The rising cost of getting closer to Beijing: New Russian-Chinese economic agreements

During the Chinese Prime Minister Li Keqiang’s visit to Moscow on 13 October 2014, nearly 40 documents were signed, including over 30 economic agreements (in the areas of finance, investment and energy, among others). The economic agreements are another manifestation of Vladimir Putin’s long-term policy of building closer relations with China in order to reduce the Russian economy’s financial and technological dependence on the West, and of diversifying Russia’s energy markets (mainly gas). The introduction of Western sanctions this year has only accelerated this process, and has also worsened Moscow’s bargaining position with Beijing. Contrary to Russian propaganda, the agreements concluded do not constitute a real breakthrough in Russian-Chinese economic relations. For example, the gas agreement indicates that the parties have still not agreed on a number of issues relating to the implementation of the contract signed in Shanghai to supply Russian gas to China (mainly, the two parties cannot agree on the bases for financing the construction of a gas pipeline in Siberia). In turn, China’s preliminary consent to hold talks on gas supplies from Western Siberia to the north-western regions of China, the so-called ‘Western path’ (a project which for Russia is mainly of political significance), is likely to be offset by significant economic concessions from Moscow to Beijing (low prices for Russian gas supplies to China).