President Xi Jinping and Russian leader Vladimir Putin presented a show of unity when they stood side by side in Tiananmen Square in Beijing admiring the military parade in early September. But behind the scenes, relations between Beijing and Moscow might be on less solid ground due to China’s slowing economic growth and the impact that will have on the energy trade between the neighbours, observers say. With several critical energy deals deadlocked, Russia is closely watching how China handles the challenges ahead and will avoid relying too much on Beijing to boost its own economy, they say. Putin was one of the few leaders of a developed nation to attend the ceremony, and it was seen as demonstrating his personal rapport with Xi. During the visit, both leaders oversaw the signing of a range of deals covering banking, aviation, technology and manufacturing. But the energy sector remains the key focus of the bilateral economic relationship, with the centrepiece being a deal signed last year for Russia to provide natural gas to China for 30 years. A contract for a second deal was expected to be signed during Putin’s visit, but it did not happen, with neither side giving a reason. Weeks earlier the two nations concluded a joint naval and air defence drills in the Sea of Japan, a show of strength amid deepening military cooperation between the United States and its allies in Asia. But observers say the close relationship could be tested by the challenges China faced in ensuring steady economic growth. The value of bilateral trade fell 30 per cent in the first six months of the year compared to a year ago, battered by the wider economic crisis and falling oil prices. Alexander Gabuev, a specialist in Russian and Asian affairs at the Carnegie Moscow Centre, said Russia had relied on China's energy demand in projects that became more crucial as Western sanctions enacted over Putin’s actions in Ukraine limited Moscow’s playing field. But Russia hoped to diversify beyond contracts offered by China and “have more options”, he said. Ties with other regional players remained important, he said, pointing to Russian stakes in Vietnam’s offshore energy projects, arms market and infrastructure projects, including a nuclear power plant. Russia has put more eggs in the Chinese basket, [but] relations with other claimant countries in the South China Sea dispute remain important Alexander Gabuev, specialist in Russian and Asian affairs “Despite the fact that Russia has recently put more eggs in the Chinese basket, relations with other claimant countries in the South China Sea dispute remain important, as Moscow seeks to diversify its contacts and decrease dependency on China,” Gabuev said. China and Russia signed a US$400 billion natural gas supply deal via an eastern route in May last year. In November, the two countries agreed to start a similar deal through a western route. But plummeting world oil prices became a major stumbling block to a finalised deal. Russia’s top natural gas producer Gazprom and China National Petroleum Corp, the mainland’s largest oil company, were in talks for the gas supply deal. It now appears that both sides are moving more cautiously. Yang Cheng, the deputy director of the Centre for Russian Studies at East China Normal University in Shanghai, said China’s slower economic growth meant its energy demand would not be as strong as in the past decade. This reduced appetite would affect the profits of Russian energy companies that had planned to lay down the pipelines to China. Although Moscow had lowered its expectations of the Chinese market, maintaining cooperation on energy remained one of the “most effective” measures to offset the economic pain of lower global oil prices and the wider economic restructuring. Yang emphasised that Sino-Russian energy deals were based on market principles. Moscow will have already asked China make adjustments to pricing formulas, but it was unlikely Beijing would be paying an overly high amount, given the weakness in the oil market, Yang said. “Having said that, one must not rule out the possibility that China would make other compensation arrangements based on a mutually beneficial basis,” Yang added. Gabuev said the fate of the deal would depend on the ability of the Russian side to build infrastructure and start supplying gas to China within the negotiated timeframe in light of Gazprom’s finances taking a hit by falling oil prices. “There might be delays due to lack of capital on the Russian side and geological problems in bringing two new gas fields in Chayanda and Kovykta on stream,” he said, referring to projects in Sakha Republic and Irkutsk Oblast. “If the Russian side doesn’t have enough capital to support the construction, Beijing and Moscow may return to the previously negotiated scheme – a Chinese loan in exchange for construction contracts for Chinese companies,” Gabuev said. However, Cheng Yijun, a Russian-relations expert at the Chinese Academy of Social Sciences, is less gloomy over the future of bilateral trade and expected a surge in private consumption would increase demand for natural gas. “The demand for energy in private consumption will grow as living standards increase, not to mention the need for China to gradually replace high polluting energy with clean power,” Cheng said.