China and Russia ink $400 billion gas deal
China and Russia ink $400 billion gas deal
China and Russia signed off on a huge gas deal worth as much as $400 billion over 30 years. The deal has been in talks for about a decade, but experts see the timing of the final agreement as a move by Russia to avoid sanctions from the West. VPC
Calum MacLeod and Anna Arutunyan , USA TODAY8:23 a.m. EDT May 21, 2014
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BEIJING — China and Russia signed off on a huge gas deal worth as much as $400 billion Wednesday that heralds a pivot east for Russian business amid ongoing tensions with the West over Ukraine, though few details of the deal were made public.
The 30-year gas-export contract, seen as a move by Russian President Vladimir Putin to aggressively shift the country's commercial interests east amid mounting sanctions from the United States and Europe, was signed as the Russian leader has enjoyed a warm welcome in China, where the two countries have inked a raft of agreements during his ongoing, two-day visit.
The price China is paying for Russia's gas was not disclosed but the value of the agreement is thought to be somewhere near $400 billion.
The eleventh-hour deal represents "good news for both countries," said Shi Yinhong, an international relations expert at People's University of China, in Beijing. "The political requirements on both sides are so powerful they can overcome the concerns on price," he said. "This is a political action by both sides."
Talks for the deal had been going on for more than a decade and will see Russia export up to 38 billion cubic meters of gas per year, for 30 years, starting in 2018. The export agreement is significant because it will permit Russia to diversify the market for its gas away from Europe, which has threatened sanctions over Russia's incursion into Ukraine.
China's neutrality over Ukraine has begun "tilting" toward Russia, said Shi, but this deal will not fundamentally change a relationship he called "a convenient coalition, not an alliance." The agreement is an example of "selective cooperation, due to the situation in Eastern Europe, the Western Pacific and East Asia at this period," but on some issues their concerns remain incompatible, he said.
"It's a demonstration of the fact that Russia always has and always will have other options to develop relations elsewhere. The threat of isolation coming from the West will not be complete," said Sergei Utkin, political expert at the Russian Academy of Sciences.
Plans already announced by the two nations include building the first railway bridge over their long border, and manufacturing Chinese cars in Russia.
The neighbors, whose relationship has long been strained by distrust, promised Tuesday to increase bilateral trade to $200 billion by 2020, up from $90 billion last year.
Ahead of his visit to Asia's largest economy, Putin told Chinese media that China is a "reliable friend." The Russian leader, now spurned in the West for his annexation of Crimea in eastern Ukraine, received reliably positive media coverage Wednesday in China, where he enjoys personal popularity as a strong leader with a macho charisma unfamiliar in China's straitlaced political system.
Photos and comments highlighting Putin's masculine charm dominated social media sites, although some Internet users expressed pride that the portly Xi Jinping, China's leader, is at least taller than Putin.
Both countries consider the other a useful counterpoint to difficult relations with the United States.
While in China, Putin traveled to Shanghai to attend a two-day session of the Conference on Interaction and Confidence Building Measures in Asia, a little-known Asian security group that includes Iran and several Central Asian states but not the U.S. or Japan, China's longtime rival in East Asia, and one of several maritime neighbors currently embroiled in disputes over territory with China.
On Wednesday, Xi told the summit that China is committed to peacefully resolving territorial disputes.
MacLeod reported from Beijing, Arutunyan from Moscow.
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