Page last updated at 10:27 GMT, Tuesday, 13 October 2009 11:27 UK

Russia and China sign trade deals

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Vladimir Putin is greeted with an official welcoming ceremony at the Great Hall of the People

China and Russia have signed trade agreements worth $3.5bn (£2.2bn).

About 40 contracts were signed by Russian and Chinese businessmen and officials, Russian deputy prime minister Alexander Zhukov said.

The head of Russia's Gazprom, Alexei Miller, said a preliminary deal had also been struck on supplying 70bn cubic metres a year of gas to China.

The agreements came during the second day of a visit to Beijing by Russian Prime Minister Vladimir Putin.

Russia is keen to bolster its economy, which President Dmitry Medvedev has said will decline by 7.5% in 2009.

ANALYSIS
Rupert Wingfield-Hayes
Rupert Wingfield-Hayes, BBC News, Moscow

Beijing and Moscow call it a "strategic partnership", but in reality it is a lot more complex and fraught with tension.

The trade relationship could be described as "you dig it up, we buy it". Russia is rich in resources: oil, gas, metals and timber. China has a huge appetite.

But Russian nervousness about China can be seen in their energy deals. Russia needs to invest billions to build new pipelines to send its oil and gas to China. Beijing has the money, but Moscow will not allow Chinese companies to build and own these pipelines. Instead, China is having to lend Russia the money.

It is all about history and demographics. Big chunks of the Russian Far East were once part of the Chinese empire and there is deep concern in Russia that a rich, powerful and over-populated China will one day want it back.

It is keen to sell more oil and gas to China - the world's second-biggest energy user.

Mr Zhukov told reporters that the deals included two $500m loans from Chinese banks to Russian financial institutions.

One was from the China Development Bank to its Russian counterpart Vnesheconombank, while the other was from the Agricultural Bank of China to Russia's state-run VTB bank.

He said other deals included investments by Chinese firms in Russian construction facilities, but gave no details.

Currency ambition

Trade between Russia and China has risen from less than $10bn to more than $50bn annually over the past six years.

The heart of the relationship is Beijing's thirst for Russian energy - oil and gas make up more than half of Russian exports to China.

Earlier this year, Moscow signed a $25bn agreement to help fund a pipeline to supply oil from Siberia to China. In exchange, China was guaranteed a 20-year supply of crude oil.

However, Moscow is also keen to boost exports of machinery, especially aviation equipment and nuclear power plants - though analysts say that China's appetite for Russian goods other than energy and raw materials is limited.

The countries are seeking to expand the amount of business they do in their own currencies, rather than the US dollar. However, currently only about 1% of their dealings involve roubles or yuan.



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