Trump’s Trade War & Potential More Sanctions are Pushing China Closer To Russia

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Sep 12 2018
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For the first time, President Xi Jinping attended the Eastern Economic Forum (EEF) in Vladivostok in Russia. It was also the first time a Chinese head of state had attended the EEF, an international forum held each year for the purpose of encouraging foreign investment in the Russian Far East. This is the third meeting between Xi and Russian President Vladimir Putin this year alone.


Over 7,000 people from more than 60 countries have participated in this year’s EEF, which was initially proposed by Putin and has been held annually since 2015. After the Yangtze River-Volga River and China’s Northeast-Russia’s Far East, the EEF has become another important regional cooperation mechanism linking China and Russia.


Xi and Putin rubbed shoulders and agreed to promote bilateral ties, and safeguard world peace and stability. And both leaders believe China and Russia should deepen cooperation on projects related to the Belt and Road initiative and with the Eurasian Economic Union – focusing on energy, agriculture, high-tech and finance.

Trade between Russia and China reached US$87 billion in 2017, and will most likely exceed US$100 billion this year. The Russia-China Investment Fund (RCIF) and China’s Tus-Holdings have announced joint investment plans focusing on developing technology, which “would see US$1.28 billion investment in the Russian Tushino Project Technology Park.”


As Russia copes with a stagnant economy, Moscow is eager to embrace Chinese investors as partners to achieve a recovery. China has the world’s biggest foreign reserves – a staggering US$3.1 trillion. Thanks to President Trump’s trade war with China, Beijing is being pushed to enhance bilateral trade with Moscow, a more reliable friend and better partner.


China’s Great Wall Industry Corp, a commercial satellite launch company, is already negotiating with Russia’s top rocket maker to strengthen cooperation on engine technology. Around 600 representatives from China, including officials, heads of State corporations and business communities, are taking part in the forum.

Alibaba Jack Ma Sign Deal with Russia - AliExpress Russia 2

Chinese e-commerce giant Alibaba has signed a new strategic partnership with a number of Russian firms to form a new e-commerce platform and utilize Russia’s own payments system. The deal was signed at the EEF with sovereign wealth fund of Russia, the Russian Direct Investment Fund (RDIF), alongside mobile operator MegaFon and internet group Mail.ru.


The partnership, aimed at integrating Russia’s key consumer internet and e-commerce platforms, is to create a one-stop destination for consumers to communicate, socialize, shop and play games, all within the same online ecosystem. It is like a new venture to a digital version of China’s silk road initiative. Alibaba will own 48% of AliExpress Russia with the Russian entities taking 52%.


Coincidently, armed with at least 300,000 Russian troops, 36,000 vehicles and 1,000 aircraft taking part in the Vostok 2018 exercises, Russia kicked off what appears to be its largest war games since the fall of the Soviet Union on Tuesday. The People’s Liberation Army sent over 3,000 troops, more than 900 pieces of military hardware and a combined total of about 30 fixed-wing aircraft and helicopters to the war game.

Russia Vostok Wargame - China

Clearly, the message being sent is that China and Russia are moving closer as both countries look to build a countermeasure against Washington. Both nations are the targets of Trump administration for various reasons, on top of the ongoing trade war with Washington, as US President Donald Trump prepares to sanction another US$200 billion of Chinese goods.


In August the U.S. State Department declared it would impose a new range of sanctions on Moscow over the poisoning of a former Russian agent in the UK earlier this year. It has also expressed deep concern over China’s “worsening crackdown” on minority Muslims in the Xinjiang region, and is considering sanctions against Chinese companies linked to allegations of human rights abuses.


China, on the other hand, is seeking permission from the WTO (World Trade Organization) to impose sanctions on the United States, citing Washington’s non-compliance with a ruling in a dispute over U.S. dumping duties. However, President Trump had already threatened to pull out from WTO should the world body tries to be funny with the U.S.

Eastern Economic Forum (EEF) in Vladivostok Russia - President Xi Jinping and President Vladimir Putin Cooking


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