Thread by @AlexGabuev

Putin is meeting Xi Jinping for the 25th time, and 1st time in 2018. @SecretaryMattis may say this is unimportant because Sino-Russian ties are hollow, as he implied at #SLD18, but he is wrong on this. Let me explain why. 1/

Ties with China become increasingly important for Russia since 2014. "Pivot to China" that the Kremlin attempted following annexation of Crimea didn't bring quick gains, but with tightening of U.S. sanctions in 2017/2018 it becomes a necessity for many oligarchs and SOEs 2/

To be in the Kremlin's pocket or in Chinese banks' pocket - this is the question for increasing number of Russian oligarchs 3/

China is Russia's largest trade partner since 2010, and share of PRC in Russian trade continues to grow at the expense of traditional EU partners. Import substitution means buying more Chinese machines. In 2017 Russians bought more industrial equipment in China than in Germany 4/

Trade turnover stands at $90b in 2017 and is set to grow to $120 in 2018 according to RU economy minister. This figure looks realistic since oil price is high, and Russia pumps more oil to China remaining #1 crude supplier after SA for 2 years in a row 5/

Economic side of Sino-Russia ties is deeply asymmetrical. Moscow needs Beijing much more than the other way around. China's share in RU trade is 16%, while RU share in CN trade is less than 2% 6/

With all the increased flow of Chinese money into Russia since 2014, it's still mostly about political deals involving Putin's friends. Chinese investors don't like Russia: "Russians have Western arrogance and sky-hight prices, but investment climate is worse than in Africa" 7/

Nevertheless, Russian economic dependency on China will grow since Russia has few alternatives, and the Kremlin is ready to suffer economically questionable projects like Power of Siberia to make a point to the West (and help Putin's friends get richer along the way) 8/

Sino-Russian rapprochement is not about Trump, but about the U.S. Sanctions that pushed Moscow into Beijing's arms were introduced by @BarackObama, and CAATSA that has set them in stone was passed by the Congress against Trump's will 9/

For China, Russia is of no help in trade war against the U.S. But Russia's role is crucial in building a more capable and well-armed PLA. Since 2014, Moscow has resumed sales of cutting-edge weapons to China like S-400&Su-35, and I expect more to come 10/

Russia is also helpful to China on North Korea, both in the UNSC and in helping Kim to survive sanctions. Here is why: wsj.com/articles/china… 11/

This time the 3 important issues to watch on the economy are: FTA framework agreement, nuclear reactors deal, high-speed rail negotiations (and Putin&Xi will even travel together on 和谐 from Beijing to Tianjin) 12/

Economic cooperation framework agreement is 1st stepping stone to a FTA China-EEU that will include chapters on IP, investment, e-commerce etc. Long way to go, but impactful once concluded. China will manage to spread its regulation into Russia&EEU 13/

Will walk readers through the key documents and contracts once they are signed in Beijing today after formal talks conclude. END