Last year, Chinese President Xi Jinping and Russian President Vladimir Putin met several times and engaged in trade negotiations that appeared to be beneficial for both countries. China was awash in U. S. Dollars and lacked gas, oil and other basic commodities. Russia, on the other hand, desperately needed hard currency and has an economy that is primarily based on gas and oil revenue, as well as some from basic commodities.
In May, Xi was the only A-List head of state to attend Putin’s parade in Moscow, which marked the 70th anniversary of the end of World War II in Europe. Putin, in return, was the only high-level guest at Xi’s parade, in Beijing, last week, to mark the end of the War with Japan. Neither country staged a solemn remembrance affair, as has been the usual theme in most Western countries. Both Beijing and Moscow rolled out the high-stepping military troops and row after row of the latest military hardware–maybe with a hidden agenda to create some nationalism. Perhaps that’s why the various Western nations that participated in World War II merely sent lower-level representatives.
It had been anticipated that when the two leaders met in Beijing that they would formally sign the various trade agreements, which had only been agreed to last year. But, a lot has happened since then. Presidents Xi and Putin, who generally appear to have a mutual admiration for each other, seemed to be somewhat distant. During the past year, the global economy has just not been cooperative for either country.
China, still has not diversified its economy sufficiently beyond the export sector and, thus, it has been significantly effected by the worldwide slow-down. Accordingly, its appetite for natural resources has diminished, and so has it supply of dollars.
And Russia’s economy has been substantially effected by the reduced sale of gas and oil to Europe, due to the economic sanctions imposed after it annexed Crimea last year. Additionally, its energy-dependent economy, has been further disrupted by the fact that prices on the global markets have dropped by more than 50% over the past year.
Therefore, the trade negotiations have been pushed even further off into the future. China would want the price of gas and oil to be cut substantially, given the weakness in global demand. In fact, Beijing currently appears unable to even project what its future energy needs might be. Moscow, for its part, although it needs dollars badly, it surely doesn’t want to jump at fire-sale prices for its commodities–if there even was an offer on the table. So perhaps they’ll just have to wait until next year.