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Energy alliance for better future

By Dmitri Trenin | China Daily | Updated: 2013-10-25 07:04

Dmitri Medvedev's first visit to China as Russia's prime minister will further cement Beijing-Moscow energy relationship. This alliance rests on a simple formula: substantial Chinese credits for long-term Russian energy supplies. Thus, cash-rich China buys a measure of energy security, and Russia gets much-needed cash for its budget. In the current geopolitical setting, however, this essentially pragmatic relationship acquires features of an energy alliance.

Since 2009, China has been Russia's biggest trading partner. The two-way trade, which stood at $88 billion last year, is finely balanced between exports and imports. There is a huge imbalance, however, as far as the trade structure is concerned. About 90 percent of Russian exports are hydrocarbons; machinery accounts for less than 1 percent. Despite the Russian government's professed desire to diversify the country's exports, the energy element has only grown in the past few years. Russia has become one of China's energy bases.

Russia's advantage as an energy source, in Chinese eyes, is that its supplies cross into China over land, and directly. Unlike sea routes, they are essentially protected from third-country interference. Pipelines also tie Russia to the Chinese market, and give Beijing leverage in case of a dispute.

Energy alliance for better future

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