Putin touches down in Beijing; Power of Siberia-2 agreement during meeting unlikely
Putin’s interview with PRC state media
It increasingly appears that Beijing and Moscow will not sign an agreement over Power of Siberia-2 (PoS2) at the Xi-Putin meeting. Chinese and Russian state media show no signs of an imminent announcement.
Before his trip to China, Vladimir Putin sat for an interview with Chinese state media over the weekend and implied that negotiations over PoS2 are still underway.
“Indeed, as I have said, we have an extensive scope of cooperation in the field of, say, energy, and it is very diverse. This is not only the supply of oil and gas. In the field of oil, a pipeline is operating steadily, and pumping volumes are increasing. The same goes for the Power of Siberia gas pipeline. Now we have good prospects, we have already signed an agreement on the Far Eastern route, and one more route, the Power of Siberia 2 that goes through Mongolia, is being worked out.” [Bolded by The Report]
Beijing, conversely, released a *very* partial and selective transcript [in Mandarin]. It didn’t include a mention of oil and gas, much less specific infrastructure projects.
Interestingly, Beijing’s version of the dialogue focused on China’s global security initiative, global development initiative and global civilization initiatives, BRICS, and of course the Belt and Road.
Putin’s comments and the lack of attention to Russian natural gas in Chinese state media appear to suggest a major natural gas agreement will not emerge from the Xi-Putin meeting. The Power of Siberia-2 (PoS2) has poor commercial rationale, but there were several hints that Beijing and Moscow would agree to the pipeline at the October meeting anyway.
Nevertheless, it’s striking that the CEOs of both Rosneft and Gazprom are traveling with Putin. It will be surprising if they leave China empty-handed.
Turning to the Middle East, Mark Galeotti’s very helpful podcast underscored that while Moscow almost certainly did not direct Hamas to attack, it will likely seek to opportunistically exploit the chaos. Beijing may be amplifying Moscow’s narratives.
Finally, I was saddened and outraged by an attack on a civilian who works at the Israeli embassy in Beijing. My thoughts are with the individual who was attacked, as well as the staff and families at the embassy. While this newsletter is not a suitable place to unpack the developments in the Middle East and will not do so, every person – Israeli, Palestinian, or otherwise – is created equal and entitled to dignified treatment. Inflicting collective punishment is never justified. While I don’t know them personally, several diplomats at the Israeli embassy read this newsletter. I hope you all are safe and well. – Joe
As The Report went to press, The People’s Daily reported that Vladimir Putin has touched down in Beijing.
Table of Contents:
1) Putin sits for interview with Chinese state media
2) Beijing apparently amplifying Moscow’s narratives re: the Middle East
3) Europe
4) Energy
5) Military Affairs
1) Putin sits for interview with Chinese state media
Putin’s latest China-related statements – People’s Daily [Chinese-language]
Reporter Wang Guan: President Putin, you have met with President Xi Jinping more than 40 times. In your opinion, what kind of leader is President Xi Jinping? Are there any interesting stories between you and him that you can share with us?
Russian President Vladimir Putin: President Xi Jinping is one of the world’s recognized leaders. President Xi Jinping is not a leader who makes decisions based on the current situation. He will analyze and evaluate the situation and make long-term considerations for the future. this point is very important. This is the difference between true world leaders and those we call “temporaries.” "Temporary workers" only come for five minutes, perform on the international stage, and then disappear without a trace. President Xi Jinping is a different kind of person. He is a firm, calm, pragmatic and reliable partner. As long as we're on the same page, we can make sure both parties stick to the agreement.
…
President Xi Jinping visited Russia at that time, and we went to St. Petersburg together, boarded the cruiser Aurora, and took a boat ride on the Neva River in St. Petersburg. In an absolutely calm and friendly atmosphere, we had a long and detailed conversation about bilateral relations and the world situation. Not long ago, in March, President Xi Jinping visited again. It was also a very pragmatic visit and was of great significance to the future development of relations between our two countries. So I hope that when we meet in China, that tradition continues. [Bolded by The Report]
Interview to China Media Group – The Kremlin
Wang Guan [PRC State Media Interviewer]: In March 2023, a joint Russian-Chinese statement was adopted, which stressed that relations between the two countries were at their strongest level ever.
Indeed, you said at the recent Valdai Discussion Club that Russian-Chinese cooperation was as an important stabilizing factor in global affairs. Could you please elaborate on your assessment of Russian-Chinese relations as well as their prospects for development?
Vladimir Putin: Relations between Russia and China – you know, I am telling you what immediately comes to my mind after you asked your question – have not been shaped to suite the current global environment; nor are they the result of a short-term political opportunism. Russian-Chinese relations have been shaped for twenty years in a careful, phased-out manner. At each step, the Russian and Chinese sides have both guided themselves by their own national interests as they understood them. While encouraging the other side to take the next step, both have always taken into account each other’s opinions and interests. We have always tried to reach a compromise, even on complicated issues inherited from the old days.
Our relations have always been driven by goodwill. It helped us solve the border delimitation issues that had remained outstanding for 40 years. Our shared desire to remove all possible obstacles to our joint progress in future was so huge that we managed to compromise in a mutually acceptable way. And then we began to develop economic cooperation, also gradually, filling the niches that were once owned by other countries in our relations, but were not as effective as our mutual cooperation in a particular area. For instance, in the area of energy that has a special place in our relations. Russia now ranks first among Chinese partners in the supply, for example, of energy to China in value terms.
China progressively became Russia’s first trade partner in terms of trade turnover, and Russia gradually rose to the sixth place among China’s trade and economic partners.
What would I note? We had different ratios for exports and imports at different times. For our part, we have tried to cover the needs of the Chinese economy, and our Chinese friends have never ignored our views as regards some imbalances, particularly in trade in manufactured goods. We have been gradually, step by step and year by year increasing and improving this trade balance. That is the way we are advancing in almost every area.
Not to mention the role that Russian-Chinese relations play in ensuring stability in the world. Relation between Russia and China are a fundamental factor.
All of this together leads us to believe that we are moving in the absolutely right direction and in the interests of both the Chinese and Russian peoples. [Comment: bolded by The Report. Putin’s framing echoes what Xi and other figures in China-Russia ties have said. Political elites in Beijing and Moscow are seeking to institutionalize the relationship in the aftermath of the Prigozhin mutiny. See the July 17th newsletter and the September 17th edition.]
Wang Guan: Mr. President!
You have just mentioned trade and economic cooperation between Russia and China. Earlier, a goal was put forward to reach the target of 200 billion US dollars in trade turnover by 2024. In fact, in 2022, the two parties basically approached this target and we could feel many of the changes. [Comment: After accounting for smuggling and Chinese indirect exports to Russia via cutout countries, such as Belarus or Kyrgyzstan, the two countries very likely exceeded $200 billion in trade turnover last year]
This time I came to Moscow and saw that the streets and stores, including online trading platforms, were increasingly filled with Chinese brands. At the same time, Russian gas is supplied to the homes of Chinese consumers and Russian meat and dairy products, for example, are becoming more and more common in Chinese stores.
What is our assessment of the prospects for trade and economic ties between the two countries?
Vladimir Putin: Our economic relations diversify from year to year.
Indeed, as I have said, we have an extensive scope of cooperation in the field of, say, energy, and it is very diverse. This is not only the supply of oil and gas. In the field of oil, a pipeline is operating steadily, and pumping volumes are increasing.
The same goes for the Power of Siberia gas pipeline. Now we have good prospects, we have already signed an agreement on the Far Eastern route, and one more route, the Power of Siberia 2 that goes through Mongolia, is being worked out. [Comment: In other words, is still being negotiated.]
The amount of coal and electricity supplied is increasing and we continue to build nuclear units. And not only to build units at two plants, but we are working on a fast neutron reactor, which will provide us with an entirely new way of building relations in this high-tech energy sector as it creates conditions for a closes cycle and, in fact, there will be virtually no waste.
We do have a very good prospect in other industries. These are automobile construction, shipbuilding, aircraft construction, and electronics. I have mentioned automobile construction. Look, just yesterday I talked to some people who could well be called car enthusiasts with a great and long experience. And in all sincerity, not knowing that we were going to have an interview today, my interlocutors told me: you know, Chinese cars are settling in our market not simply because others are becoming fewer, this is not the only reason. The quality is improving. The quality of Chinese cars is getting better, so our consumers, particularly in terms of quality/price ratio, are happily turning towards products of Chinese manufacturers. [Comment: Interestingly, there’s no mention of Chinese exports of heavy-duty vehicles, which are playing a significant role in Russian military and civilian logistics]
You have mentioned agriculture. Yes, our cooperation is expanding here as well. There are certain issues related to the supply of meat products and so on, but the work is continuing. We are aware of the Chinese consumers’ interest not only in agricultural products, but also in the supply of some products that the People’s Republic of China itself needs to produce there agricultural products on its own territory.
We are working on and we are developing a significant number of industries, and this number has been constantly growing, especially recently, because of our cooperation on high-tech.
Wang Guan: We are confident that we will reach the $200 billion target this year, what do you think?
Vladimir Putin: I have no doubts, or, let us be more cautious, I am almost certain. In the previous period, we had 32 per cent growth in trade, which is a very good one. There is every reason to believe that we will reach $200 billion mark by the end of the year.
Wang Guan: Mr. President, with regard to the Belt and Road Initiative, I would now like to talk about energy. We are cooperating in areas such as renewable energy, combating climate change and the UN climate agenda.
What do you think is the impact of our cooperation in these areas for the whole world, for mankind?
Vladimir Putin: You know, when we talk about the UN Sustainable Development Goals, there is more than one, two or three of them, I believe there are 17 actually. The struggle for the environment and the fight against climate change both are very important areas, but they are not the only ones.
One should not forget, for example, the fight against poverty. How can you say to people in African countries: you will get no oil, you will get no petroleum products, you will have to rely on renewable energy sources exclusively – on wind and solar energy, for example, and so on. Those are largely out of reach for developing countries. So, people are going to starve or what? So there should be a balance; all decisions should be balanced.
In this context, when we talk about President Xi Jinping’s Belt and Road Initiative – I believe, it was some ten years ago when he formulated the idea – I think it was very timely and is developing well, because the focal point of this idea is an attempt to unite the capabilities of many countries to achieve common development goals.
Today, in one way or another, President Xi Jinping’s ideas have involved you know, how many? Some 147 countries, two-thirds of the world’s population. So I think this is already a success, this is a good, correct and technologically organized initiative that is developing.
Yes, we see that some people consider it an attempt by the People’s Republic of China to put someone under its thumb, but we see otherwise, we just see desire for cooperation. Our own ideas on the development of the Eurasian Economic Union, for example, on the construction of a Greater Eurasia, fully coincide with the Chinese ideas proposed within the framework of the Belt and Road Initiative.
Look, our countries, the Eurasian Economic Union, have received $24 billion in investments as a result of our cooperation. What is wrong with that? At the same time, each country chooses for itself, within the framework of bilateral or multilateral formats, what is favourable or unfavourable for it, no one imposes anything. But it stimulates and creates conditions for development.
The same applies to the development of logistics and infrastructure facilities. We have recently built two bridges over the Amur River with China. I think this is good for people –it increases the number of them communicating with each other, and it is good for business because it allows us to increase trade.
So we welcome this initiative by President Xi Jinping, we are working together, we are ready and we will continue to work together.
Comment: China’s turn to renewable energy will likely, over time, create major complications for its relationship with Russia, which is of course a major hydrocarbon exporter. China’s earnings from solar exports alone may exceed the totality of Saudi Arabia’s hydrocarbon exports by 2030. Russia will face challenges but also garner opportunities during the energy transition, especially if can maintain its edge in nuclear energy exports – which it may be ceding to China. Putin’s discomfort with renewables is rather striking: he doesn’t mention any discrete areas where China and Russia are cooperating.
For more on Russia and the energy transition, see Jason Bordoff’s counterintuitive Foreign Policy article from 2020 or Thane Gustafson’s excellent book, Klimat.
Wang Guan: As regards the Ukrainian issue: Mr. President, what is your opinion on the prospects of a peaceful settlement of the Ukrainian crisis? When will peace prevail?
You have also mentioned the Chinese document outlining a political solution for the Ukrainian crisis settlement. What do you think about it?
Vladimir Putin: We are thankful to our Chinese friends for trying to think about ways to end this crisis. However, I would like to remind you that hostilities in Ukraine did not start with our special military operation, but way before – in 2014, when the Western countries, after having volunteered as guarantors of the agreements between President Yanukovich and the opposition, forgot about those guarantees in a matter of days and – worse still – supported a coup d’état. United States Administration officials even acknowledged spending big money on it – five billion, they said, if memory serves me, – and now we have what was bound to happen.
I am not going to dwell on whether it was a revolution or whether it was a colour revolution, but it was anyway a coup d’état. Yes, it had to do with mistakes made by the then leadership, but those mistakes needed to be remedied through democratic procedures, rather than by means of militants in the streets. But Western countries chose otherwise – to support a coup d’état. And then, essentially by proxy of the Kiev regime, they started hostilities in the south-east of Ukraine, in Donbass, and continued those hostilities for eight years, killing women and children. The West paid no attention to that or pretended not to notice.
Even when agreements were signed in Minsk, Belarus, known as the Minsk Agreements, Russia did everything to follow this path towards settling the conflict. They did not let us do that, either.
Moreover, Ukraine’s leaders ultimately said that they simply did not like those Minsk Agreements and they were not going to fulfil them.
This was aggravated by the United States’ attempts to drag Ukraine into NATO, which led to the escalation of the conflict.
Let me remind you that, when Ukraine gained independence – or proclaimed its independence – it was the Declaration of Independence that served as the fundamental document laying the basis for Ukrainian independence. The main principle enshrined in this Declaration of Independence was that Ukraine is a neutral state.
Yet in 2008, for no good reason – there was no crisis in sight – they announced that they would welcome Ukraine in NATO. Why? Still no one understands. And thus, year by year, they would heighten the tensions. Then, finally, the 2014 crisis hit, the hostilities broke out. This took the escalation to a new level. Therefore, the start of the special military operation was not the start of a war, but an attempt to end it.
As for what needs to be done and how it needs to be done in order to end the conflict by peaceful means: we have never been against this. Moreover, we reached an agreement in Istanbul confirming that we were ready for this, provided that – I emphasize – the legitimate security interests of Russia are respected. The Ukrainian side put forward very strict demands in terms of security, and we almost accepted them. However, as soon as we pulled our troops back from the Ukrainian capital, Kiev, the Ukrainian side committed all the arrangements to flames. Those same arrangements that were initialled on paper by the heads of the negotiating parties – not the package itself, but the memorandum on those arrangements. They announced that they would seek to defeat Russia and secure a victory on the battlefield, to inflict a strategic defeat on Russia. They launched an active military operation, the so-called counter-offensive. It has continued since 4 June. No results achieved so far, only massive losses. The losses are simply huge, at a ratio of one to eight.
Of course, we know the proposals of our Chinese friends. We highly value those proposals. I think they are absolutely realistic and could lay the foundation for peace arrangements. But, unfortunately, the opposing side does not want to enter into any negotiations. In fact, the President of Ukraine has even issued a decree prohibiting everyone – including himself – to conduct any negotiations with us. How can we conduct negotiations if they are not willing to and even issued a regulation prohibiting such negotiations?
So if the Ukrainian side is willing to, I guess the first thing to do is to revoke the decree and express the readiness for the negotiations. We are ready, including on the basis of the proposals by our Chinese friends.
Wang Guan: Mr. President, China has always articulated its interest in building shared, common and indivisible security. Is there any chance to reconcile the positions on the Ukrainian issue?
Vladimir Putin: Yes, we have always said that, too. We said that security of one group of states cannot be built at the expense of security of other states. Security needs to be the same for everyone.
In this context, it is extremely important for us that Ukraine stays outside any blocs. We were told as far back as 1991 – by the then US Administration – that NATO would not expand further east. Since then, there have been five waves of NATO expansion, and every time we expressed our concerns. Every time we were told: yes, we promised you not to expand NATO eastwards, but those were verbal promises – is there any paper with our signature on it? No paper? Good-bye.
You see, it is very difficult to engage in a dialogue with people like that. I have already cited the example of the Iranian nuclear programme. The negotiations on the Iranian nuclear programme were very, very lengthy. An agreement was reached, a compromise found, and documents signed. Then came a new Administration and threw everything in the trash, as if those arrangements never existed. How can we agree on anything if every new Administration starts from scratch – begin each time from the centre of the playing field?
The same goes for any issue, any topic, including the one we are discussing. That is why one of the key points is to ensure equal security for everyone, and Russia is entitled to that, just as any other state. If we believe that NATO poses threats to us through Ukraine, we want our concerns to be heard.
Wang Guan: Thank you very much for the interview. Thank you.
Vladimir Putin: It was a pleasure for me to do this for Chinese viewers, listeners. I would like to thank you from the bottom of my heart and extend my best wishes to the citizens of our friendly neighbour, the People’s Republic of China.
Thank you.
China not imposing anything on anybody — Putin – TASS
The current foreign policy of China, including the one implemented in the Belt and Road project, is built on searching for a compromise, Russian President Vladimir Putin said in the interview with the China Media Group.
Beijing endeavors to find projects and ways of achieving common goals that are acceptable for everybody, the Russian leader said. "This is a specific feature of current China headed by President Xi Jinping in building relations with others. Nobody imposes anything on anyone else; nobody enforces. Only an opportunity is offered," Putin stressed.
Multipolar world emerges as many countries, including China, boost their potential – Putin – TASS
Growing potential of many countries, including Russia and China, helps the development of a multipolar world, President Vladimir Putin said in an interview with China Media Group.
2) Beijing apparently amplifying Moscow’s narratives re: the Middle East
A Chinese envoy on Friday called on parties in the Ukraine crisis to prevent the proliferation of weapons.
"We call on all relevant parties to the Ukraine crisis to take a responsible attitude, pay heightened attention to, and make every effort to prevent the risk of proliferation of weapons and ammunition," Geng Shuang, China's deputy permanent representative to the UN, told the Security Council briefing on Ukraine.
BBC did not report that Ukraine is sending arms to Hamas, a video was fabricated – AP
Social media users are sharing a bogus video to claim there’s a direct link between the wars playing out in Ukraine and the Middle East.
The clip purports to show a BBC News story about a recent report from Bellingcat on Ukraine providing arms to Hamas, the Palestinian group that launched a deadly surprise attack on Israel this past weekend.
“Bellingcat: Ukrainian military offensive failure and HAMAS attack linked,” reads the text over the video, which has more than 2,500 comments and 110,000 views on the messaging service Telegram. “The Palestinians purchased firearms, ammunition, drones and other weapons.”
3) Europe
Wang Yi said that China attaches great importance to its relations with the EU and regards the EU as an important and independent pole in a multi-polar world.
Comment: Beijing will likely continue to underscore this “independent pole” framing as Europe looks to see if U.S. voters will return Donald Trump to the White House.
4) Energy
Will Russian President Vladimir Putin finally be able to secure a Chinese commitment on an ambitious natural-gas pipeline project that could transform energy flows across Asia?
Putin is expected to push for progress on the China-bound Power of Siberia-2 gas pipeline when he meets Chinese counterpart Xi Jinping in Beijing for talks and to attend the third Belt and Road Forum on October 17-18.
China’s Economic Stake in the Middle East: Its Thirst for Oil – NYT
China is the largest oil importer by far from Saudi Arabia and from Iran, highlighting the risk it faces if the war in Israel and Gaza were to broaden.
Comment: The article includes some discussion on China-Russia energy ties.
5) Military Affairs
China's shipbuilding industry continues to lead global race – People’s Daily
From January to August 2023, China's shipbuilding industry continued to top global rankings in three crucial categories -- shipbuilding output, new orders, and holding orders, which all reported double-digit growth.
The country's shipbuilding output accounted for 49 percent of the global market share during the period, while the sector's new orders and holding orders represented 68.8 percent and 53.9 percent of the world's total, respectively.
Comment: This is a real problem. I’ll be writing more on this, soon.
Until next time,
Joe
Joe Webster is a senior fellow at the Atlantic Council and editor of the China-Russia Report. This article represents his own personal opinion.
The China-Russia Report is an independent, nonpartisan newsletter covering political, economic, and security affairs within and between China and Russia. All articles, comments, op-eds, etc represent only the personal opinion of the author(s) and do not necessarily represent the position(s) of The China-Russia Report.