes in the nature of that relationship can be sudden and dramatic.

One impetus for the ramp up in diplomatic cooperation could be developments in U.S. foreign policy.

“The fact that the U.S. seems far less systematic in its foreign policy than in the past creates space for China and Russia to make the best of the situation,” Chong told CNBC.

Hugo Brennan, Asia analyst at Verisk Maplecroft, added that President Donald Trump’s approach to foreign policy was more likely to foster alignment between Beijing and Moscow than it was to thrust a wedge between the two.

Aside from the reiteration of closer strategic ties between the states, other issues discussed during Xi’s visit included the deepening of economic linkages and security concerns.

Although details about the exact nature of the proposed enhancements in trade and investment remained unclear, an investment fund worth $10 billion was announced during the trip, the Financial Times reported.

Signed into agreement on Tuesday, funds from the Russia-China RMB Cooperation Fund are expected to be invested in infrastructure projects linked to China’s “One Belt, One Road” (OBOR) initiative and the Eurasian Economic Union ー a trading bloc championed by Putin. Russian state media said the investment fund was an agreement between the Russian Direct Investment Fund sovereign wealth fund and the China Development Bank.

Another agreement worth 6 billion yuan ($882.35 million) between VEB — a Russian state development bank — and the CDB was signed on Tuesday, Reuters reported. The funds are expected to be channeled into areas such as the development of blockchain innovations, Reuters said.

Despite the declarations of friendship and what Xi called his “close personal friendship” with Putin, pressure points continue to exist in the China-Russia relationship, experts said.

This is especially given how China’s OBOR initiative involves the participation of several former Soviet Union countries in Central Asia, including Kazakhstan, Tajikistan and the Kyrgyz Republic. China’s growing clout in the region could play off Russia’s existing, but waning, influence on Eurasia in the near future.

“China’s increasing influence in Russia’s traditional sphere of influence is a notable pressure point in Sino-Russian relations. Beijing often has competing, if not conflicting, objectives with Moscow in Central Asia,” Brennan told CNBC in an email.

For now, both countries remained in agreement. In a joint statement after North Korea’s missile launch on Tuesday, both China and Russia called for a freeze on missile tests from the hermit state. Foreign ministers from both countries also said that the U.S. and South Korea should abstain from carrying out joint exercises.

Xi and Putin had earlier voiced their objection to the deployment of a U.S. anti-missile system in South Korea as a means of defense against North Korea. The deployment of Terminal High Altitude Area Defense (THAAD) in South Korea “seriously undermines the strategic security interests of China,” Xinhua quoted Xi as saying on Monday.

Following the conclusion of the bilateral meeting, Xi and Putin are set to attend the G20 summit convening in Hamburg, Germany on July 7.

Source: cnbc
'Best time in history' for China-Russia relationship: Xi and Putin boost ties

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