What Is Putin Up To in China?

Putin and Xi in Beijing
Kazakhstan President Nursultan Nazarbayev (left), South Korea's President Park Geun-hye (2nd left), Russia's President Vladimir Putin (2nd right) and Chinese President Xi Jinping applaud during the military parade marking the 70th anniversary of the end of World War Two in Beijing, China, September 3, 2015. Wang Zhao/Pool/Reuters

Russian President Vladimir Putin will be on his way to China on Saturday, the Kremlin has announced, in what has become an almost routine visit in recent years.

The two have enjoyed a close relationship since Chinese President Xi Jinping made Putin the first foreign leader he visited after becoming president in 2013 and since then regular annual meetings between the two have usually also come with announcements of significant new economic and political joint deals. As Putin is due to meet his Chinese counterpart this week, here are the most likely talking points and possible announcements.

Putin Is Looking to Sell Arms

Although Russia has long occupied the second spot globally , behind the U.S. for the most military equipment sold, a boom in France's arms dealing has sought to displace Russian supplies in Asia. Meanwhile, China has attempted to cut down on imports in a bid to produce its own equipment, though Putin will likely try to convince Chinese officials they ought to be buying more Russian goods.

"Since Western sanctions and a drop in oil prices of 2014, arms sales are increasingly important for the Russian budget," Agnia Grigas, Senior Fellow at the Atlantic Council says. "Following on the arms deals between the two countries of 2015, it is likely that more will follow during this visit."

On Monday Russia's Deputy Prime Minister Dmitry Rogozin announced that an apparent agreement between Moscow and Beijing for the supply of Russian rocket RD-180 rocket engines would be awaiting the Russian President's signature once he lands in China.

Lauren Goodrich, Russia analyst for private security firm Stratfor believes the sale could see Russia find a buyer for a product it may soon have a surplus of, while also convince China to buy more.

"It will be an important development because that particular rocket engine is something that Russia sells to the U.S. and within the sanctions, the U.S. has to end that contract within two years," Goodrich says. "It also opens the door for Russia to sell arms to China and that door has been closing recently. China used to be a big market for Russia but it has been producing its own equipment. Moscow will want some of that business back."

Russia and China Can Make Japan Nervous

Japan's Prime Minister Shinzo Abe has been among the world leaders meeting with Putin most frequently, as his country sees trade with Russia as lucrative and also has an ongoing territorial dispute with Moscow , which it would like to resolve. Although a U.S. ally, Japan has enjoyed a more amicable relationship with Russia in recent years and they follow meetings with China closely and suspiciously.

"Japan particularly does not want to be left out of business with Russia," Goodrich says. "Putin knows he can play the east Asian powers against one another. There's always been a big concern in Japan that when Russia and China meet, they make joint plans about the east China Sea, disputed by Japan."

Earlier this month both Chinese and Russian navies sailed vessels into the disputed waters and in Japan, this apparent coincidence seemed too much like coordinated action.

"The fact that the two happened to be in the same place at the same time, seemed to confirm the suspicions of some in Tokyo that Russia and China were teaming up to signal that both are there and they both talk to each other. The chances of a formal alliance between the two is small. However it always useful for each country to make their presence known and to make Japan unsure about whether or not they are planning something," she added.

Putin Is Out For Investment in Energy

Russia and China have one natural gas pipeline under construction, known as the Power of Siberia pipeline and another prospective pipeline known as the Altai pipeline. Though Russia's oil giant Gazprom and China's state-owned oil company CNPC have hit a snag that Putin and Xi will likely need to resolve.

"They will discuss Russian gas export plans and the high level visit by Putin will probably be used to make a breakthrough on the two stalling pipeline projects," Grigas says. "Russia has long prioritized the 1,700 mile-long Altai pipeline, from its already-developed Western Siberian gas fields because of the shorter relative length of the pipeline and cheaper construction costs. "

The West Siberia pipeline was postponed by two years in 2015 and Altai appears to have stalled indefinitely due to price wrangling. And that's not even the most urgent oil deal Putin needs to make.

"There is also the privatization of Russian oil-giant Rosneft," Goodrich says. "Russia is offering 19.7 percent, which would give someone two seats on the company's board. This deal needs to get done by the end of the year for Russia, which is a very tight deadline. If this deal is not done Russia will not be on budget."

Goodrich adds: "China is reluctant because it already has many investments in Russia, it has many eggs in the Russia basket, so to speak and it does not have all the money it used to for investing. Because of that Rosneft has been talking about finding other partners such as India. Over the weekend Italy was also mentioned and it remains to be seen if Italy can afford it, but it can probably at least afford part of it.

"It might be that Russia needs to sell the shares piecemeal, but it will be Putin's job to convince China to invest as much as possible," Goodrich says.

China Wants Transport Link With the West Via Russia

Russia's Transport Ministry announced an ambitious plan to build a hyperloop train between its eastern Zarubino port and China last week. The project is valued at nearly $460 million and Russia needs Chinese investment. But China has railway plans of its own in Russia.

"The hyperloop train plan is highly advanced and speculative at this point. Hyperloop technology is highly modern and it will take time for this project to materialize," Goodrich says. "However, China has been interested for a while in building a railway line between the Russian city of Kazan and the capital, Moscow, which China views as a necessity for eventually linking themselves with the West."

Traffic on Trans-Siberian routes has been rising of late and this is due in no small part to China. Both countries could benefit from a modernized, westward route, so it is likely Putin will be discussing the Kazan-Moscow train line in China.

Putin Needs to Show He Has Friends

Since the Ukraine crisis the Russian government has tried to unnerve Western states, by claiming it could replace trade with Europe and the U.S. by tapping into South America and East Asia. While the success of these endeavors has been debatable, Russian officials frequently like to point to Russia's continued relevance on the international stage as evidence that the policy of isolation has failed.

One of the most significant partners Russia can boast throughout the last two years, however, is China and any visit Putin makes to China will likely prompt fears in the West that Moscow and Beijing are mulling over deeper cooperation.

"Russia would like to present Sino-Russian relations as balancing or a bulwark against the West but this notion is more posturing than reality," Agnia Grigas, senior fellow at the Atlantic Council says. "It is Russia that needs this relationship more, both for pragmatic and political reasons."

Goodrich agrees noting that there is a difference between what China conveys and what Russia will try to convey with such meetings.

"Anyone who watches China does not believe a Sino-Russia alliance deal is on the cards. There is simply too much mistrust there and they have different interests internationally. The U.S. sees that," she says.

"What Putin tries to convey, especially in the face of sanctions, is that he is not alone. This is a big signal to Europe that Russia is looking for eastern partners and if it appears that Russia is moving close to China, it adds to the already shaky resolve on sanctions in Europe," Goodrich adds.

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