US-Korea politics drawing Putin and Xi closer together

CHINESE President Xi Jinping hailed on Sunday the success of the latest Shanghai Cooperation Organisation (SCO) summit held in Qingdao. While the session saw multiple leaders in attendance, it was Beijing's relationship with Moscow that was centre stage, with Mr Xi asserting that bilateral relations are at an "all-time high" with Russian President Vladimir Putin.

Coming in the shadow of the US-driven disarray of the latest session of the G-7 (the western club from which Russia has been excluded for having annexed Crimea), the SCO summit had a more unified tone and featured presidents and prime ministers from China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan, India and Pakistan, along with the group's observer states Afghanistan, Belarus, Iran and Mongolia.

The SCO was originally founded in 2001 as a body to resolve border issues, to fight terrorism and to counter US influence across the region, it has since assumed a significant economic role as well. Mr Xi announced at the summit that China would offer around US$4.7 billion in loans through the bloc.

He said that the presence of new SCO full members India and Pakistan had "great historical significance", but singled out Mr Putin for special praise.

Mr Xi said bilateral relations are "the highest-level, most profound and strategically most significant relationship between major countries in the world" and also praised the Russian leadeer by stating that he "is my best, most intimate friend".

Mr Putin arrived in Beijing on Friday, a day ahead of the start of the SCO, underlining the growing bilateral dialogue between Beijing and Moscow, including on key regional and global issues such as Korea.

Reflecting this, the two countries signed a series of deals, including that for nuclear cooperation projects of around US$3 billion, and a US$1 billion industrial investment fund.

China and Russia already enjoy a relatively extensive economic dialogue, which has, in particular, warmed in several areas since Moscow's annexation of Crimea. In the period following escalation of those tensions, Russia has for instance announced plans for numerous cooperation projects with China; these include a new method of inter-bank transfers and a joint credit agency to create a shared financial and economic infrastructure that will allow them to function independently of Western-dominated financial institutions.

ALTERNATIVE FORA

China and Russia are also among the states involved in creating alternative fora to the World Bank and International Monetary Fund, including the New Development Bank. This will finance infrastructure and other projects in the BRICS states (Brazil, Russia, India, China and South Africa) and a related US$100 billion special currency reserve fund.

Moreover, in the energy sector, the two states have signed a US$400 billion natural gas supply deal to build an approximately 3,220 km gas pipeline from eastern Siberia to north-east China; they have also agreed to construct a second major gas pipeline from western Siberia to China's Xinjiang province.

Moscow has also opened parts of its upstream oil and gas sector to direct investment from Beijing. And Chinese firms have also stepped in to provide Russian counterparts with technology; Chinese banks have become an important source of loans for Russian businesses in the wake of Western sanctions.

While little substantial progress has so far been made on a number of these economic and financial projects, the boost to the bilateral cooperation agenda has helped enable work toward stronger, common positions on key regional and global issues too. And both parties are looking to enhance this strategic coordination from the Middle East to the Asia-Pacific and the Americas.

In the context of Tuesday's Singapore summit between Donald Trump and Kim Jong Un, North Korea was a significant theme of Mr Putin's dialogue with Mr Xi at the weekend. On Friday, the Russian leader said both nations "are interested in establishing peace and stability on the Korean peninsula".

Both China and Russia grappled in 2017 with how best to respond to not just the regular missile launches by Pyongyang, but also its nuclear tests. And Mr Trump's rhetoric in 2017 gave Beijing, in particular, heightened concerns that Washington might be thinking much more seriously about a pre-emptive strike on North Korea's nuclear capabilities. This US rhetoric was one reason why Chinese Foreign Minister Wang Li asserted that "China's priority now is to flash the red light and apply the brake to both [the US and North Korean] trains" to avoid a collision.

Given that both Beijing and Moscow last year had been so concerned that the tensions on the peninsula could spiral out of control, they have cautiously welcomed the Singapore summit.

PASSIVE BYSTANDERS

However, both are concerned that they don't become passive bystanders in unfolding events, and want to instead reinforce their roles as key players in the grand geopolitical game that is now being played out on the peninsula.

This is why Mr Xi has met Mr Kim twice in Beijing the last few months, and also why Russian Foreign Minister Sergei Lavrov travelled to Pyongyang at the end of last month to meet the North Korean leader too.

Taken overall, Mr Putin's visit highlights the growing willingness of both sides to develop a significant cooperation agenda. Despite limited progress so far on an array of bilateral projects in recent years, this latest trip has emphasised the very positive mood music between the Russian and Chinese presidents, which is underpinning the wider warming of ties.