"Geopolitical forces are catalyzing the growing ties between Russia and China," said Steve Orlins, president of the National Committee on U.S.-China relations. Plunging oil prices and economic sanctions imposed on Russia by Western countries, in the light of the conflict in Ukraine, have slowed down its economic growth. At the same time, foreign investors have pulled around $96 billion out of Russia this year, the Institute of International Finance has reported. The IMF said the Russian economy is in recession and forecasts GDP growth to just 0.2 percent for 2014.
In response, Russian President Vladimir Putin has turned to his rival to the east, granting China access to its raw materials and advanced weapons. With the ruble near a record low—it hit 40.885 on Tuesday—and foreign investment dwindling, Chinese cash can fill the void.
According to Russia's Bureau of Statistics, trade between Russia and China amounted to more than $59 billion so far this year in sectors ranging from energy to finance to technology. Right now the Russia-China relationship is a marriage of convenience. Russia cannot rely on the West as its primary market for energy, and East Asia presents a perfect opportunity for Russia to fill its energy exports, explained senior Eurasia analyst at Stratfor, Lauren Goodrich.
A delegation led by Premier Li Keqiang signed a package of deals on Oct. 13 in Moscow. Among them was an agreement to swap $25 billion in Chinese yuan for Russian rubles over three years, and cooperation on satellite navigation systems and high-speed rail. They also plan to build the first rail bridge over their common border and an ice-free port in Russia's Far East.
The ties are also spilling over to arms sales. Reuters has reported that it is likely Russia will sign contracts for the delivery of the S-400 missile systems and Su-35 fighter jets to China next year. It is also possible that Russia may supply China with its newest submarine, the Amur 1650.
This kind of collaboration is the latest in a flurry of joint ventures and cross-border transactions between the two strategic allies. Other agreements include a large contract for engineering work on the Novatek-led Yamal LNG project in Russia.
In September 2013, China National Petroleum bought a 20 percent stake in OAO Novatek's $20 billion liquefied natural gas project.