Russia and China to strengthen trade ties

Chinese President Hu Jintao and his Russian counterpart Vladimir Putin shake hands during a signing ceremony at the Great Hall of the People in Beijing on June 5, 2012.

Story highlights

  • The presidents of Russia and China laid out ambitious plans to increase trade
  • Set a goal of more than doubling bilateral trade from $83.5bn last year to $200bn in 2020
The presidents of Russia and China laid out ambitious plans on Tuesday to tie their countries into a closer strategic and economic partnership as both Beijing and Moscow seek to use each other to balance their relationship with the US.
The two presidents set a goal of more than doubling bilateral trade from $83.5bn last year to $200bn in 2020, Hu Jintao, China's president, said after talks with Vladimir Putin, the Russian president.
The ambitious target was announced together with a slew of investment and trading deals. It was held up by the two leaders as a sign of new heights for the relationship between two powers to be reckoned with on issues ranging from global trade to the international response to Syria.
Mr Hu said that through closer co-operation China and Russia would "set the global political and economic order in a more fair and rational direction".
Chinese state media feted Mr Putin, a fairly frequent visitor to Beijing who had last been in town in October 2011, praising close and growing bilateral co-operation and consultation of the two nations on the world stage. People's Daily, the ruling Communist party's mouthpiece, even ran a long piece by Mr Putin himself in which he talked up ties with China.
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"Without the participation of Russia and China, without considering Russia and China's interests, no international matter or issue can be discussed and implemented," he wrote.
Moscow and Beijing have angered western countries with their refusal to back an international intervention in the brewing civil war in Syria.
But Russian and Chinese analysts say the two countries are still far away from a close alliance.
"The reason the Chinese media are hyping the visit like this is that a significant portion of the Chinese leadership, including the military . . . hope to build Russia into an ally to help push back against the US," said Dmitri Trenin, director of the Carnegie Moscow Center. "But for Mr Putin the focus is mainly on strengthening the economic relationship." And, he cautioned, historical suspicions lingered. "There remains a lack of trust between the two sides, and none of the two wants a true alliance."
Chinese observers said the fact that Mr Putin had cancelled his participation in a G8 summit soon after his inauguration last month but had now decided to honour his long-scheduled Beijing visit showed the importance he gave to China.
"But there is no need to exaggerate it," said Li Ziguo, a professor at the Institute of International Relations. "Following the financial crisis, the world order is being realigned, and the economic centre is shifting from Europe to the Pacific, so Russia hopes to lean towards Asia in its economic development."
The two governments on Tuesday announced more than a dozen co-operation agreements including a joint venture for the development of long-range civilian aircraft. They also officially launched a joint fund for investments in Russia, the creation of which was first reported by the Financial Times last October.
The Russia-China Investment Fund would make its first investments in timber, logistics or agriculture within two months and was also interested in ports, infrastructure and logistics, Kirill Dmitriev, CEO of the Russian Direct Investment Fund, told the FT.
He said China and Russia would sooner or later handle some of their bilateral trade in their own currencies. "If you consider Chinese investments into the equity of Russian companies the amount is less than $2bn each year and we expect it will grow 10 times over the next five years," he said.
A long-awaited gas pipeline deal was delayed again as the two sides continue to disagree over pricing, although Mr Putin said he hoped Russia would export "large quantities" of natural gas to China eventually.