China Parades Closer Ties in Moscow

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On display: an upgraded military relationship that could complicate U.S. strategy

BEIJINGJeremy Page reports: When a Chinese honor guard joins a military parade in Russia’s capital this weekend, watched by China’s President Xi Jinping, it will mark more than just a symbolic recognition of the two countries’ contributions to the Allied victory in 1945.

China’s participation also reflects an upgrade of its military ties with Russia, including joint naval exercises and a revival of arms purchases, that could complicate U.S.-led efforts to counter both nations’ expanding military activities, analysts and diplomats say.

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“They’ve basically come to a consensus that despite their differences over some national interests, they really face the same common enemy.”

The 102 Chinese troops who will join the Victory Day parade in Moscow on Saturday were seen during a rehearsal this week marching through streets near Red Square singing the Russian wartime ballad “Katyusha”, according to video footage posted online.

The only other foreign countries with troops in the parade are India, Mongolia, Serbia and six former Soviet states.

Three Chinese navy ships also made a rare foray into the Black Sea on their way to join commemorations in Russia’s southern port of Novorossiysk on Saturday.

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“I think they’re both sending a message that their relationship is stronger than outsiders generally expect and if others put pressure on either in their own arenas, the two will stand together.”

— Gilbert Rozman,an expert on China-Russia relations at Princeton University

The Chinese ships—two missile destroyers and a supply vessel — will then take part in joint exercises with the Russian navy in the Mediterranean Sea for the first time, according to Chinese and Russian authorities.Xi-tall-Jinping-HT

Both sides say the drills aren’t directed at other countries, but the timing, after Russia’s 2014 annexation of Crimea, and the location, on NATO’s southern flank, have compounded Western concerns about an emerging Moscow-Beijing axis.

[Read the full text here, at WSJ]

“The main significance is that the two countries’ navies are learning how to jointly project power into the other regions of the world,” said Vasily Kashin, an expert on China’s military at Moscow’s Centre for Analysis of Strategies and Technologies.

The Chinese ships’ visit to Novorossiysk could be seen as a response to NATO ships holding exercises in the Black Sea in March, he said, the message being: “Russia has allies too.”

On Wednesday, Russia’s government unveiled a draft cybersecurity deal with China under which both countries agree not to conduct cyberattacks against each other and to counteract technology that might disrupt their internal politics.

The rapprochement between Moscow and Beijing has been driven in large part by Western sanctions which have forced Russia to seek new markets for its oil and gas and new sources of investment.

Mr. Xi also appears to share a personal affinity with Russian President Vladimir Putin who is seen by many in China as a strong, patriotic leader.

The relationship, though well short of a formal alliance, is now developing a more substantial military dimension as Russia ramps up air and naval patrols around Europe and China seeks to challenge U.S. military dominance in Asia. Read the rest of this entry »


Dropping Oil Prices Threaten Moscow’s Budget

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Andy Tully writes: Oil and gas are at the heart of the Russian economy and are largely responsible for keeping Moscow’s government budget in balance. But the recent decline in the price of oil from the North Sea and Texas has now spread to Urals crude, giving President Vladimir Putin one more economic headache.

The price of Urals crude fell just below $100 per barrel on Aug. 18, an 18-month low. On Aug. 19, it dropped to less than $97 per barrel. These declines coincided with similar drops in the price of Brent crude from the North Sea and U.S. oil.

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The reasons are fairly easy to recognize. First, the United States has been on a drilling tear, extracting oil at record levels to increase its supply at a time when demand is waning. Second, though more tentative, is that conflicts in North Africa and the Middle East are so far not interfering with oil production in these regions.

This oil production boom raises problems for Moscow. Two-thirds of Russia’s exports are oil and gas, accounting for fully half of the central government’s revenues. That means that so far this year, every dollar drop in the price of Russian oil means a cut of about $1.4 billion in revenues. Read the rest of this entry »


Why Russia Is ‘China In Reverse’

China used to be all about infrastructure investment: new roads, new bridges and airports. Now it's Russia's turn.

China used to be all about infrastructure investment: new roads, new bridges and airports. Now it’s Russia’s turn.

Kenneth Rapoza writes: In the fun-house mirror of the global economy, Russia is the mirror opposite of China.

China consumers are the driving force behind the market. Russian consumers are hobbling along and maybe stuck in a middle income trap. China needs less investment. Russia needs more.

The kind of investment Russia needs doesn’t lend itself to a lot of sex appeal. We’re not talking about oil and gas giant Rosneft investing billions in Arctic drilling.  This is about roads and very big bridges.

“Russia is a reverse-China,” Alexei Yakovitsky, global CEO of VTB Capital said. ”China is a consumer theme for investors today,” he said, noting that not too long ago, investment was China’s theme. Now, investment is Russia’s theme. Years ago, it was the consumer. “Russian consumers still have room for growth, but that is no longer the story here. The story in Russia today is investment,” he said last Tuesday on the sidelines of VTB’s Russia Calling!, an annual investor’s forum in Moscow. Read the rest of this entry »