The stated purpose of the two day summit in Moscow just concluded on July 3 and 4 between China’s President Xi Jinping and Russia’s President Vladimir Putin was to foster the solid and seemingly still strengthening economic and political bilateral relations between Moscow and Beijing.
But a clear subtext of the meeting was also to coordinate common positions between the two allies before their high profile meetings later this week with US President Donald Trump at the G20 meeting beginning this Friday in Hamburg.
** The Trump Administration has expressed mounting frustration with Beijing’s efforts to rein in North Korea’s Supreme Leader Kim Jong-Un, but Chinese officials warn neither Xi nor Putin will tolerate a retaliatory military strike on North Korea. Chinese officials in private also continue to indicate Beijing’s intention to maintain normal economic and trade relations with North Korea, including the continuation of exports of crude oil and refined oil as needed to ensure the North Korean people’s basic needs are met.
** That full commitment may shift on the heels of the provocative ballistic missile test just conducted by Pyongyang over the US July 4 holiday, with the US now calling for a special meeting of the United Nations Security Council on Wednesday to focus on the growing threat from Pyongyang. But relations between the US and China are nevertheless frosty, and among other issues, Xi will specifically draw a “red line” to Trump over the United States’ mounting overtures towards Taiwan.
** From what we understand, in upcoming phone calls and face to face meetings, Xi will demand that Trump reject a US Congressional amendment to the National Defense Authorization Act that would “reestablish regular ports of call by the US Navy at Kaohsiung or any other suitable ports in Taiwan.” If Washington were to allow US Navy vessels to make port calls in any port in Taiwan, it would be seen as a major provocation, and Chinese officials warn Beijing would begin by suspending normal bilateral relations with the US in response.
** Meanwhile, Xi will recommit to Putin China’s readiness to work with Russia towards building the western route Sino-Russian natural gas pipeline (the Power of Siberia -2) and the Sakhalin-Khabarovsk-Northeast China pipelines, despite construction on both pipelines not beginning for 18 months.
**China will also flex its muscles on trade policy with Europe, where we have been told the National Development and Reform Commission and Ministry of Commerce will take the lead through the second half of 2017 to support imports from countries that are more supportive of China’s gaining of Market Economy Status – especially Germany and the UK – while deliberately limiting imports from those that are less supportive – including France and Spain.