In Putin's hometown, China's Xi Jinping gets lavish welcome as Moscow looks to cement deeper ties

Xi Jinping reacts during a session of the St. Petersburg International Economic Forum.
Xi Jinping reacts during a session of the St. Petersburg International Economic Forum.PHOTO: REUTERS

ST PETERSBURG (WASHINGTON POST) - Russian President Vladimir Putin delivered a broadside against America's role in the global economy on Friday (June 7), looking to cement the budding alliance between Russia and China as a union of countries trying to counter US influence.

With Chinese President Xi Jinping onstage next to him at Russia's marquee annual business event, Putin depicted Russia and China as increasingly facing similar pressures from Washington.

While Moscow has faced US sanctions for years, China now faces its own, intensifying economic battle with Washington.

"Countries that used to preach the principles of free trade and free and open competition have started speaking the language of trade wars and sanctions," Putin said.

"A system will never be stable or balanced if the unfairness at its foundation is clearer than ever."

There was little new in Putin's jabs at how the United States wields its economic power. But - with China's leader by his side - they carried wider aspirations: How Moscow hopes to build long-term strategic ties with the China, the world's second-largest economy and a rising military force in Asia.

Until recently, China has been slow to accept Russia's embrace.

But the Trump administration's trade war - and its campaign against Chinese telecom giant Huawei - is providing Russia with a new opportunity to win over China by casting the United States as a shared adversary.

Beijing "may no longer harbour illusions that the States will have mercy on China," Artyom Lukin, a specialist on Russian-Asian affairs at Far Eastern Federal University in Vladivostok.

"This could lead to a qualitative leap in our relations."

Xi was the guest of honour this week at the St Petersburg International Economic Forum, Russia's answer to the annual business conference in Davos, Switzerland.

Xi led a delegation of some 1,000 Chinese executives and officials even as many Western officials stayed away - in part because of the furor over the recent arrest of an American investor based in Moscow.

Guiding Xi on Thursday through his home city, Putin showed off the Italian Renaissance paintings at the Hermitage Museum and took his guest on an evening boat tour on the Neva River.

They stopped at the Aurora, a warship that saw battle in Russia's war with Japan and is said to have fired the first shot of the 1917 October Revolution. The two leaders only parted at midnight, Putin said afterwards, "and we still had a lot to talk about."

Ahead of Xi's three-day visit to Russia, he referred to Putin as "my best and bosom friend." Russia has long looked to its big neighbour to the southeast for much-needed trade and investment. But China's significance as a geopolitical partner for Moscow rose sharply after the Ukraine crisis in 2014 - the outbreak of a Moscow-stoked separatist conflict in eastern Ukraine and Russia's annexation of Crimea.

The West, in return, punished Russia with sanctions and other measures.

"The Russian approach to China has been somewhat forced, in my view," Andrey Sokolov, chairman of Russia's biggest private bank, Alfa Bank, said in an interview. "Because after the well-known events of 2014 there was no other way out. Russia needed allies with whom it could cooperate in the political and economic sphere."

China refused, for instance, to recognise Russia's annexation of the Ukrainian peninsula of Crimea. But amid the trade war with President Donald Trump, China has appeared more eager to move closer to Russia.

The country's military participated in major exercises with the Russian Army last year. Trade between Russia and China rose nearly 25 per cent to US$108 billion last year, the Kremlin said, though the increase stems in part from higher oil prices.

"In a world which is undergoing profound changes unseen in a century, China and Russia bear the great expectations of the people of the two countries and the international community," People's Daily, the Chinese Communist Party's flagship newspaper, said on Friday.

"Strengthening Sino-Russian relations is the call of history and the unwavering strategic choice of both sides," the commentary added.

Putin, with Xi at his side at the St Petersburg conference on Friday, referred to the situation around Huawei as "the first technological war of the coming digital epoch."

 
 
 

He compared it to efforts by Washington and some European Union member states to block Nord Stream 2, a new gas pipeline between Russia and Germany that critics say will make it easier for Russia to wield its energy supply as a geopolitical weapon. Russian officials counter that the criticism is rooted in America's desire to sell its own gas to Europe.

"Look at what's happening with Huawei," Russian Finance Minister Anton Siluanov said here on Thursday. "Clearly, this is a competitive battle. The same thing is happening to us."

American officials have warned that Huawei equipment embedded in Western telecom networks could aid future espionage or sabotage by the Chinese government.

But Washington's ability to stop other countries from using Huawei technology has been tempered by the company's low prices and its advances in the next-generation wireless networking technology known as 5G. Huawei inked an agreement to develop a 5G network for Russia's biggest mobile carrier, MTS, in a Kremlin ceremony attended by Putin and Xi on Wednesday.

A day later, Guo Ping, Huawei deputy chairman, bantered in English onstage in St Petersburg with Herman Gref, the chief executive officer of Sberbank, Russia's biggest bank.

"We will do everything we can to help our customer win in his market," Guo said in front of the thousands of executives and officials.

Xi and other Chinese officials took a more measured tone toward the United States than Putin at the conference, saying they were committed to multilateralism. But for Xi's Russian hosts, it may have been more significant what he did not say.

While the arrest of Moscow-based American investor Michael Calvey - a regular attendee here in past years - cast a shadow over the conference, Xi voiced no concerns about Calvey's case.

US Ambassador Jon Huntsman boycotted the conference because of Calvey's arrest, and even leading Russian economic officials said the case had seriously damaged Russia's standing among foreign investors. Calvey, the founder of private equity firm Baring Vostok, denies wrongdoing. He was detained on embezzlement charges in February in a case he said stemmed from a dispute over control of a Russian bank. He is now under house arrest.

"Yes we are developing relations with China because it's currently possible, necessary, and so on," said Sokolov, the Alfa Bank chairman. "But does cooperating with China replace cooperation with the West? No."