Economic Ties to Top Agenda at Hu-Putin Talks

When Yu Jia entered the China-Russia trading business more than a decade ago, the players were mostly grubby small-time merchants hauling suitcases across the border by train. The prospects looked so bleak, the former Russian language teacher recalls, that she had real second thoughts about giving up her secure job at the university.

Over the last decade, however, business has expanded rapidly even as its participants have computerized and become exponentially more polished and professional.

Yu, a manager at Hua Sheng International Transport Service, says business has expanded tenfold since 1996, with her company now shipping 18 truckloads and two planeloads of appliances, garments, shoes and accessories a week to Moscow, Vladivostok and other points north.

President Hu Jintao plays host to Russian counterpart Vladimir V. Putin in Beijing today, the fifth meeting between the two leaders in less than a year, and economic ties are high on the agenda.

Yu is on the front lines of a move to strengthen those ties, part of a goal to boost two-way trade beyond $60 billion by 2010 from $29.2 billion in 2005.

“In the past, the relationship between Beijing and Moscow was described as politically hot, but economically cold,” said Jiang Zhenjun, professor at the Institute of Russian Studies at Heilongjiang University. “Without strong economic ties, it’s hollow inside, a strategic relationship with no content. Building the economic base is a main focus.”

Also binding the two are expanded political and military ties and shared discomfort with a world dominated by a single superpower, the United States.

On the economic front, a focal point of the two-day meeting will be energy. With the United States, Japan, China and other major energy consumers vying for supply, China has long salivated over an oil pipeline deal with its resource-rich neighbor.

This month, Russia’s Federal Service for Ecological, Technological and Nuclear Supervision signed off on a route for a 2,550-mile Siberian pipeline to the Far East.

Chinese analysts saw this as a good sign that Beijing’s pipeline dreams might finally be realized after years of jockeying with Japan. Currently, Russian oil travels to China aboard rail cars, an inefficient and expensive proposition.

“The Japanese have largely retreated from this battle,” said Cheng Jian, a professor in Russian studies at East China Normal University. “I think we’ve won.”

In addition to oil, China will be looking for natural gas contracts, greater cooperation on nuclear power plants and expanded sales of Russian electricity to light up Chinese cities along their shared border.

There will also be a healthy dose of well-scripted ceremony by two leaders with a penchant for tight political control. This week marks the beginning of a Russian cultural year in China: Flags of the two countries fluttered around Beijing along with banners of Chinese pandas dancing with Russian bears.

“The positive development of our relations convincingly proves that pragmatism and constructive dialogue are far better than mutual claims and endless appeals to the disputed pages of history,” Putin said in an interview with China’s official New China News Agency.

On political issues, the two leaders should find little to argue about. Putin and Hu are expected to confer on the Iranian and North Korean nuclear standoffs, on which their positions are relatively similar.

Both nations have historical ties to North Korea and sizable economic interests in Iran, leading them to favor a diplomatic solution over United Nations sanctions or possible military options.

“Our cooperation plays an important role in keeping the situation within the controlled diplomatic process,” Russia’s ambassador to China, Sergei Razov, told a news conference in Beijing last week.

Both leaders are also wary of their respective Muslim populations, which they view as potential secessionist threats, and both share concern over rising U.S. influence in Central Asia.

In previous Hu-Putin meetings, the two have voiced concerns over a world dominated by the United States.

“The two nations are doing everything they can to strengthen ties,” said a diplomat based in Beijing who asked not to be identified. “I’m not sure they can pull it off -- joining forces as a counterweight to the U.S. and its allies -- but they certainly seem to be trying.”

Chinese analysts downplayed the significance of this apparent challenge, however. “I think it’s only a political gesture,” said Cheng, the Russian studies professor. “It’s just to show they have a strategic relationship. In reality, when each one deals with the United States, nothing changes.”

The two leaders are also expected to discuss defense ties. With U.S. weapons exports blocked to China, and a European arms embargo still in place, Russia remains China’s largest foreign arms supplier.

Millions of Chinese saw Russian pilots in SU-27 and SU-30 fighters perform aerobatic tricks last week in a performance broadcast on national television.

The two nations plan a sizable military exercise in Russia later this year following last year’s joint operation in the Yellow Sea involving 7,000 Chinese and 1,800 Russian troops, their largest since the Korean War.

As the two countries focus on further integrating their economies, they appear to have a lot going for them. Russia has resources China needs. China has light industry Russia lacks.

But it isn’t always that easy. Russia frets that China is keen on buying its resources but little else. And Russia has imposed high taxes on Chinese consumer goods in a bid to promote its own light industry, wary that its companies will be swamped by Chinese competitors.

That adds up to something of a headache for Yu, the Russian language teacher turned businesswoman.

“The Russians love inexpensive Chinese shoes, clothes and consumer goods, and trade is growing,” she said. “But the tariffs are still too high. I only hope the two governments can work these problems out.”

Yin Lijin of The Times’ Beijing Bureau contributed to this report.