Is there any end to Chinas energy appetite? Apparently not! The Asian dragon has been scouting the earth for nearly a decade to secure its growing needs for energy, ores, minerals and other raw materials.
Such has been the silent rise of China - which comes without diplomatic or military hegemony -that it has sealed deals in places where one couldn fathom. For example, in Africa it has locked contracts worth billions of dollars - not just in oil but also in mines, construction, manufacturing and infrastructural investment.
Even in places where the US has more presence, China has made significant inroads. In Afghanistan, for instance, China has won the rights to exploit one of the worlds largest copper deposits whose Chinese workers are protected by Afghan soldiers trained by the US. In Iraq, Chinese oil companies are reported to have acquired bigger stakes in the oil business than their American counterparts.
And now the multi-billion dollar deal with Russia. From later this month, Russian oil is expected to start flowing to China, which will receive 300,000 barrels per day for the next two decades under a $25 billion loan-for-oil agreement struck last year.
Russia is also in talks with Chinese partners on plans to launch natural gas supplies to China starting 2015. Last month, China agreed to lend Russia an additional $6 billion in exchange for increased coal supplies over the next 25 years.
What Russia gets in return was pretty much summed up by Russian Prime Minister Vladimir Putin at a ceremony last month marking the completion of the 2,100-kilometer Russian section of the oil pipeline. "For China, these are stable deliveries to the countrys energy balance, and for us an entrance to new promising markets and in this particular case, to the expanding Chinese market," he said.
Aside from being able to upgrade its aging industrial infrastructure with the help of Chinese money, Russia has other plans in mind as well, some experts say.
Specifically, Moscow might push for a major investment commitment into economic sectors, such as technology. Russian President Medvedevs team is also expected to talk about Chinese support for the governments privatization programme, i.e. for Chinese state-backed investment groups to participate, whereas Russian Railways may also consider a dual listing in Hong Kong in 2011 or 2012.
China will begin to allow trading of the yuan against the ruble in September 2010, according to RGE economics, whereas several Russian companies have already expressed interest in issuing offshore RMB-denominated bonds in their search for new financing.
These developments are redefining the Sino-Russian relationship, which has historically been sour due to mutual suspicion and tensions. In addition to strengthening economic ties, political ties have improved rapidly in recent years, with the two countries carrying out large joint military exercises since 2005, and resolving a four-decade dispute over their vast land border in 2008.
But that doesn mean that both sides will start hugging each other, as critics argue that the Sino-Russian relationship is mostly an arms-length transaction.
For a fact, most of their economic relationship, at the moment, converges around energy. The bulk of their respective trade is with the West - a tendency that is seen unchanged in the foreseeable future.
Second, Chinas business forays in Central Asia - often termed Moscows backyard - is not well-received by the Russian comrades, whereas Russias military adventures in the region (such as that of Georgia) are not endorsed by China.
Lastly, it is feared, that in the geopolitical Central Asian chess game between Russia, China and the West, there are still several major moves to be played out - those that can reignite the old tussle between Russia and China. Russia may just be the raw material supplier to China at the moment, but everybody knows how easy it is to play gas pipeline politics (remember Ukraine?), if and when needed.
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