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Commentary :: Globalization
Strengthening Sino-Russian Ties
05 Oct 2014
business and finance
Strengthening Sino-Russian Ties

by Stephen Lendman

On October 2, Vladimir Putin participated in the VI Russia Calling! Investment Forum. It focuses on attracting foreign capital.

It discusses ways to increase investments in Russia's economy overall. Efforts so far proved successful. Opportunities in a resource rich country like Russia are huge.

According to Putin, "many serious investors and our country’s partners of long standing continue increasing their investment in various sectors of the Russian economy."

At the same time, "(e)xternal limitations have an adverse effect not only on Russia’s economy, but also on that of the whole world," he said.

"They only add to our determination to meet our targets in the priority areas of our country's development, which include economic growth, upgrading the industry and infrastructure, the creation of new jobs and improvement of the quality of life of Russia's citizens."

Conditions are more complicated than earlier, Putin explained. Russia's actions are based on responsible, balanced macroeconomic and budget policy, he added.

"The events of this year have convinced us yet again that the choice we made many years ago is the right one," he stressed.

Putin remains upbeat. He's confident about Russia's economic prospects. He's looking more East than West.

At the same time, He's eager for normalized Western relations. He called sanctions on Russia "foolish."

They've had little effect on Russia's economy. According to Russian expert Richard Connolly, "FDI (foreign direct investment) figures from the Central Bank didn’t show any particular downturn."

"There may be one in the future if Russia chooses retaliations to sanctions and people choose to withdraw their investment(s)."

Economist Yaroslav Lissovolik believes Russia wishes to "combine the best" of East/West trade.

It's eager to maintain relations with longtime trading partners. It recognizes the importance of increasing Sino/Russian trade.

Lisssovolik sees it "likely to be reinforced in the coming years." He believes "Russia will look to bolster ties with…other Asian countries, including South Korea and Japan."

Except for China, Connolly says "(b)arely any significant foreign investment comes from Asia at the moment so you’re starting from an extremely low base."

"It’s not even in the double digits as a percentage of the total FDI in Russia."

"So to talk about switching or opening up to investment from other countries is all well and good and from a Russian perspective it's good to diversify sources of capital."

"But it's a very big job and would take place over decades, not just years. To raise the source of capital to supplant the amount of western capital flowing into Russia would be a serious job indeed."

According to Lissovolik, "(w)e're seeing a more active use of currencies from Asia in Russia and even there are low base effects and the absolute amounts are relatively low, the growth rates are significant."

"So this is a this trend that if it continues will make Asia a much greater part of the Russian economy."

Connolly adds: "You’d be talking of using rubles or yuan for trade between those countries."

"Between Russia and Kazakhstan or Russia and China - big bilateral trade relationships, but still, compared to global trade it's insignificant."

"That said, it needs to start somewhere. It would be in China's interest in the long run for its currency to play a bigger role and you have to start somewhere."

"But I don't think it would affect the global economy in any significant way" short term.

Prospects for Sino/Russian trade going forward are huge. According to China/Russia relations expert Zhao Huasheng:

“After decades of mutual suspicion, Beijing and Moscow are drawing closer as they simultaneously challenge the US-led security architecture that has prevailed since the Soviet collapse."

A previous article discussed what Zero Hedge called Russia's "Holy Grail gas deal with China," saying:

If Washington and EU partners intend greater Sino/Russian unity, "one (nation) a natural resource…superpower and the other a fixed capital/labor output…powerhouse, in the process marginalizing the dollar and encouraging Ruble and Renminbi bilateral trade, then things are surely 'going according to plan.' "

Strong Moscow/Beijing unity against Western imperialism is their best defense. Western nations have a tiger by the tail. Ukraine is a hotbed of instability, extremism and violence.

At the same time, European countries are "scrambling to find alternative sources of energy should Gazprom pull the plug on natgas exports…"

Ukraine can expect much higher gas prices. Negotiations continue. Russia wants things resolved responsibly.

So far, Kiev rejected constructive proposals. According to Energy Minister Alexander Novak, eight rounds of talks were held.  They went nowhere.

More are scheduled. Key is assuring uninterrupted gas supplies to Ukraine and other European countries as winter approaches. Whether compromise is possible remains to be seen.

Ahead of China and Russia's historic gas deal, Zero Hedge called it "a move which would send geopolitical shockwaves around the world and bind the two nations in a commodity-backed axis."

It'll "lay the groundwork for a new joint, commodity-backed reserve currency…" It'll bypass the dollar. It's hugely important. A previous article discussed it.

It sends geopolitical shockwaves worldwide. It binds two key nations together. It does so "in a commodity-backed axis."

It "lay(s) the groundwork for a new joint, commodity-backed reserve currency…" Eventually it'll bypass the dollar.

According to Itar Tass at the time, "Russia's Gazprom and China's CNPC have stricken a deal on natural gas supplies to China."

"The document has been signed in the presence of Russian President Vladimir Putin and Chinese leader Xi Jinping."

"Gazprom CEO Alexei Miller reported that the contract has been concluded for $400 billion for 30 years."

"In the gas contract for China, the sides envisaged granting preferential mineral extraction tax regimes, said Gazprom CEO."

Xinhau confirmed Itar Tass' report. It headlined "China, Russia ink long-awaited gas deal," saying:

It's finalized. "China and Russia on Wednesday inked the long-awaited gas deal in Shanghai, ending the decade-long natural gas supply talks between the two neighbors."

Official documents "were signed at a ceremony attended by Chinese President Xi Jinping and Russian President Vladimir Putin."

"The deal...fully embodied the principle of mutual trust and mutual benefit of China and Russia…"

It "accelerate(s) the economic and social development in Russia's far east region, and also diversify the export of the major oil and natural gas exporter."

Both countries established "a comprehensive energy cooperation partnership." They pledged stronger economic and financial ties.

They're natural partners. They promised wide-ranging cooperation. They'll increasingly trade in their own currencies.

They'll bypass dollar transactions. They'll weaken it in the process over time. Other countries are doing the same thing.

China and Russia agreed on gas supplies worth around $400 billion over 30 years. Russia will supply China with around 38 billion cubic million meters of natural gas annually.

Over time, the amount may double. Depending on China's internal needs. Other key trade deals were agreed on.

In technological, industrial, and commercial sectors. In military hardware.

Growing Sino/Russian trade lessens reliance on increasingly undependable Western sources. China is Russia's leading foreign trade partner.

A Sino/Russian Investment Committee was established. Its purpose is expanding economic and financial ties.

It's "diversifying trade." It's "reducing…dependence on global economic" conditions.

It's promoting cooperation in "technology-intensive areas." They include industrial, commercial, banking and military ones.

They're increasing bilateral ruble/renminbi trade. It bears repeating. Doing so bypasses dollar transactions. It weakens dollar strength over time.

Its reserve status perhaps will end. Not soon, but eventually. Money printing madness substitutes for stimulative growth policies. For responsible ones.

Economist Marc Faber expects Fed policy to "destroy the world." It just takes time.

"The fallacy of monetary policy in the US is to believe this money will go to the man on the street," he said. It hasn't so far. It "won't."

"It goes to the Mayfair economy of the well-to-do people and boosts asset prices of Warhols."

"It is difficult to tell what will happen. I happen to believe that eventually we will have a systemic crisis and everything will collapse."

There's "a huge misconception and fallacy that money printing can actually improve the rate of employment because the money flows down into the system."

"It goes into the banking system and into financial institutions, into the pockets of well-to-do people." Not Main Street where it's needed. Where it can do the most good.

Fed policy "created a gigantic credit bubble and the misery that we have today." No relief whatever is in sight.

Paul Craig Roberts calls America's economy "a house of cards" for good reason. Consumer credit and real retail sales are flat at best.
"Construction is limited to rental units."

The Labor Department's latest jobs report shows 35,300 new retail trade ones. How is this possible, asks Roberts, when major "chains are in trouble and closing stores…?"

When "shopping centers are renting space by the day or hour."

When the economy is sick and likely worsening. When jobs created are rotten ones. When good ones are few in number and disappearing offshore.

When "the discredited 'birth-death model'…overstates" monthly job totals "by at least 50,000…" Plus "manipulat(ed) seasonal adjustments."

America's economy resembles third world status. Poverty is a growth industry. Conditions are deplorable.

Over 23% of Americans wanting work can't find it. Most jobs are temp or part-time low pay/poor or no benefit service ones with no futures.

Labor force participation hit a 36-year low. Inflation adjusted median household income is at 1967's level.

Protracted Depression conditions affect many tens of millions.
America's top 1% benefits hugely. Most others endure third world conditions.

Reported economic numbers are fake. So-called growth is illusory. Consumers are sick. They have less inflation adjusted income to buy more expensive goods and services.

Business investments consist of companies buying their own stocks, says Roberts. Rigged numbers conceal reality.

Many trillions of dollars are misspent on permanent wars, bailing out Wall Street and huge corporate subsidies.  

Popular interests increasingly go begging. Ordinary people suffer hugely. Democrats are as indifferent as Republicans.

Monied interests alone matter. Others can take the hindmost. They're increasingly on their own out of luck.

In an uncaring nation. One deploring equity and fairness. Waging permanent wars. Destroying one country after another.

Wrecking America's economy at the same time. Risking potential global war with Russia. World peace hangs by a thread.

Putin and Obama are geopolitical opposites. Putin supports peace and stability. Obama wages permanent wars.

He does so against invented enemies lawlessly. Putin affirms core rule of law principles. Obama ignores them. He spurns them.

Advancing America's imperium matters more. Doing it belligerently is official policy. Millions of corpses are a small price to pay.

Putin believes nation-state sovereignty is inviolable. No nation may interfere in the internal affairs of others, he says.

Obama wants pro-Western puppet regimes replacing independent ones. Putin's approval rating exceeds 80%.

Obama's at most is half that figure. The lowest of his presidency and falling. He disgraces the office he holds.

He's a world class con man. He wrecked the economy. He looted the nation's wealth. He lets popular needs go begging.

He destroyed hard won labor rights. He's commodifying education. He ignores growing poverty, unemployment, underemployment, hunger, homelessness and deprivation.

He presides over a police state apparatus. He can have anyone murdered on his say anywhere for any reason or none at all. Or indefinitely imprisoned without charge or trial.

He's destroying fundamental freedoms in plain sight. Torture remains official policy. It continues out of sight and mind. In dozens of US-run global prisons.

He deployed special forces death squads worldwide. They operate in over 130 countries overly and covertly. CIA agents infest all countries. They're ambassadors of ill will.

Obama targets Muslims, Latinos, African Americans, environmental activists, animal rights defenders, truth-tellers and whistleblowers.

He institutionalized tyranny. It's headed toward becoming full-blown. Russia, China and other major world nations represent the future.

America on its present course has none. It makes more enemies than friends. It's thirdworldized.

It wages permanent wars of aggression. It does so when world peace more than ever is needed.

It's the leading cause of world misery. It threatens humanity's survival. Putin represents responsible leadership.

Obama represents the worst of rogue governance. He mocks legitimacy. He governs lawlessly. Duplicity defines his agenda.

Freedom is dying on his watch. He has nearly 28 months left to serve. Humanity may not survive his tenure. Stopping him matters most.

Stephen Lendman lives in Chicago. He can be reached at lendmanstephen (at)

His new book as editor and contributor is titled "Flashpoint in Ukraine: US Drive for Hegemony Risks WW III."

Visit his blog site at

Listen to cutting-edge discussions with distinguished guests on the Progressive Radio News Hour on the Progressive Radio Network.

It airs three times weekly: live on Sundays at 1PM Central time plus two prerecorded archived programs.

This work is in the public domain
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