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
TEXT SIZE - +

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.


James Brooke

A foreign correspondent who has reported from five continents, Brooke, known universally as Jim, is the Voice of America bureau chief for Russia and former Soviet Union countries. From his base in Moscow, Jim roams Russia and Russia’s southern neighbors.

You May Like

Multimedia Relatives of South Korean Ferry Victims Fire at Authorities

36 people are confirmed dead, but some 270 remain trapped on board More

War Legacy Haunts Vietnam, US Relations

$84 million project aims to clean up soil contaminated by Agent Orange More

Wikipedia Proves Useful for Tracking Flu

Technique gave better results than Center for Disease Control (CDC) and Google’s Flu Trends 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.
Ukraine, Russia, United in Faith, Divided in Politicsi
X
Michael Eckels
April 19, 2014
There is a strong historical religious connection between Russia and Ukraine. But what role is religion playing in the current conflict? In the run-up to Easter, Michael Eckels in Moscow reports for VOA.
Video

Video Ukraine, Russia, United in Faith, Divided in Politics

There is a strong historical religious connection between Russia and Ukraine. But what role is religion playing in the current conflict? In the run-up to Easter, Michael Eckels in Moscow reports for VOA.
Video

Video Face of American Farmer is Changing

The average American farmer is now 58 years old, and farmers 65 and older are the fastest growing segment of the population. It’s a troubling trend signaling big changes ahead for American agriculture as aging farmers retire. Reporter Mike Osborne says a new report from the U.S. Census Bureau is suggesting what some of those changes might look like... and why they might not be so troubling.
Video

Video Donetsk Governor: Ukraine Military Assault 'Delicate But Necessary'

Around a dozen state buildings in eastern Ukraine remain in the hands of pro-Russian protesters who are demanding a referendum on self-rule. The governor of the whole Donetsk region is among those forced out by the protesters. He spoke to VOA's Henry Ridgwell from his temporary new office in Donetsk city.
Video

Video Drones May Soon Send Data From High Seas

Drones are usually associated with unmanned flying vehicles, but autonomous watercraft are also becoming useful tools for jobs ranging from scientific exploration to law enforcement to searching for a missing airliner in the Indian Ocean. VOA’s George Putic reports on sea-faring drones.
Video

Video New Earth-Size Planet Found

Not too big, not too small. Not too hot, not too cold. A newly discovered planet looks just right for life as we know it, according to an international group of astronomers. VOA’s Steve Baragona has more.
Video

Video Copts in Diaspora Worry About Future in Egypt

Around 10 percent of Egypt’s population belong to the Coptic faith, making them the largest Christian minority in the Middle East. But they have become targets of violence since the revolution three years ago. With elections scheduled for May and the struggle between the Egyptian military and Islamists continuing, many Copts abroad are deeply worried about the future of their ancient church. VOA religion correspondent Jerome Socolovsky visited a Coptic church outside Washington DC.
Video

Video Critics Say Venezuelan Protests Test Limits of Military's Support

During the two months of deadly anti-government protests that have rocked the oil-rich nation of Venezuela, President Nicolas Maduro has accused the opposition of trying to initiate a coup. Though a small number of military officers have been arrested for allegedly plotting against the government, VOA’s Brian Padden reports the leadership of the armed forces continues to support the president, at least for now.
Video

Video More Millenials Unplug to Embrace Board Games

A big new trend in the U.S. toy industry has more consumers switching off their high-tech gadgets to play with classic toys, like board games. This is especially true among the so-called millenial generation - those born in the 1980's and 90's. Elizabeth Lee has more from an unusual café in Los Angeles, where the new trend is popular and business is booming.
Video

Video Google Buys Drone Company

In its latest purchase of high-tech companies, Google has acquired a manufacturer of solar-powered drones that can stay in the air almost indefinitely, relaying broadband Internet connection to remote areas. It is seen as yet another step in the U.S. based Web giant’s bid to bring Internet to the whole world. VOA’s George Putic reports.
AppleAndroid