[Business Week] Defying the U.S. and Europe is forcing Russian President Vladimir Putin to aid his biggest rival to the east. To avert a recession, Russia is turning to China for investment, granting it once restricted access to raw materials and advanced weapons.
Russia is likely to sign contracts for the delivery of S-400 missile systems and Su-35 fighter jets to China as early as the first quarter of next year, says Vasily Kashin, a China expert at the Centre for Analysis of Strategies and Technologies in Moscow. Russia may also supply China with its newest submarine, the Amur 1650, he says.
The Amur class submarine is one of the latest Russian submarine designs. It is advertised as an export version of the Lada class, a modernised version of the Kilo-class submarine with improved acoustic stealth, new combat systems, and an option for air-independent propulsion (AIP).
The new vessels are the fourth generation of the Kilo submarine family, with two models developed.
China is wasting no time filling the void created by the closing of U.S. and European debt markets to Russia’s largest borrowers. A delegation led by Premier Li Keqiang signed a package of deals on Oct. 13 in Moscow. Among them were an agreement to swap $25 billion in Chinese yuan for Russian rubles over three years, a treaty to protect companies operating in Russia and China from having their profits taxed twice, and cooperation on satellite-navigation systems and high-speed rail.
China could get high speed rail paths to Europe via Russia
China will want multiple high speed rail paths in case there are geopolitical issues with any countries along the way and for more stops and higher volumes and increased trade with all countries.
With a trade volume of almost $600 billion, and a trade deficit with China at about $150 billion, the European Union is China’s largest trading partner. The EU and China are seeking to bring trade to $1 trillion by the end of this decade.
The other paths through other countries involve different gauge rail.
A 5000 mile route through Russia could have 24 to 36 hour trips from China to Europe with trains moving at 200 miles per hour. Two day cargo delivery could be at half or less the cost of air transport. It takes about 27 to 48 days for a container ship to go from China to Europe.
Regular rail freight is about one fifth the cost of air transport. There would be different freight rail speeds.
Russia’s economy is more vulnerable than it’s been since the collapse of the Soviet Union in 1991. Unlike then, Russians are united in support of their leader, and with $455 billion in foreign currency and gold reserves, the country isn’t broke, according to Lipman.
Russia has supplied arms to China for decades, but it had withheld its most advanced weapons because China often uses reverse engineering to create knockoffs.
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