Many experts say it is no coincidence that Dmitri Medvedev chose Kazakhstan and China for his first trip abroad as Russian president. Bobo Lo with the London-based Center for European Reform says, "He wanted to send a message to the West, basically that Russia has options, that, 'The West shouldn't take Russia for granted and we have friends elsewhere.' Russia has reasonable relations with both of those countries -- certainly rather better, more comfortable relations with those two countries than it does with the United States, with many European states, particularly the E.U. [i.e., the European Union], generally."
In Kazakhstan, Mr. Medvedev discussed economic issues. Those topics also dominated his talks with Chinese officials. Experts say trade is an important part of the relationship between Moscow and Beijing. During the past eight years, Russia-China trade increased seven-fold, reaching $48-billion last year. Analysts say that is much less than the level of Russia's economic ties with Europe.
But while commerce is growing, Bobo Lo and other experts say the balance of trade is very much in China's favor. "Russia basically exports oil and timber and precious metals to China. So basically, it supplies raw materials. It supplies natural resources for Chinese industry, while China exports consumer goods and also increasingly industrial equipment, manufacturing goods. It's a very, very unequal relationship," says Lo. "And the Russians are not very happy with the fact that they seem to be almost, what they fear to be a raw materials appendage to the growing Chinese economy. The relationship in trade terms is almost acquiring a neo-colonial tinge to it."
While in Beijing, President Medvedev signed a one billion dollar deal to have Moscow build a nuclear fuel enrichment plant in China and supply uranium. Analysts say Russia is looking to China as an important market for civilian nuclear technology as Beijing tries to find energy substitutes for fossil fuels.
Robert Legvold from Columbia University says Russia's gas and oil trade with China has been limited, but it is expected to increase in the years ahead.
"Eighty percent of Russia's energy exports go to Europe, that is outside the post-Soviet space. Only three percent go to all of Asia. They are saying that by 2020, those numbers for oil and gas should be between 20 and 25 percent of exports to all of Asia -- China being a large part of that. But right now, it's hamstrung by the transport routes," says Legvold. "The only way Russia can really get quantities of oil to China is by rail. And so everything awaits pipelines. There's been vacillation and confusion over precisely where Russia is going to build that pipeline -- primarily to the Pacific and to Japan or with a spur to China. The commitment is now with a spur to China. But none of that is yet done."
Another key trade component between Russia and China has been arms sales. Experts say that from the early 1990s until 2006, Moscow was Beijing's leading weapons supplier, averaging one-to-two billion dollars a year in sales. Top items included the Sukhoi SU-27 jet fighter, "Kilo" class submarines, missiles and destroyers. But analysts say that during the past few years, arms sales have dropped.
Jason Lyall with Princeton University's Woodrow Wilson School of Public and International Affairs says, "What the Chinese have been essentially doing is reverse-engineering the Russian aircraft and destroyers, and they've stopped buying them now. And Russia is concerned that basically China has stolen the copies and now are going to put them in production and not buy Russian equipment. So the last two or three years, arms sales have been stagnant. And Russia is worried that that they have essentially sold out all of their know-how and technological expertise to China, and China has essentially committed copyright infringement and is building their own. So this is something that I think was being worked out behind the scenes in this latest meeting. And there was no announcement of any new arms sales and there was no announcement that this issue had been resolved."
In its latest data on arms transfers for last year, the Stockholm International Peace Research Institute [SIPRI] says, "With no new contracts for big-ticket aircraft or ships in 2007, this may be the beginning of the end for the high-volume of arms transfers from Russia to China."