Russia's growing China connection

China's premier Li Keqiang is traveling to Russia for a regular meeting of the two countries' heads of government. Since the visit was first announced in April, Russia's geopolitical and geo-economic situation has changed profoundly, making its relationship with Beijing even more important. While the presidents of the two countries deal with broader strategic issues, it has been up to Li and the Russian Prime Minister Dmitry Medvedev to fill the relationship with substantive economic content.

In response to the Western sanctions imposed on Russia as a result of the Ukraine crisis, quite a few commentators have raised the idea of Russia pivoting away from Europe and the West toward Asia, particularly China. The spectacular gas deal signed during Russian President Vladimir Putin's trip to Shanghai in May 2014 was compared in its geopolitical significance with the Soviet-West Germany 1970 "gas for pipes" agreement which introduced Russian gas to Western Europe.

The short-lived refusal by Visa and MasterCard to service credit cards issued by a couple of sanctioned Russian banks has led the Russian government to decide on creating a national electronic payments system, similar to China's Union Pay. The near-impossibility for Russian companies to raise money in the West has evoked hopes that Hong Kong can replace London as the main financial center serving Russian needs. Present-day China is viewed in Moscow as a potential source of investment and even some advanced technologies.

China is a major economy refusing to follow the US' lead and impose sanctions against Russia. China is a market for Russian energy exports. Chinese investments in Russia can certainly grow from the current very low level, and China can provide Russia with some oil drilling equipment and infrastructure development, such as highways and high-speed rail connections. The two governments have agreed to raise the two-way trade volume from about $90 billion last year to $100 billion in 2015 and $200 billion by 2020. There are truly excellent prospects for Sino-Russian economic cooperation.