From energy to yuan: All you need to know about Xi and Putin’s ‘no limits’ partnership


Chinese President Xi Jinping met Russian President Vladimir Putin in the ancient Silk Road city of Samarkand in Uzbekistan on Thursday and had important discussions about Taiwan and Ukraine.

After blasting Washington’s “ugly” policies, Putin thanked Xi for his “balanced” approach to the Ukrainian crisis.

Ahead of the 20th Communist Party Congress, Xi is confident about his grip on power as he is due to cement his place as the most powerful Chinese leader since Mao Zedong.

Allowing Xi to present himself as the global leader of the anti-American world, China’s “no-limits” friendship with Moscow is giving Russia the leverage to tilt towards Asia.

Being careful not to provide the sort of direct material support which could provoke Western sanctions, Xi promised “strong support” to Russia’s “core interests.”

Although for much of the past 300 years Russia has looked to the West as the crucible of economic growth, Putin casts the West as a failing group of declining US puppets.

Calling Russian action against Ukraine a legitimate response to US provocation, China’s foreign ministry defended Moscow’s ”special military operation.”

Since Soviet geologists found oil and gas in the swamps of Siberia in the decades after World War Two, selling oil and gas to Europe has been one of the main sources of Russian foreign currency earnings.

As the West moves to establish a price cap on Russian energy resources and potentially cut their imports altogether, observers say Russia will likely grow increasingly reliant on China as a market for its oil and gas.

Following US House Speaker Nancy Pelosi’s visit to Taiwan, Russia backed China amid tensions with Washington.

While Putin said last week that a major gas export route to China via Mongolia had been agreed, Kremlin aide Yuri Ushakov said no new energy deals with China are expected to be signed in Uzbekistan.

From the Bovanenkovo and Kharasavey gas fields in Yamal, the Power of Siberia 2 gas pipeline will travel through Mongolia taking Russian gas to China.

After the West froze $300 billion in Russian state-owned reserves, Moscow called dollars and euros “toxic”.

As a result of the deepening ties between Russia and China, the yuan is becoming much more popular as Moscow tries to ditch its post-Soviet addiction to cash US dollars.

On the basis of a 50-50 split between the Russian rouble and Chinese yuan, Putin said last week that China will pay Gazprom for its gas in national currencies.

After successfully completing its debut yuan-denominated bond placement worth 15 billion yuan ($2.15 billion), Russia’s largest oil producer Rosneft said it was gradually shifting to foreign trade settlements in Russian roubles and national currencies of “friendly” countries.

While Russia’s largest gold producer Polyus issued bonds denominated in the Chinese yuan worth 4.6 billion yuan ($670 million), the country’s aluminium producer Rusal tapped the yuan bond market on the Moscow Exchange.

(With inputs from agencies)

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