Asia Times

27 June 1997

[for personal use only]

PREPARING FOR A 'MULTI-POLAR' FUTURE

Francesco Lao Xi Sisci and agencies, Beijing

China and Russia are strengthening their strategic partnership with a series of billion-dollar oil, gas and arms deals intended to expand economic and military ties between the two nations.

Russian Prime Minister Victor Chernomyrdin arrived in China on Thursday for a two-day visit at a time when Sino-Russian relations are at their best in decades following a landmark Moscow summit which called for a new "multi-polar" world order aimed at diluting the power of the United States.

The two sides will sign a major oil and natural gas contract on Friday, as well as a railway agreement and other deals intended to expand trade after meetings between Chernomyrdin and his Chinese counterpart, Li Peng, the Russian embassy in Beijing has announced.

A statement released by the embassy described the oil deal as a "major framework agreement", but did not give details. China, a net oil exporter until 1993, has been pursuing access to foreign oil supplies to meet surging demand as its economy expands.

China will also finalize the purchase of US$2 billion worth of state of the art Sevremennyy destroyers to be delivered by the end of the year, Russian sources and Western diplomats said.

The Sevremennyy are medium-large 7,500 tonne warships with an autonomy of 7,000 nautical miles and a crew of 300, ideal to patrol the disputed South China Sea and escort convoys. They can also be used against land and air attacks.

Russia and China will also finalize the construction of a US$2.5 billion plant to assemble 200 SU-27S planes in northern China. The deal was delayed by Chinese financing difficulties and, said diplomats, because Russia became reluctant to cede both a naval and air force edge to China.

"But then the Russians got wind that the Chinese were successfully hiring Russian engineers to set up the plant by themselves, so they decided to proceed with the plant sale anyway," said a diplomat.

China has already purchased 48 SU-27 fighter bombers from Russia and has an outstanding order for 24 more.

Russian sources put the value of the gas project alone at US$7 billion.

Chinese officials predict that oil imports could reach an annual 50 million tonnes by the year 2000.

Sino-Russian trade was about US$6.8 billion last year, with a surplus of about US$3 billion in Russia's favor. Beijing estimates total trade could reach US$8 billion to US$10 billion in 1997. Last year President Boris Yeltsin and President Jiang Zemin called for expanding bilateral trade to US$20 billion by the year 2000.

Bilateral trade grew 25 percent last year, as the two sides found ways to expand cooperation and investment, Chernomyrdin said before leaving Moscow.

"More than the numbers and the trade it is the strategy that seems important," said a Western diplomat.

"China is trying to secure its continental back, trying to solve all territorial disputes with its neighbors, while keeping a vigilant eye on its ocean front.

"It has an open Taiwan issue, it has disputes with Japan over the Diaoyu/Senkaku islands, and with Vietnam, Malaysia, the Philippines and Brunei over the South China Sea," the diplomat said.

"On all these matters China's behavior is not as conciliatory as with its continental neighbors. It is a huge historical change for China, for millennia a continental power, with little interest in sea expansion, and now projecting itself to the sea."

The change of heart toward its sea borders is due to the sensitive question of re-unification with Taiwan and the pot- entially enormous oil and gas reserves both in the South China Sea and around the Diaoyu islands, suggested Asian diplomats.

During the Moscow summit in April, China and Russia signed a border troop reduction treaty together with the former Soviet Central Asian states of Kazakstan, Kyrgyzstan and Tajikistan, capping the total size of forces along the once-tense 7,300km border at 260,800 men.

On Thursday, Chernomyrdin visited the showcase city of Shenzhen, a special zone that has spearheaded China's economic opening to the world. "We also intend to do this back home," Chernomyrdin said before flying to Beijing to meet Li and other top officials.

Chernomyrdin's visit has been preceded by a trip by several economic and energy officials, including First Deputy Prime Minister Boris Nemtsov and Minister of Foreign Trade Mikhail Fradkov, who have been hammering out details of the deals.

Nemtsov is to visit the site of the Three Gorges dam on the Yangtze River on Thursday after Li suddenly invited him to visit the giant hydroelectric and water conservancy project, a Russian embassy spokesman said earlier. No details were provided.

A Russian consortium is bidding for a large contract to supply 14 generators with a total installed capacity of 9,800 megawatts for the hydroelectric power station.

China Yangtze Three Gorges Development has said it was still reviewing tenders from several international consortia to supply the generating units and had planned to select the winning bidder by late June or early July.

During Jiang's summit trip to Moscow this April, the two sides signed an agreement on a strategic "partnership" intended to demonstrate the growing trust between Beijing and Moscow, once bitter rivals who are now keen to counter US influence over world affairs.

The diplomatic thaw has also led to closer military cooperation between China, which is relying on Moscow's modern technology to upgrade its own armed forces, and the cash-starved Russian government.

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Johnson's Russia List

27 June 1997

djohnson@cdi.org