News / Asia

Russia and China Reverse Trade Roles

Russian President Dmitry Medvedev, center, with his Chinese counterpart Hu Jintao inspects a guard of honor during a welcoming ceremony at the Great Hall of the People in Beijing Monday, Sept. 27, 2010
Russian President Dmitry Medvedev, center, with his Chinese counterpart Hu Jintao inspects a guard of honor during a welcoming ceremony at the Great Hall of the People in Beijing Monday, Sept. 27, 2010
James Brooke

Russia and China are swapping roles in their bilateral trade. Russia once sold arms, cars and machinery to China, but is now selling raw materials and importing Chinese manufactured goods.

Russia's president, Dimitry Medvedev, came back from China last week with a briefcase filled with energy contracts.  But he did not take home what he really wanted: Chinese commitments to invest in modernizing Russian factories.

Russia's president reported on his fifth meeting this year with the Chinese President Hu Jintao, saying Chinese officials promised to consider investing in a new technology park under construction outside Moscow.

Russia's president Dimitry Medvedev (left) signed several energy contracts with his Chinese counterpart Hu Jintao, but couldn't win China's commitments to invest in modernizing Russian factories
Russia's president Dimitry Medvedev (left) signed several energy contracts with his Chinese counterpart Hu Jintao, but couldn't win China's commitments to invest in modernizing Russian factories

To some, Russia and China make a perfect couple - a marriage between the world's-largest energy producer and the world's-largest energy consumer.

Under deals signed in recent days, Russia will soon be supplying 10 percent of China's imported oil and coal.  In other deals, China is investing billions of dollars in Russian iron mines, aluminum smelters, timber companies, and corporate farms.

During the past decade, trade between Russia and China increased 12-fold, allowing China to dethrone Germany as Russia's top trading partner.  Since 2007, the fastest growing region in Russia has been the Far East, the section of Siberia that borders China.

But Russian sales of cars and weapons to China have fallen dramatically. Moscow-based economic analyst Chris Weafer says Russians do not like to look in the mirror and see themselves as raw materials supplier to China, the factory to the world.

No Chinese commitments beyond energy

"President Medvedev and the Russian side, they wanted to talk more about China's involvement in the modernization and investment into Russian industry, beyond energy.  But when they got there, all the Chinese wanted to talk about was how to get more energy,'' Weafer said.

In the only manufacturing deal announced, a Chinese company agreed to help build trucks in the Urals.

If China is not interested in helping Russians build better products, it appears to have unlimited appetite for importing Russian energy - oil, gas, and electricity.

At present, the bulk of China's imported oil and gas comes by tankers passing through a geographic chokepoint: the Straits of Malacca.  To cut this strategic weakness, China wants to develop energy imports by land.

Last week, the presidents of Russia and China symbolically inaugurated the first oil pipeline from Russia.  Beginning in January, Siberian oil is to move 1,000 kilometers through this pipeline to Northeast China.

The Chinese want this to be followed by a gas pipeline.  Both sides promise a deal will be cut by next summer, but negotiations about price have continued for 10 years.

Australian analyst Bobo Lo studied this deadlock for his book: "Axis of Convenience: Moscow, Beijing and the New Geopolitics."

"People say, 'Oh, it is just pricing.'  But pricing is absolutely critical,'' Lo said.  "Because until they agree on pricing, they will not even build the pipelines."

Cutting Russia's bargaining power

While Russia holds out for the best price, gas demand in Europe is weak, shale gas makes North America self-sufficient in gas, and shiploads of liquefied natural gas cruise the oceans looking for buyers.  Further cutting Russia's bargaining power, new gas and oil pipelines stretch thousands of kilometers from Central Asia to China.
Chris Weafer again.

"China has now been able to put the gun to the head to the Russians to some extent and say, 'You have got to do this now, on terms that suit us,'' Weafer said.  "Otherwise we are not going to do it all, because we have other options.'  China can get more energy supplies from Central Asia."

A fact highlighted while Mr. Medvedev visited Beijing, Turkmenistan's president inaugurated a compression station what will boost that nation's gas exporting capacity to China to 40 billion cubic meters a year - more than the entire volume Russia agreed long ago to sell to China.

You May Like

Elusive Deal With Iran Could Yield Foreign Policy Legacy for Obama

A new Iranian leader -- and a strategic shift by the United States -- opens narrow window for nuclear agreement with Tehran More

Column: Saudi-Iran Meeting Could Boost Fight Against Islamic State

The fact that Iranians and Saudis are talking again does not guarantee a breakthrough, but it could make it easier to build a broad coalition against IS More

Thai Ruler Gives Top Cabinet Posts to Junta Inner Circle

Thailand's army chief has kept an iron grip on power as he extends the government, hand-picking an interim parliament that subsequently nominated him prime minister More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
West Africa Ebola Vaccine Trials Possible by Early 2015i
X
Carol Pearson
August 30, 2014 7:14 PM
A U.S. health agency is speeding up clinical trials of a possible vaccine against the deadly Ebola virus that so far has killed more than 1,500 people in West Africa. If successful, the next step would be a larger trial in countries where the outbreak is occurring. VOA's Carol Pearson has more.
Video

Video West Africa Ebola Vaccine Trials Possible by Early 2015

A U.S. health agency is speeding up clinical trials of a possible vaccine against the deadly Ebola virus that so far has killed more than 1,500 people in West Africa. If successful, the next step would be a larger trial in countries where the outbreak is occurring. VOA's Carol Pearson has more.
Video

Video Survivors Commemorate 70th Anniversary of Nazi Liquidation of Jewish Ghetto

When the German Nazi army occupied the Polish city of Lodz in 1939, it marked the beginning of a long nightmare for the Jewish community that once made up one third of the population. Roughly 200,000 people were forced into the Lodz Ghetto. Less than 7,000 survived. As VOA’s Kane Farabaugh reports, some survivors gathered in Chicago on the 70th anniversary of the liquidation of the Lodz Ghetto to remember those who suffered at the hands of the Nazi regime.
Video

Video Cost to Raise Child in US Continues to Rise

The cost of raising a child in the United States continues to rise. In its latest annual report, the U.S. Department of Agriculture says middle income families with a child born in 2013 can expect to spend more than $240,000 before that child turns 18. And sending that child to college more than doubles that amount. VOA’s Deborah Block visited with a couple with one child in Alexandria, Virginia, to learn if the report reflects their lifestyle.
Video

Video Chaotic Afghan Vote Recount Threatens Nation’s Future

Afghanistan’s troubled presidential election continues to be rocked by turmoil as an audit of the ballots drags on. The U.N. says the recount will not be completed before September 10. Observers say repeated disputes and delays are threatening the orderly transfer of power and could have dangerous consequences. VOA correspondent Meredith Buel reports.
Video

Video Ukraine Battles Pro-Russia Rebel Assault

After NATO concluded an emergency meeting to discuss the crisis in eastern Ukraine, the country is struggling to contain heavy fighting near the strategic port of Mariupol, on the Azov Sea. Separatist rebels are trying to capture the city, allegedly with Russian military help, and Ukraine's defense forces are digging in. VOA's Daniel Schearf spoke with analysts about what lies ahead for Ukraine.
Video

Video Growing Business Offers Paint with a Twist of Wine

Two New Orleans area women started a small business seven years ago with one thing in mind: to help their neighbors relieve the stress of coping with a hurricane's aftermath. Today their business, which pairs painting and a little bit of wine, has become one of the fastest growing franchises across the U.S. VOA’s June Soh met the entrepreneurs at their newest franchise location in the Washington suburbs.
Video

Video Ebola Vaccine Trials To Begin Next Week

The National Institutes of Health says it is launching early stage trials of a vaccine to prevent the Ebola virus, which has infected or killed thousands of people across West Africa. The World Health Organization says Ebola could infect more than 20,000 people across the region by the time the outbreak is over. The epidemic has health experts and governments scrambling to prevent more people from becoming infected. Zlatica Hoke has more.
Video

Video Asian Bacteria Threatens Florida Orange Trees

Florida's citrus fruit industry is facing a serious threat from a bacteria carried by the Asian insect called psyllid. The widespread infestation again highlights the danger of transferring non-native species to American soil. VOA’s George Putic reports.
Video

Video Aging Will Reduce Economic Growth Worldwide in Coming Decades

The world is getting older, fast. And as more people retire each year, fewer working-age people will be there to replace them. Bond rating agency Moody’s says that will lead to a decline in household savings; reducing global investments - which in turn, will lead to slower economic growth around the world. But experts say it’s not too late to mitigate the economic impact of the world’s aging populations. Mil Arcega has more.
Video

Video Is West Doing Enough to Tackle Islamic State?

U.S. President Barack Obama has ruled out sending ground troops to Iraq to fight militants of the so-called Islamic State, or ISIS, despite officials in Washington describing the extremist group as the biggest threat the United States has faced in years. Henry Ridgwell reports from London on the growing uncertainty over whether the West’s response to ISIS will be enough to defeat the terrorist threat.
Video

Video Coalition to Fight Islamic State Could Reward Assad

The United States along with European and Mideast allies are considering a broader assault against Islamic State fighters who have spread from Syria into Iraq and risk further destabilizing an already troubled region. But as VOA State Department Correspondent Scott Stearns reports, confronting those militants could end up helping the embattled Syrian President Bashar al-Assad.
Video

Video Made in America Socks Get Toehold in Online Fashion Market

Three young entrepreneurs are hoping to revolutionize the high-end sock industry by introducing all-American creations of their own. And they’re doing most of it the old-fashioned way. VOA’s Julie Taboh recently caught up with them to learn what goes into making their one-of-a-kind socks.
Video

Video Americans, Ex-Pats Send Relief Supplies to West Africa

Health organizations from around the world are sending supplies and specialists to the West African countries that are dealing with the worst Ebola outbreak in history. On a smaller scale, ordinary Americans and African expatriates living in the United States are doing the same. VOA's Carol Pearson reports.

AppleAndroid