In These New Times

A new paradigm for a post-imperial world

Posts Tagged ‘Russia China co-operation’

Trump’s NSA bluffed. No sunlight between China and Russia

Posted by seumasach on April 19, 2017

“No matter Trump’s game plan to drive a wedge between China and Russia by exploiting Xi’s interest in a ‘new type of major country relations’ with US, it is preposterous that Beijing will allow any erosion to the Sino-Russian entente. The point is, for both China and Russia, their number one priority in world politics will be to push back at US hegemony and there is no daylight possible here between them for a foreseeable future.”

M.K.Bhadrakumar

Indian Punchline

18th April, 2017

The Chinese Foreign Ministry announced earlier today that the Director of the General Office of the Communist Party of China Li Zhanshu will visit Russia on April 25-27 at the invitation of his counterpart, head of the Presidential Administration in the Kremlin Anton Vaino. The Foreign Ministry spokesman Lu Kang said in Beijing that the two officials will discuss China-Russia relations “as previously agreed on by the countries’ leaders” and that the Chinese side is confident that the visit will further galvanize Sino-Russian ties. (TASS)

Read more

Advertisements

Posted in Multipolar world | Tagged: , , | Leave a Comment »

Russia-China military ties take a leap forward

Posted by seumasach on September 12, 2016

What this reveals is that the new US doctrine of detente with Russia alongside containment of China is already dead in the water. The assumption behind this strategy would have been that Russia and China could be set at odds rather as they were by Kissinger in 1972. China’s deployment in Syria and Russia’s support for China over the South Seas have essentially laid to rest such delusions. As a result, I would predict that the Brexit project will be very short-lived, that Temer will be hoisted on his own petard of Facebook protest, that Macri will reverse his anti-China shift, that the oppositional movements Venezuela, South Africa and Zimbabwe will fail and that Australia will not end up preferring a security alliance with the USA to it’s vital economic interests in a trade deal with China. At the same time, all the logic of this situation points to a Trump victory in the US. There will be no comeback for the neo-con elements purged by Obama now gathering around Clinton. We are at a remarkable conjuncture with the moment of truth to come with the raising of interest rates in the US. Then we will know exactly the potential for East-West cooperation and a reset of the global financial system: whether what is to come will be merely painful or totally catastrophic.

M.K.Bhadrakumar

Indian Punchline

11th September, 2016

The wrap on the long-awaited China-Russia naval exercise in the South China Sea has been lifted, finally. From what Beijing disclosed today regarding the eight-day exercise (codenamed Joint Sea-2016), beginning on September 12, it is anything but a routine exercise. Make no mistake, it marks a leap forward in Sino-Russian military ties and signals a significant show of strategic congruence.

Read more

Posted in Containing China, Multipolar world | Tagged: | Leave a Comment »

Russia to launch high speed railway between Moscow And Beijing

Posted by seumasach on January 6, 2015

Between Moscow And Beijing With Travel Time Of 48 Hours

IBTimes

5th January, 2015

 Russia will build a high speed railway line between Moscow and Beijing. This will cut down the travel time to about 48 hours. The existing travel time is seven days, and it will be a revolution when it will be cut to two days.

Read more

Posted in Multipolar world, Uncategorized | Tagged: , | Leave a Comment »

The future visible in St Petersburg

Posted by seumasach on May 29, 2014

Pepe Escobar

Asia Times

29th May, 2014

The unipolar model of the world order has failed. 
– Vladimir Putin, St Petersburg, May 22

In more ways than one, last week heralded the birth of aEurasian century. Of course, the US$400 billion Russia-China gas deal was clinched only at the last minute in Shanghai, on Wednesday (a complement to the June 2013, 25-year, $270 billion oil deal between Rosneft and China’s CNPC.)

Read more

Posted in Multipolar world | Tagged: , , | Leave a Comment »

Putin pushes trade on China visit

Posted by smeddum on October 13, 2009

Putin, right, will meet top Chinese leaders during his three-day visit [AFP]

Aljazeera

13/10/2009

Russia’s prime minister, Vladimir Putin, has begun a three-day visit to China overseeing the signing of deals worth $3.5bn between Russian and Chinese companies.

Putin is in the Chinese capital for talks with top officials aimed at strengthening economic and political ties between the two countries.

Officials are still working on the details of a joint energy agreement, worth another $2bn, which they hope will also be signed during Putin’s visit.

The Russian prime minister is due to meet his Chinese counterpart, Wen Jiabao, and hold talks with President Hu Jintao later. Read the rest of this entry »

Posted in Multipolar world | Tagged: , | Leave a Comment »

Defying the Economic Odds-The World Melts Down, China Grows

Posted by seumasach on May 4, 2009

Dilip Hiro

TomDispatch.com

3rd May, 2009

In the midst of the worst economic crisis since the Great Depression, a new world order is emerging — with its center gravitating towards China. The statistics speak for themselves. The International Monetary Fund (IMF) predicts the world’s gross domestic product (GDP) will shrink by an alarming 1.3% this year. Yet, defying this global trend, China expects an annual economic growth rate of 6.5% to 8.5%. During the first quarter of 2009, the world’s leading stock markets combined fell by 4.5%. In contrast, the Shanghai stock exchange index leapt by a whopping 38%. In March, car sales in China hit a record 1.1 million, surpassing the U.S. for the third month in a row.

“Despite its severe impact on China’s economy,” said Chinese President Hu Jintao, “the current financial crisis also creates opportunity for the country.” It can be argued that the present fiscal tsunami has, in fact, provided China with a chance to discard its pioneering reformer’s leading guideline. “Hide your capability and bide your time” was the way former head of the Communist Party Deng Xiaoping once put it. No longer.

Recognizing that its time has indeed come, Beijing has decided to play an active, interventionist role in the international financial arena. Backed by China’s $2 trillion in foreign exchange reserves, its industrialists have gone on a global buying spree in Africa and Latin America, as well as in neighboring Russia and Kazakhstan, to lock up future energy supplies for its ravenous economy. At home, the government is investing heavily not only in major infrastructure, but also in its much neglected social safety net, its health care system, and long overlooked rural development projects — partly to bridge the increasingly wide gap between rural and urban living standards.

Among those impressed by the strides Beijing has made since launching its $585 billion stimulus package in September is the Obama administration. It views the continuing rise in China’s GDP as an effective corrective to the contracting GDP of almost every other major economy on the planet, except India’s. So it has stopped arguing that, by undervaluing its currency — the yuan — with respect to the U.S. dollar, China is making its products too cheap, thus putting competing American goods at a disadvantage in foreign markets.

The Secret of China’s Success

What is the secret of China’s continuing success in the worst of times? As a start, its banking system — state-controlled and flush with cash — has opened its lending spigots to the full, while bank credit in the U.S. and the European Union (EU) still remains clogged up, if not choked off. Therefore, consumer spending and capital investment have risen sharply.

Ever since China embarked on economic liberalization under the leadership of Deng Xiaoping in 1978, it has experienced economic ups and downs, including high inflation, deflation, recessions, uneven development of its regions, and a widening gap between the rich and the poor, as well as between the urban and the rural — all characteristics associated with capitalism.

While China’s Communist leaders have responded with a familiar range of fiscal and monetary tools like adjusting interest rates and money supply, they have achieved the desired results faster than their capitalist counterparts. This is primarily because of the state-controlled banking system where, for instance, government-owned banks act as depositories for the compulsory savings of all employees.

In addition, the “one couple, one child” law, enacted in 1980 to control China’s exploding population, and a sharp decline in the state’s social-support network for employees in state-owned enterprises, compelled parents to save. Add to this the earlier collapse of a rural cooperative health insurance program run by agricultural cooperatives and communes — and many Chinese parents were left without a guarantee of being cared for in their declining years. This proved an additional incentive to set aside cash. The resulting rise in savings filled the coffers of the state-controlled banks.

On top of that came China’s admission to the World Trade Organization (WTO) in 2001, which led to a dramatic jump in its exports. An average economic expansion of 12% a year became the norm.

When the credit crash in North America and the EU caused a powerful drop in China’s exports, throwing millions of migrant workers in the industrialized coastal cities out of work, the authorities in Beijing focused on controlling the unemployment rate and maintaining the wages of the employed. They can now claim an urban unemployment rate of a mere 4.2% because many of the laid-off factory workers returned to their home villages. Those who did not were encouraged to enroll in government-sponsored retraining programs to acquire higher skills for better jobs in the future.

Whereas most Western leaders could do nothing more than castigate bankers filling their pockets with bonuses as the balance sheets of their companies went crimson red, the Chinese government compelled top managers at major state-owned companies to cut their salaries by 15% to 40% before tinkering with the remuneration of their workforce.

To ensure the continued rapid expansion of China’s economy, which is directly related to the country’s level of energy consumption, its leaders are inking many contracts for future supplies of oil and natural gas with foreign corporations.

Energy Security

Once China became an oil importer in 1993, it proved voracious. Its imports doubled every three years. This made it vulnerable to the vagaries of the international oil market and led the government to embed energy security in its foreign policy. It decided to actively participate in hydrocarbon prospecting and energy production projects abroad as well as in transnational pipeline construction. By now, the diversification of China’s foreign sources of oil and gas (and their transportation) has become a cardinal principle of its foreign ministry.

Conscious of the volatility of the Middle East, the leading source of oil exports, China has scoured Africa, Australia, and Latin America for petroleum and natural gas deposits, along with other minerals needed for industry and construction. In Africa, it focused on Angola, Congo, Nigeria, and Sudan. By 2004, China’s oil imports from these nations were three-fifths the size of those from the Persian Gulf region.

Nearer home, China began locking up energy deals with Russia and the Central Asian republic of Kazakhstan long before the current collapse in oil prices and the global credit crunch hit. Now, reeling from the double whammy of low energy prices and the credit squeeze, Russia’s leading oil company and pipeline operator recently agreed to provide 300,000 barrels per day (bpd) in additional oil to China over 25 years for a $25 billion loan from the state-controlled China Development Bank. Likewise, a subsidiary of the China National Petroleum Corp agreed to lend Kazakhstan $10 billion as part of a joint venture to develop its hydrocarbon reserves.

Similarly, Beijing continued to make inroads into the oil and gas regions of South America. As relations between Hugo Chavez’s Venezuela and the Bush administration worsened, ties with China strengthened. In 2006, during his fourth visit to Beijing since becoming president in 1999, Chavez revealed that Venezuela’s oil exports to China would treble in three years to 500,000 bpd. Along with a joint refinery project to handle Venezuelan oil in China, the Chinese companies contracted to build a dozen oil-drilling platforms, supply 18 oil tankers, and collaborate with PdVSA, the state-owned Venezuelan oil company, to explore new oilfields in Venezuela.

During Chinese Vice President Xi Jinping’s tour of South America in January 2009, the China Development Bank agreed to loan PdVSA $6 billion for oil to be supplied to China over the next 20 years. Since then China has agreed to double its development fund to $12 billion, in return for which Venezuela is to increase its oil shipments from the current 380,000 bpd to one million bpd.

The China Development Bank recently decided to lend Brazil’s petroleum company $10 billion to be repaid in oil supplies in the coming years. This figure is almost as large as the $11.2 billion that the Inter-American Development Bank lent to various South American countries last year. China had established its commercial presence in Brazil earlier by offering lucrative prices for iron ore and soybeans, the export commodities that have fuelled Brazil’s recent economic growth.

Similarly, Beijing broke new ground in the region by giving Buenos Aires access to more than $10 billion in yuans. Argentina was one of three major trading partners of China given this option, the others being Indonesia and South Korea.

Will the Yuan Become an International Currency?

Without much fanfare, China has started internationalizing the role of its currency. It is in the process of increasing the yuan’s role in Hong Kong. Though part of China, Hong Kong has its own currency, the Hong Kong Dollar. Since Hong Kong is one of the world’s freest financial markets, the projected arrangement will aid internationalization of the yuan.

In retrospect, an important aspect of the G-20 Summit in London in early April centered around what China did. It aired its in-depth analysis of the current fiscal crisis publicly and offered a bold solution.

In a striking on-line article, Zhou Xiaochuan, governor of China’s central bank, referred to the “increasingly frequent global financial crises” that have embroiled the world. The problem could be traced to August 1971, when President Richard Nixon took the dollar off the gold standard. Until then, $35 bought one ounce of gold stored in bars in Fort Knox, Kentucky — the rate having been fixed in 1944 during World War II by the Allies at a conference in Bretton Woods, New Hampshire. At that time, the greenback was also named as the globe’s reserve currency. Since 1971, however, it has been backed by nothing more tangible than the credit of the United States.

A glance at the past decade and a half shows that, between 1994 and 2000 alone, there were economic crises in nine major countries which impacted the global economy: Mexico (1994), Thailand-Indonesia-Malaysia-South Korea-the Philippines (1997-98), Russia and Brazil (1998), and Argentina (2000).

According to Zhou, financial crises resulted when the domestic needs of the country issuing a reserve currency clashed with international fiscal requirements. For instance, responding to the demoralization caused by the 9/11 attacks, the U.S. Federal Reserve Board drastically reduced interest rates to an almost-record low of 1% to boost domestic consumption at a time when rapidly expanding economies outside the United States needed higher interest rates to cool their growth rates.

“The [present] crisis called again for creative reform of the existing international reserve currency,” Zhou wrote. “A super-sovereign reserve currency managed by a global institution could be used to both create and control global liquidity. This will significantly reduce the risks of a future crisis and enhance crisis management capability.”

He then alluded to the Special Drawing Rights (SDR) of the International Monetary Fund. The SDR is a virtual currency whose value is set by a currency “basket” made up of the U.S. dollar, the European euro, the British pound, and the Japanese yen, all of which qualify as reserve currencies, with the greenback being the leader. Ever since the SDR was devised in 1969, the IMF has maintained its accounts in that currency.

Zhou noted that the SDR has not yet been allowed to play its full role. If its role was enhanced, he argued, it might someday become the global reserve currency.

Zhou’s idea received a positive response from the Kremlin, which suggested adding gold to the IMF’s currency basket as a stabilizing element. Its own currency, the ruble, is already pegged to a basket that is 55% the euro and 45% the dollar. Within a decade of its launch, the euro has become the second most held reserve currency in the world, garnering nearly 30% of the total compared to the dollar’s 67%.

Treasury Secretary Timothy Geithner’s immediate reaction to Zhou’s article was: “China’s suggestion deserves some consideration.” Nervous financial markets in the U.S. took this as a sign from the Treasury Secretary that the dollar was losing its primacy. Geithner retreated post-haste. And President Obama quickly joined the fray, saying: “I don’t think there is need for a global currency. The dollar is extraordinarily strong right now.”

Actually, maintaining the customary Chinese discretion, Zhou never mentioned the state of the U.S. dollar in his article, nor did he even imply that the yuan should be included in the super-sovereign currency he proposed. Yet it was clear to all that at a crucial moment — with world leaders about to meet in London to devise a way to defuse the most severe fiscal crisis since the Great Depression — that a China which had bided its time, even though it had the third largest economy on the planet, was now showing its strong hand.

All signs are that Washington will be unable to restore the status quo ante after the present “great recession” has finally given way to recovery. In the coming years, its leaders will have to face reality and concede, however reluctantly, that the economic tectonic plates are shifting — and that it is losing financial power to the thriving regions of the Earth, the foremost of which is China.

Dilip Hiro is the author, most recently, of Blood of the Earth: The Battle for the World’s Vanishing Oil Resources (Nation Books). His upcoming bookAfter Empire: The Rise of a Multipolar World will be published by Nation Books this year.

 

Copyright 2009 Dilip Hiro

Posted in Multipolar world | Tagged: , , | Leave a Comment »

Cash-rich China courts the Caspian

Posted by seumasach on April 22, 2009

M.K Bhadrakumar

Asia Times

18th April, 2009

The global downturn is spreading to Central Asia. It may lead to a marked shift of fortune in the Great Game for control of Caspian energy reserves. On the surface, the intensity of the rivalries may appear to have subsided, as the principal protagonists – Russia and the West – brood over the precarious state of their own finances and prioritize fixing their domestic economies.

But the slowing down of the Great Game bears a deceptive appearance. China gains out of any changing equations. Of all the major economies of the world, it is in China that the government’s 4 trillion yuan (US$585 billion) stimulus package may have begun showing results, which puts the economy in a “better-than-expected” shape, as Premier Wen Jiabao said on Thursday.

China’s prospects as the first major economy to recover gives it a crucial role to lead the world economy as a whole and the Central Asian region in particular. Following up on a $25 billion loan to Russia that China dished out in February, it has agreed to lend $10 billion to Kazakhstan. China expects both the recipients to reciprocate by bolstering their energy supplies to China.

We may be witnessing the signs of a seismic shift in the geopolitics of Central Asia. The region faces a grim economic outlook and it instinctively looks up to China to help it figure a way out. That provides a big opportunity for China to take the region under its wings. The implications are deep for the Caspian energy sweepstakes.

In its latest regional report, the International Monetary Fund (IMF) has projected a stark economic forecast for Central Asia. The IMF predicts that the economic growth which stood at 12% in 2007 and 6% in 2008 will slow down to less than 2% in 2009 as a “great recession” takes hold. A senior IMF official said, “Until recently, the region had been awash with commodity-export receipts, capital inflows and remittances. This had led to significant economic gains in recent years with real per capita GDP [gross domestic product] growing impressively.”

However, the conditions are deteriorating. The point is, oil and gas exporters are heavily affected by the decline in global demand and the sharp fall in their prices. At the same time, Central Asian countries are hit hard by the financing constraints of the international financial markets, which translate as difficulty in obtaining foreign capital.

At a summit meeting of the Eurasian Economic Community in Moscow in February, Russia initiated the creation of a bailout fund of $10 billion financed by Russia and Kazakhstan to help the economies of the member countries – Belarus, Kazakhstan, Kyrgyzstan, Russia and Tajikistan. But the capacity of Russia and Kazakhstan to play such lead role is in serious doubt. February seems a long time ago already as the crisis deepens in Russia and Kazakhstan.

Russia’s statistical agency, Rosstat, reported in late March figures that all but suggest the economy is in trouble. The output of essential goods and services declined in February by 11.6% while export earnings – of which oil and gas exports account for the bulk – registered a 40% drop. The World Bank has forecast a 4.5% contraction of the economy in 2009 and that it may take time to recover. Russia has already committed $85 billion into stabilization efforts.

Russia’s crisis is directly related to the sharp decline in revenue from oil and gas exports. Energy giant Gazprom recently revised its price forecast for the export of its gas to Europe to $257.9 per thousand cubic meters (tcm) of gas. The price stood at $409 tcm in 2008. The Russian newspaper Vedomosti estimates that at an average price of $260 tcm, Russia’s revenues from gas exports in the current year will work out to $44 billion, as against $73 billion last year.

The business newspaper Kommersant reported that with demand for Russian gas declining, Gazprom faces a liquidity problem, which in turn could seriously affect Russia’s urgently needed investment program to explore new gas fields.

Russia’s biggest Soviet-era gas fields are past their prime. Moscow expects that through development of giant new fields, the decline in production can be made up. The fields at Bovanenkovskoye on Yamal were expected to produce their first gas by 2011, and Shtokman by 2015. But the financial crisis in the West affects fresh investments.

Meanwhile, Gazprom’s gas production is expected to decline to 510 billion cubic meters (bcm) in 2009 from a level of 550 bcm in 2008. Thus, Gazprom may be constrained to limit its exports to 170 bcm in 2009, as compared to 179 bcm last year. Russia’s gas shortfall seems to have set in earlier than expected.

Therefore, Central Asia’s importance as a source of cheap energy has increased for Russia. Gazprom is currently buying roughly 50 bcm of gas from Turkmenistan, 15 bcm from Kazakhstan and 7 bcm from Uzbekistan. Central Asian producers accounted for about 14% of Gazprom’s total production last year. However, Central Asian producers would now assess that Russia lacks the financial resources to follow through on its commitments in the field of energy cooperation.

In late March, when Turkmen President Gurbanguly Berdymukhamedov visited Moscow, it was widely expected that the talks would result in a decision to kick-start the so-called Prikaspiiski pipeline network expansion which was agreed to over two years ago. The project is of immense importance for Russia to make increased gas purchases from Turkmenistan. It involves the expansion of the Soviet-era gas pipeline along the east coast of the Caspian Sea via Kazakhstan to Russia. But Berdymukhamedov balked.

Beijing would have taken into account these emergent circumstances when it signed an unprecedented “oil-for-loans” agreement with Russia on February 17. In terms of the agreement, China Development Bank will lend $25 billion at 6% annual interest to Russia’s state-owned oil company Rosneft and oil pipeline monopoly Transneft. In return, China will receive roughly 20 million tons of oil annually from Russia starting from 2011 for a 20-year period. The total volume of the Russian oil supplies within this framework is the equivalent of about 4% of China’s current consumption of oil and about 8% of China’s present imports. Rosneft receives $15 billion out of the Chinese loan.

On its part, Transneft receives the remaining $10 billion out of the Chinese loan towards the cost of building a spur from the East Siberia-Pacific Ocean (ESPO) pipeline originating from Skovorodino in eastern Siberia to China’s Daqing petrochemical hub. China had earlier funded the project’s $37-million feasibility study.

The ESPO’s first stage is expected to have a capacity of 30 million tons annually and the second stage will have a capacity for transporting 80 million tons. Transneft is expected to complete the first stage (Taishet to Skovorodino) by the end of this year and to commence the construction of the second stage (Skovorodino to Kazimo) in December. The entire project will be completed by end-2010.

Clearly, the Chinese loan comes as a great relief to the two cash-strapped Russian energy companies to realize their refinancing loans in 2009 as well as to continue with their capital expenditures. The loan also goes to some extent to make up for the flight of Western capital from Russia. Without doubt, China has made a smart move.

One, it is always a wise thing to tie up long-term energy supplies. Two, the price of the Russian oil will definitely be cheaper than the prices on the spot market, where China buys the bulk of its imports at present. Three, China has got Russia to deliver oil by a single-destination pipeline to China. Four, China is reducing its reliance on Middle Eastern oil. Five, China is reducing its dependence on the stretched-out transportation route via the Malacca Straits.

Above all, China has persuaded Moscow to commit significant quantities of its oil away from its traditional European market. Moscow often held out the prospect of a diversification to the Asian market, but remained fixated on the Western market. That mindset is changing. Again, China may have at long last galvanized an all-round energy cooperation program with Russia. Sino-Russian energy cooperation had lately shown signs of fatigue after the promising start during the landmark visit by then-Russian president Vladimir Putin to China in March 2006.

Putin, now prime minister, had proposed to export up to 40 bcm of Russian gas to China via the new 6,700-kilometer, $10-billion Altai pipeline. But virtually nothing has happened on this front since then, ostensible amid squabbles over a mutually agreeable gas price formula, while Moscow remained focused on the European gas market. This attitude is changing.

In February, the Kremlin decided to revive the Altai project when President Dmitry Medvedev wrote to Chinese President Hu Jintao offering comprehensive cooperation in bilateral energy projects. Gazprom has since shown interest in forming a gas-trade joint venture with the China National Petroleum Corporation, which would allow the Russian firm to participate in retail gas sales in the Chinese market as a quid pro quo for favorable pricing.

Kazakhstan, Central Asia’s number one energy producer, also faces a financial crisis similar to Russia’s. Kazakh Prime Minister Karim Masimov underscored this recently by comparing the crisis to wartime conditions, which needed a response on a war footing. He wasn’t exaggerating.

With the oil price falling to $50 per barrel as compared to $150 in July last year, there is a severe resource crunch. Besides, Kazakhstan has reason to worry that the crisis may turn out to be drawn out. True, Kazakhstan is spending almost $15 billion or 14% of its GDP on stimulus packages. But the government has nonetheless begun cutting jobs in state enterprises. A ban has been imposed on new hirings. The initial hopes on new infrastructure projects keeping wages stable have faded. Unemployment is rising, which is a matter of major political concern.

In this scenario, China has responded to the Kazakh request for help. Two agreements were signed in Beijing on Thursday during a five-day visit (April 15-19) by Nazarbayev providing for a Chinese loan amounting to $10 billion to Kazakhstan in return for the right, among other things, to take a big stake in the Central Asian country’s energy sector. China’s Eximbank will lend the state-owned Development Bank of Kazakhstan US$5 billion. China’s state-run Chinese National Petroleum Company (CNPC) will in turn extend a $5 billion loan to KazMunaiGas, the Kazakh national oil company.

The two oil companies also signed a separate agreement giving CNPC a 49% stake in MangistauMunaiGas (MMG), a local oil producer. (Kazakhstan and China also signed an initial accord to build a “road transport channel” linking western China and Europe. Other agreements include accords to cooperate in agriculture, education, finance and telecommunications.)

Beijing’s intentions are quite transparent: China will tap its $1.95 trillion currency reserves to buy overseas exploration rights wherever available in Central Asia. Nazarbayev told Xinhua news agency on the eve of his departure for China that China’s role was of global significance. Its huge market, abundant foreign exchange reserves and “effective crisis response” constitute an “enormous support for the world economic revival”, he said.

Kazakhstan is a safe investment destination, too. It holds over 3% of the world’s proven oil reserves. It received $21 billion in exploration and production investment in 2007 before the financial crisis erupted. Curiously, China is stepping into the purchase of MMG, outbidding Russia’s Gazprom and India’s ONGC (Oil and Natural Gas Commission), both state-owned enterprises. CNPC won the race by offering the $10 billion investment package which neither Russia nor India could match. China evidently took a long-term view. The MMG has estimated crude oil reserves of 1.32 billion barrels and also holds a 58% stake in the Pavlodar oil refinery, apart from operating a chain of retail stations.

China is not a new investor in Kazakhstan’s energy sector. It already owns Aktobemunaigas, which produces 120,000 barrels of oil per day (b/d) and China holds 67% of PetroKazakhstan, which produces 150000 b/d. It is also an equal partner, along with the Kazakh state oil company KazMunaiGas, in the 200,000 b/d oil pipeline from the Caspian to China’s Xinjiang border.

Meanwhile, work on the gas pipeline project from Turkmenistan via Uzbekistan to China is on target. China is financing this. The Turkmen portion of the pipeline runs 188 kilometers and will be completed by end-2009. More than 1,200 km of the pipeline has already been laid in Kazakhstan and Uzbekistan.

It shouldn’t come as surprise if Beijing now begins flexing its financial muscles to ensure that the pipeline optimally delivers gas on China’s western border. Indeed, gas deliveries to China via the new pipeline will signify a major diversification of the Central Asian region’s gas exports away from Russia and Europe.

Ambassador M K Bhadrakumar was a career diplomat in the Indian Foreign Service. His assignments included the Soviet Union, South Korea, Sri Lanka, Germany, Afghanistan, Pakistan, Uzbekistan, Kuwait and Turkey. (Copyright 2009 Asia Times Online (Holdings) Ltd. All rights reserved. Please contact us about sales, syndication and republishing.)

Posted in Multipolar world | Tagged: , | Leave a Comment »

PM Putin suggests Russia, China ditch dollar in trade deals

Posted by smeddum on October 29, 2008

Russia
PM Putin suggests Russia, China ditch dollar in trade deals
15:23 | 28/ 10/ 2008 Novosti

MOSCOW, October 28 (RIA Novosti) – Russian Prime Minister Vladimir Putin proposed on Tuesday that Russia and China gradually switch over to national currency payments in bilateral trade, expected to total $50 billion in 2008. Read the rest of this entry »

Posted in Uncategorized | Tagged: , | Leave a Comment »

 
%d bloggers like this: