Mega-deals and security to link China and Russia

Russia and China have signed multi-million dollar deals during a meeting of the countries’ heads in Moscow. President Medvedev said overcoming the global financial crisis depends greatly on the countries’ cooperation.

Russian President Dmitry Medvedev and Chinese leader Hu Jintao have signed a joint declaration and plan for Russo-Chinese partnership. They have put their signatures to three memorandums of understanding, namely for cooperation in gas and coal, and stimulating bilateral trade.

Amidst the financial turmoil, Russia and China are yet again challenging the dominance of the dollar.

“An issue which has become crucial for us is the use of national currencies in bilateral payments. We may even introduce alterations to existing documents,” Medvedev said.

The pace of cooperation between the two has slowed this year in an expected side-effect of financial downturn. Oddly many experts believe it’s the crisis that will help the two to emerge as even bigger global players. Political analyst Evgeny Bazhenov believes that Russia and China are adjusting to new realities after the financial crisis.

“I think what is changing is the role of China and Russia in international relations. Just a few years ago, many people were saying that America is the only super power, that it’s far ahead of all other countries and can do whatever it wants. It is in charge of world economy and the world’s political and military life, etc. Now it’s changing of course, and the Americans themselves understand that it’s a new world, and in this respect, other big countries like Russia and China are trying to enforce their positions in the world,” Bazhenov said to RT.

Russia and China are among the biggest holders of the dollar outside the US, and they both seek to lessen their reliance on the currency, although up till now it’s been more of a daydream.

“It will take years and it will take preparations, and we don’t want to do it against the dollar, against the US, but together with them. All countries should work together in setting up a good system which will suit everybody,” says Evgeny Bazhenov.

Russia and China also say using their national currencies in bilateral deals could prove a crucial crisis remedy.

Though they agreed to dump the dollar someday, for now Russia will get a more than US$1 billion loan from China.

“To buy Chinese machinery. Of course it's very profitable for China, but it’s also very profitable for Russia. We feel a little bit behind with our modernization plans and in that situation Chinese equipment in comparison of price and quality is the best in the world, I think,” said Business Russia movement chairman Boris Titov.

Summing up the results of the talks, President Medvedev specifically pointed out the oil and gas deal:

“This agreement for almost $100 billion dollars has become the most important of all in the history of our relations,” he said.

In 2010, Russia will begin to ship crude oil to China via the first pipeline in Asia. The deal is a real game-changer for Russia, which has been looking to muscle up its presence in the region.

Another big deal concerns cooperation in the banking sector. Russia’s Vneshekonombank and China’s Export and Import Bank have signed a framework agreement for granting the former a loan of up to $700 billion.

In 2008, the trade turnover between the countries hit a record high of more than US$55 billion. But that is still a small fraction of what China has with either the US or Europe. So Russia has a long way to catch up.

With regard to foreign policy, the leaders noted they have understanding on many issues, including the situation in Afghanistan.

“Of course we are interested in security and stable development in Central Asia,” Medvedev said. “Our joint statement reflects the similarity of our approaches.”

Among other issues, this document contains Russia’s and China’s joint stance on the Iranian nuclear program. It says the settlement of the issue “is only possible through political and diplomatic means”. It is also important to “restore the trust of the international community to the peaceful character of the Iranian nuclear program and step up efforts for resuming talks with Iran”.

Russia & China call for resumption of Six-Party Talks

In a joint statement, Russian President Dmitry Medvedev and Chinese President Hu Jintao have expressed “serious concern about the situation on the Korean peninsula, noting that UN SC Resolution 1874 is aimed at strengthening political and diplomatic aspects of the North Korean nuclear settlement”.

Russian President Dmitry Medvedev (R) and Chinese President Hu Jintao (L) (AFP Photo / Dmitry Astakhov)

They called for the resumption of the Six-Party Talks as soon as possible, as well as, “the fulfillment of the obligations undertaken in the September 19, 2005 joint statement by all parties”.

Russia and China urged all parties to resolve differences “by peaceful means, through dialog and consultations”, as well as “maintaining and strengthening peace and security in the North-Eastern Asia sub-region, on the basis of forming a relevant multilateral mechanism”, the statement says.

Overall, the talks “have taken place in a friendly and constructive way,” according to the Russian President, who will visit China in 2010.

For his part, Hu Jintao has pledged his country’s willingness to strengthen bilateral relations, which were established 60 years ago.

“During these 60 years our relations have made great progress. China’s government and people will never forget that the Soviet Union was the first to recognize the People’s Republic of China and establish diplomatic ties with us,” Hu Jintao said.