Putin, Xi at center stage of Shanghai summit

By Andrew Hammond

Chinese President Xi Jinping hailed the success of the latest Shanghai Cooperation Organization (SCO) summit held in Qingdao, Sunday.

While the session saw multiple leaders in attendance, it was Beijing's relationship with Moscow that was center stage with Xi asserting that bilateral relations are at an "all-time high" with Russian President Vladimir Putin.

Coming in the shadow of the U.S.-driven disarray of the latest session of the G7 (the western club that Russia has been excluded from after its annexation of Crimea), the SCO summit had a more unified tone and featured presidents and prime ministers from China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan, India and Pakistan, and the group's observer states of Afghanistan, Belarus, Iran and Mongolia too.

While the SCO was originally founded in 2001 as a body to resolve border issues, fighting terrorism and countering U.S. influence across the region, it has assumed a significant economic role too and Xi announced at the summit that China will offer around $4.7 billion in loans through the bloc.

Xi called the presence of new SCO full members India and Pakistan "of great historical significance," but singled out Putin for special praise. Xi said that bilateral relations are "the highest-level, most profound and strategically most significant relationship between major countries in the world" and also praised Putin by stating that he "is my best, most intimate friend".

Putin arrived in Beijing, Friday, before the SCO started, Saturday, underlining the growing bilateral dialogue between Beijing and Moscow, including on key regional and global issues such as Korea. And reflecting this, the two countries signed a series of deals, including for nuclear cooperation projects of around $3 billion and a $1 billion industrial investment fund.

China and Russia already enjoy a relatively extensive economic dialogue, in particular, which has warmed in several areas since Moscow's annexation of Crimea.

In the period following escalation of those tensions, Russia has for instance announced plans for numerous cooperation projects with China including a new method of inter-bank transfers, and a joint credit agency that seeks to create a shared financial and economic infrastructure that will allow them to function independently of Western-dominated financial institutions.

China and Russia are also among the states involved in creating alternative fora to the World Bank and the International Monetary Fund, including the New Development Bank. This will finance infrastructure and other projects in the BRICs states, and a related $100-billion special currency reserve fund.

Moreover, in the energy sector, the two states have signed a $400-billion natural gas supply deal which will see an approximately 2,000-mile gas pipeline from eastern Siberia to northeast China. And they have agreed to construct a second major gas pipeline from western Siberia to China's Xinjiang Province.

Moscow has also opened parts of its upstream oil and gas sector to direct investment from Beijing. Moreover, Chinese firms have also stepped in to provide Russian counterparts with technology, and Chinese banks have become an important source of loans for Russian businesses, in the wake of Western sanctions.

While little substantial progress has so far been made on a number of these economic and financial projects, the boost to the bilateral cooperation agenda has helped enable work toward stronger, common positions on key regional and global issues too. And both parties are looking to enhance this strategic coordination from the Middle East to Asia-Pacific and the Americas.

In the context of Tuesday's Singapore summit between Donald Trump and Kim Jong-un, North Korea was a significant theme of Putin's dialogue with Xi at the weekend. On Friday, Putin said that both nations "are interested in establishing peace and stability on the Korean Peninsula".

Both China and Russia grappled in 2017 with how best to respond to not just the regular missile launches by Pyongyang, but also its nuclear tests.

And Trump's rhetoric in 2017 gave Beijing, in particular, heightened concerns that Washington might be thinking, much more seriously, about a pre-emptive strike on North Korea's nuclear capabilities.

This U.S. rhetoric was one reason why Chinese Foreign Minister Wang Li asserted that "China's priority now is to flash the red light and apply the brakes to both [the U.S. and North Korean] trains" to avoid a collision.

Given that both Beijing and Moscow last year had been so concerned that the tensions on the peninsular could spiral out of control, they have cautiously welcomed the Singapore summit.

However, both are concerned that they don't become passive bystanders in unfolding events, and want to instead reinforce their roles as key players in the grand geopolitical game that is now being played out on the peninsula.

Hence that's why Xi has seen Kim twice in Beijing in the last few months. And also why Russian Foreign Minister Sergei Lavrov traveled to Pyongyang at the end of last month to see the North Korean leader.

Taken overall, Putin's visit highlights the growing willingness of both sides to develop a significant cooperation agenda.

Despite limited progress so far on an array of bilateral projects in recent years, this latest trip has emphasized the very positive mood between the Russian and Chinese presidents which is underpinning the wider warming of ties.

Andrew Hammond (andrewkorea@outlook.com) is an associate at LSE IDEAS at the London School of Economics.