• Russian economic winds blow cold

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    HEIHE, China: The warmth of the friendship between Chinese President Xi Jinping and Russia’s Vladimir Putin – who meet on Wednesday for the eighth time in two years – does little to counter the bitter economic winds blowing through their shared border.

    In the Chinese city of Heihe, neon-lit high-rises line the banks of the Amur river facing Siberia’s Blagoveshchensk powered by electricity from hydroelectric plants over the border.

    Cyrillic signs greet shoppers from the north, but traders say recession in Russia is hitting business.

    China has emerged as Russia’s largest trading partner as Moscow turns east, seeking markets in Asia in the face of Western sanctions over Ukraine and low energy prices that have battered its economy.

    Beijing sealed a landmark $400-billion gas supply deal with Moscow last year, and in May Russia became China’s biggest source of crude oil for the first time in a decade.

    Work started last week on the Chinese section of a 4,000-kilometer gas pipeline from Siberia to Shanghai via Heihe.

    Russian Prime Minister Dmitry Medvedev said the project only became possible “due to an extremely high level of truly strategic cooperation between Russia and China”.

    In the 1960s, the Chinese and Russian militaries exchanged fire across the Amur – known as the Heilongjiang in China – as tensions between the two peaked.

    Now Russians are able to travel to Heihe visa-free in search of bargains, and shoppers cross it by boat, or on foot when it freezes over in winter.

    The 30,000-square-metre Free Trade City mall, on an island in the river, sells everything from computers to belts.

    “If you do not speak Russian, no one will buy your furs,” Wang Jianxin enunciated in perfect Slavic tones, in front of racks of Chinese-made mink coats.

    A taxi driver surnamed Cui added: “For making money, trade with Russia is the main thing.”

    But at the weekend just a trickle of Russian visitors could be seen passing through Heihe’s border post, while the mall saw just a handful of Russian shoppers.

    Russia’s economy shrunk by 2.2 percent year-on-year in the first quarter of this year, and the ruble’s value has almost halved against the yuan in 12 months.

    “Everyday I dream that the exchange rate will improve,” said Wang. “Today 1,000 rubles will buy you nothing. That’s why people leave.”

    ‘Perfect Man’
    Xi was guest of honor at a massive Moscow military parade in May to celebrate the Soviet Union’s victory over Nazi Germany, and the same month the Chinese and Russian navies held live-fire drills in the Mediterranean Sea.

    The latest meeting between the two leaders comes as the Russian president hosts multiple summits in Ufa.

    Putin is a popular figure in China for his macho image and willingness to confront Washington, with a cottage industry dedicated to producing hagiographies of the Russian leader.

    The Pushkin bookshop in Heihe displayed a tome titled “Putin: the perfect man in women’s eyes” in a brass picture frame.

    “Since Putin came to power, China and Russia have been getting closer. But the Ukraine crisis has pushed forward the relationship at a more rapid rate,” said Yang Cheng, deputy director of the Center for Russian Studies at East China Normal University.

    The authoritarian leaders are said to share similar views on human rights and distrust of the United States.

    “China-Russia relations are the best they’ve been for a long time,” said Ji Zhiye, vice president of China’s Institute of Contemporary International Relations.

    “Russia and China have a lot in common when it comes to views on global politics,” he added, naming joint suspicion of Washington as a key uniting factor.

    But Russia was only China’s ninth biggest trade partner last year, and analysts said Russia’s weak comparative economic performance – Beijing is targeting 7.0 percent gross domestic product growth this year – makes Moscow wary.

    “There is a concern in the large part of the Russian elite about being a junior partner,” said Alexander Gabuev of Moscow’s Carnegie Center.

    Chocolate wafers
    According to official Chinese figures, trade between the two rose 6.8 percent last year from 2014 to reach a record $95 billion, and they are targeting $100 billion this year.

    Some traders in Heihe have switched to selling Russian commodities to Chinese buyers who now find them more affordable.

    Near the mall, vendor Fang Chao offered hazelnut and chocolate wafers with his Russian partner Alec.

    “Russian products, like chocolate for example, taste good and are high quality. So Chinese people like them,” he said.

    Nonetheless Moscow-based Gabuev said: “It’s pretty clear right now that the trade goal wont be reached because of falling energy prices.”

    One of Heihe’s most popular Russian restaurants, the Amur, was empty on Friday evening.

    When a waitress at another establishment that serves borscht and other Russian favorites was asked about business, she raised both hands and mimed a torrent of tears pouring down her face.

    AFP

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