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Russia fosters Chinese dependence

Moscow uses oil and investment to balance its neighbor's rising power.

Until the crisis impacted economic activity worldwide, Russo-Chinese trade was growing steadily for a decade. In 2008, bilateral trade stood at $56.8 billion, according to Chinese government statistics.

“There are also serious changes happening to the infrastructure of trade,” Sanakoyev said. “We’re moving away from illegal, uncivilized forms [of trade].”

He was referring mainly to the massive markets like Cherkizovsky, a sprawling Moscow market dealing primarily in smuggled Chinese goods that was suddenly shut last year. The move caused a minor spat between the two countries, with China protesting the closing of the market, where some 60,000 Chinese were estimated to have been working. Similar markets, though smaller in size, flourish around Russia, particularly in East Siberia and the Far East.

It is those eastern regions, severely underdeveloped and underpopulated, that present the greatest concern. They spread along a 2,700-mile-long border with China. The two countries only ended their last border dispute in late 2008, with Russia giving up two islands, known as Tarabov and Bolshoi Ussuriysky in Russian, and as Yinlong and Heixiazi in Chinese.

“Chinese economic expansion might influence Russian development, and Russia could lose leverage over the Asian part of the country,” said Lukyanov. “It’s not a military threat, it’s an economic or demographic one.”

A key means of tying resource-hungry China to Russia is energy.

In mid-February, Russia launched a new oil terminal on its Pacific coast at a ceremony overseen by Prime Minister Vladimir Putin.

“This is the completion of one of the biggest projects in contemporary Russia. This is a strategic project because it allows [us] to come to new markets, the growing Asia-Pacific markets," Putin said at the opening.

The terminal accepts oil from the East-Siberia Pacific Ocean pipeline (ESPO) — a $26 billion project that figures among the country’s most expensive infrastructure projects ever. Its first branch was opened last year, and a second branch, which would bring daily exports to 600,000 barrels of oil per day, is slated to be completed in 2014, though analysts consider that optimistic.

http://www.globalpost.com/dispatch/russia/100303/russia-china-relations-energy-security