China-Russia relations at all-time high, says Putin ahead of Shanghai visit

Kremlin chief aims to seal long-discussed gas deal and will encourage Chinese investment in Russia during trip to Shanghai this week

PUBLISHED : Monday, 19 May, 2014, 4:17pm
UPDATED : Tuesday, 20 May, 2014, 3:33am

Amid a crisis in relations with the West over Ukraine, Russian President Vladimir Putin is moving to bolster ties with China.

Russia saw relations with Beijing as a top priority and their ties now were the best ever, Putin said in an interview with Chinese media released by the Kremlin before his trip to Shanghai today.

He said a deal on Russian natural gas exports to China was close to being signed, and would allow Russia to diversify its export routes and let China meet its growing demand for energy.

Russia, which sends most of its gas exports to Europe, has sought to develop an export link to China, but the two nations have been locked for nearly two decades in talks over price.

[The gas deal] is uncertain because the price is still an important issue

Moscow speeded up work on the contract after the United States and European Union slapped travel bans and asset freezes on members of Putin's entourage over Russia's annexation of Crimea and threatened to impose harsher sanctions.

"In the context of the turbulent global economy, the strengthening of mutually beneficial trade and economic ties, as well as the increase of investment flows between Russia and China, are of paramount importance," Putin said.

A deal would secure Beijing a key chunk of supply as demand for the cleaner burning fuel is set to surge.

Putin said that Russia wanted more Chinese investment, in particular in a free-trade zone in the far eastern port of Vladivostok.

"Obviously, we are interested in Chinese businessmen making use of these opportunities and become one of the leaders here, since both Russia and China will benefit from an accelerated development of the Russian far east," he said.

Li Lifan, a Russian and Central Asian affairs expert at the Shanghai Academy of Social Sciences, said Russia needed Chinese capital to develop its far east.

Even though the price of Russian gas may be higher than Beijing's original estimation, the government could demand more favourable down payment conditions, Li said.

Li Xing, a Russian affairs expert at Peking University, said hopes were high that the deal could be signed despite sanctions imposed against Russia.

But he added: "It is uncertain because the price is still an important issue."

Li Lifan said Russia would also solicit Beijing's support on Crimea, amid the unrest in eastern Ukraine, where pro-Moscow activists want to join Russia.

"Putin wants China's support," Li said. "China may boost economic investment or participate in infrastructure projects in Crimea, but it's unlikely it will offer strong political support."

Li said Beijing may want Russia's support in handling South China Sea disputes and its row with Vietnam, even though a Sino-Russian military drill in the disputed waters was unlikely.

Associated Press, Reuters