Russian President Vladimir Putin on Friday renewed calls to revisit the role of the US dollar in global trade and accused Washington of seeking to dominate the world. Speaking at an economic forum alongside Chinese President Xi Jinping, the Russian president called for deep reform, claiming that trust in the dollar has been on the decline.
Changes in the global economy “call for the adaptation of international financial organisations (and) rethinking the role of the dollar which… has turned into an instrument of pressure by the country of issue on the rest of the world,” Putin said. Putin whose country has chafed under numerous rounds of US sanctions has repeatedly slammed the global financial system established by Washington in the aftermath of World War II.
In a speech at a plenary session, Putin accused Washington of seeking to “extend its jurisdiction to the whole world.” “But this model not only contradicts the logic of normal international communication. The main thing is, it does not serve the interests of the future.” He also criticised the United States for using pressure and sanctions to maintain its economic supremacy, hurting international trade and eroding global stability. Putin said the US attempt to “spread its jurisdiction to the entire world” challenges the global order.
‘First technological war’
Putin also slammed US moves against Chinese tech giant Huawei, which has signed a deal to develop a 5G network in Russia. He condemned “the situation around the company Huawei that they are attempting not just to squeeze but to unceremoniously push out of the global market.”
“In some circles, this is even being called the first technological war of the dawning digital era,” Putin said. Despite international concerns that it could present a security risk, Huawei on Wednesday signed an agreement with Russian telecoms company MTS to develop a 5G network in the country, on the sidelines of a meeting between Putin and Xi in Moscow.
Chinese President Xi said Beijing was ready to share its expertise, including on 5G technology, with partner countries. “China is ready to share technological inventions with all partners, in particular 5G technology,” Xi said. His comments came as China races to be a global leader in advanced wireless networks amid fierce rivalry with the United States.
Washington has blacklisted Huawei, a key supplier of equipment for 5G networks in several countries.
Several companies have already distanced themselves from Huawei, including Google, whose Android system equips the vast majority of smart phones in the world. Huawei’s reported potential involvement in Britain’s 5G network has proved politically sensitive and Theresa May’s government insisted no decision has been made on the issue.
Russia-China trade ties
President Xi appeared as guest of honour at Russia’s showcase economic forum, as the two neighbours present a united front in the face of shared troubles with the US. Xi arrived in Moscow on Wednesday for a three-day visit with Vladimir Putin and described the Russian leader as his “best friend” during a cosy meeting at the Kremlin.
The trip comes five years after Moscow’s annexation of Ukraine’s Crimea peninsula led to a serious rift with the West and a move towards Russia’s neighbour to the east. Beijing is meanwhile locked in a trade war with the United States. Moscow and Beijing’s economic ties have grown in recent years, though they remain heavily weighted in favour of China, which dwarfs Russia in economic and demographic terms.
Xi’s visit has already seen the signing of dozens of commercial contracts in e-commerce, telecoms, gas and other areas. While this is the Chinese leader’s first appearance at the economic forum, where he heads a 1,000-strong delegation, he and Putin have met regularly in recent years.
Uneven relationship
Ahead of Xi’s visit, Kremlin advisor Yury Ushakov described China as “Russia’s most important economic partner”. The partnership is yielding increasing trade, which grew by 25 percent in 2018 to hit a record $108 billion, he said. But despite political tensions and repeated rounds of sanctions over Moscow’s actions in Ukraine, the European Union remains by far the biggest foreign investor in Russia — well ahead of China and the US.
“China is taking time to ramp up investments in Russia,” said Charles Robertson, chief economist at Renaissance Capital. “It wants to feel secure about the long term, it doesn’t want to rush into it.” He predicted China would make big investments over the next three to five years, possibly even sooner, as Russia plays an important role in Chinese projects along Beijing’s New Silk Road.
Among major Russian-Chinese collaborations is the Power of Siberia gas pipeline, a joint project between Gazprom and China’s CNPC which is set to deliver Russian gas to China from later this year. CNPC and the Silk Road Fund also have a 29.9 percent stake in the Yamal LNG liquefied natural gas mega project run by Russia’s Novatek in Arctic Siberia.
But analysts stress the limits of this alliance. “Asymmetries are present across the board but are especially visible in the economic field,” according to a report published last month by the Institute for International Political Studies (ISPI) in Milan.
Russia’s GDP is today no bigger than that of China’s Guangdong province, and its defence spending is a third of that of its neighbour. “It is hard not to see who has the upper hand in this relationship,” the ISPI report said.
