Russia Is Ready To Give China Everything

By Aleksey Koval

Ukraine, declaring its intention to develop the relations of strategic partnership with China, should be really cautious about the way of the promotion of the relations between Beijing and Moscow. Following the official terms, they have already reached the level of “comprehensive deepening of partnership and strategic interaction”. And this is one of the results of the visit of Russian President Dmitry Medvedev to the People’s Republic of China on the 26th – 28th of September, which was noticed by the signing of the energy treaty.

Let’s note, that this is already the fifth meeting of the highest authorities of the two states this year. And probably it is not the last one.
China will Lead Russia

Russian-Chinese Summit has demonstrated what the both states want to get from the current cooperation. And who is leading and who is lead within these relations: the first violin within the talks hold the Chinese Leader.

He precisely defined what he’d like to get from Russia. It’s enough to analyze those suggestions to deepen the cooperation withthe Russian Federation, with which the Chairman of the People’s Republic of China Hu Jintao addressed his Russian colleague. They all are aimed for the both Parties to intensify the activity within strategic spheres – starting with trade and up to the technologies exchange. Russian leader has agreed with it, adding his several ideas concerning regional and humanitarian cooperation.

Within the international arena China and Russia favor multipolarization of the world, support democratization of international political order, promote globalization of economy. More vividly these theses resulted into the decision of Moscow to support Beijing in the issue of IMF reform. The new voting system can be approved during the Great Twenty Summit in November 11th – 12th to be held in South Korea. In case of successful redistribution of quotas and votes in IMF China can take the third or even the second line in the frameworks of the organization in the scope of power after the USA, outrunning Great Britain, Germany and France. A real impromptu of the Summit was the consent of Dmitry Medvedev (under the suggestion of Chinese party) to sign a joint declaration related to the 65th anniversary of the Second World War end. With this document Russia has in fact interfered into a foul conflict of China and Japan on the issue of batable islands in East-Chinese Sea. Already after the end of the visit to Beijing Dmitry Medvedev decided to keep on tickling the nerves of Japanese, declaring its intention to visit the Kuril Islands in the near future. Tokyo perceived that as a confederacy and expressed a protest.

Interesting were the comments of Chinese Mass Media on the role, which the Tianxia intends to play in the future of Russia. The Newspaper "Huanqiu Shibao" in the day of the beginning of the visit of Dmitry Medvedev wrote: “We can’t agree with the views of those who think that only in West Russia can get money technologies and specialists urgent for reforms. China already has this all being the biggest neighbor and the only partner in strategic interaction in the world “. China will not only follow the way of Russian modernization, but will also participate in it, and by this it will become not only a participant, but also a “winner”.
China Has Got Close to Raw Materials

The economic part of the strategic partnership of the two states today has resulted into the energy dialogue.  The biggest Russian companies – “Gazprom”, “Lukoil”, “Rosneft”, “Transneft” and “Rosatom” on the eve of the visit has developed a number of treaties for China, which obviously became the most definite result of Beijing talks of Russian Leader.

Starting from the first of January 2011 commercial oil supplies will flow through the new oil pipeline to the North China from Russia. The leaders have already formally celebrated the end of its construction. The contract was signed for 20 years and it is expected during this period China will get from Russia 300 mln tons of oil in general. Earlier Russian oil companies have already received a credit from China for 25 billion USD to accomplish this project. In September 21st “Rosneft” signed with its Chinese partner – CPNC – an agreement on the establishment of the joint venture with the total volume of investments of 5 bln USD. The new joint venture will start the construction of the new oil-processing plant within the territory of China in Tianjin, and afterwards – the construction of the fuel stations network. The plant will be able to process 13 mln ton annually, by this 70% of the total volume will comprise Russian raw materials.

Except for that, the joint plans of Russia and China include projects on transportation of energy carriers from the Near East. It’s enough to say, that today the import oil comprises more than a half of the black gold consumed in China, and in ten years the dependence of the People’s Republic of China from the international supplies will accede 60%.

The states have also managed to agree on the participation of “Rosatom” in the construction of Tianwan Nuclear Power Station: Russia will build another two energy blocks. Its first two reactors were constructed by “Atomstroyexport” and to this process Russia attracted Ukrainian specialists. Also Russia will supply to China coal of 1 mln tons till the end of the year, which is still the main raw material for Chinese energy and industry. In 2009 the People’s Republic of China imported 122 mln tons, by this theimport volumes increase every year: Following the results of 2010 China can become the biggest importer of coal in the world,outrunning Japan.

But the biggest intrigue of the visit was the talks of “Gazprom” with Chinese partners on gas supplies. On the eve, Russian Vice Prime-Minister Igor Sechin declared that Russia is ready to assure completely the growing demands of China in natural gas. At the moment the country consumes about 80-90 bln cubic meters annually. By this a significant part goes at the cost of their own resources. Only 7—10 bln cubic meters comprise import fuel.

But according to the forecasts of experts, during the next ten years the consumption of gas in China will be doubled, especially if China will decide to change coal on gas. For the last five years the consumption of gas has increased two times. However, lately suppliers from Central Asia outran Russia in supplies of gas to China. Kazakhstan, Uzbekistan and Turkmenistan already pump blue fuel to the Tianxia, as they found exactly there a market outlet alternative to a Russian one. Following the results of the current year, Central Asia states will deliver to China 13 bln cubic meters, and in the next year – already more than 30 bln. This circumstance has created for “Gazprom” quite an unusual situation: it appeared to be disable to fix costs on its raw materials. Thus, the result of the last round of talks was only the agreement on that “Gazprom” will probably start the supplies to China from 2015. The —Āontract will be concluded in 2011 for the term of 30 years, and the volume of supplies will reach 30 bln cubic meters annually. China also considers the possibility to issue “Gazprom” a many-billion credit on account of future supplies guarantee. But the Parties didn’t manage to agree on the costs issues.

According to the Deputy Chairman of the Board of Directors JSC “Gazprom” Alexander Medvedev the difference between Russian and Chinese variants of prices is 60 USD, he also refuted a report that “Gazprom” approved the price of 150USD for a thousand of cubic meters. However, experts think that it would be hard to bargain over a higher price with China.

Except for that, “Rosneft” and “Lukoil” have also declared its readiness to supply gas to China. By this, “Lukoil” can do this even earlier than “Gazprom”, having the access to Central Asian pipelines. “Gazprom” will have to pipe a line to China.

The visit of the Russian Federation President Dmitry Medvedev to China has demonstrated that Beijing is interested in Russia as a source of raw materials. Now this part of bilateral relations will dominate. Yet there is still no alternative to the kind of interaction scheme, Russian experts say. They note, that the share of machines and equipment in Russian supplies to Beijing has reduced up to 1,7%. And meanwhile the People’s Republic of China has made a breakthrough in technologies and  graded up to Russia within many sectors of industry. Even in the defense sphere China can count on itself mostly, leaving the Russian military-industrial complex without orders and money. And over the years this tendency within the relations of Moscow and Beijing will only promote.
Translated by EuroDialogue XXI from Zerkalo nedeli