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. Last Updated: 07/27/2016

$4Bln in Deals Signed at Chinese Show

Itar-TassPresidents Vladimir Putin and Hu Jintao visiting the opening of a Chinese trade exhibition at the Crocus-Expo center near the Moscow Ring Road on Tuesday.
President Vladimir Putin and Chinese President Hu Jintao opened the world's largest exhibition of Chinese goods outside China on Tuesday as their two countries signed $4 billion worth of agreements.

Praising relations between the two emerging-market economies for a second straight day, Putin said the 20,000-square-meter exhibit at the Crocus-Expo center, just outside Moscow, could serve as an opportunity for Russia to learn.

"Getting acquainted with the most significant Chinese production and technological achievements will be extremely important and useful for us," Putin told an audience of government officials and businesspeople gathered for the occasion.

Putin and Hu spoke against a backdrop portraying the Great Wall of China and featuring the logo for the Year of China in Russia, a panda in a red shirt and a bear in Russian peasant dress standing arm-in-arm.

The two leaders departed, however, before the sides got down to business, leaving First Deputy Prime Minister Dmitry Medvedev and Chinese Deputy Premier Wu Yi to sign agreements covering Russian supplies of steel to China, Chinese buses to Russia, as well as deals on tomato paste and ceramic sanitation fixtures, among others. The $4 billion total came on the heels of $2 billion worth of deals signed on Monday.

One deal that had been anticipated fell through. On Monday, Vladimir Yakunin, the CEO of Russian Railways, or RZD, said the company was prepared to raise rail shipments of oil to China to 15 million tons this year. A total of 10 million tons were delivered in 2006.

But the plans appear to have fallen apart after state-owned oil major Rosneft and RZD were unable to agree on shipping fees.

"Rosneft wants a very steep cut in fees, which would make deliveries very unprofitable for RZD," Reuters quoted a source within RZD as saying.

A deal between Rosneft and Chinese oil trader Unipec had also been expected during Hu's visit.

Among the largest deals that were signed Tuesday were supply agreements by steelmakers Novolipetsk, or NLMK, and Severstal, to sell their steel to China.

NLMK signed a $460 million contract with China's leading manufacturer of transformers, TBEA. The company said in a statement that it had agreed to supply 94,000 tons of steel from 2007 to 2011, with the first delivery contracts to be signed in the next few months.

Severstal, meanwhile, struck an agreement with the Minmetals Group. According to the terms of a deal contained in a statement from Severstal on Tuesday, the St. Petersburg-based company will buy refractories and other products from Minmetals, which will promote Severstal's new products abroad. The statement did not put a price tag on the deal or provide details about what would be involved in the promotion.

In other deals, the government of the far eastern republic of Tuva reached an agreement with the Chinese for the mining of polymetals in the region, Medvedev's spokeswoman Zhanna Odintsova said.

Sitronics, the technology arm of billionaire Vladimir Yevtushenkov's AFK Sistema, signed a five-year contract to supply China National Machinery Import & Export Corp. with microelectronic products, the company said in a statement. The deal is valued at $75 million, it said.

The agreements on Tuesday, pushing the total value for the visit to $6 billion, highlighted greater economic cooperation between Russia and China.

Mikhail Klimentyev / Itar-Tass
Putin signing autographs Tuesday for visiting Chinese monks in the Kremlin.

China's robust economic growth numbers over the last decade, however, have generated reactions ranging from envy to nervousness in Russia.

"China is not applying pressure," said Fyodor Lukyanov, editor of the journal Russia in Global Affairs. "It is strangling [Russia] in an economic embrace."

Not everyone present on Tuesday was comfortable with the embrace.

"Over the past 10 years, China has built 20 automotive production facilities and is building a fourth cosmodrome," Communist Party leader Gennady Zyuganov said at the exhibition. "Meanwhile, we argued, talked and spat on our past. So the question is, to whom does the the future belong?"

Before leaving, Hu showed Putin around some of the stands at the exhibition, including one devoted to the Three Gorges Dam, appliance manufacturer Haier and the Lenovo "supercomputer."

Chinese energy companies, including CNPC, Chinese Petrochemical and China National Offshore Oil Corp., were well represented at the exhibition. While no Chinese energy executives spoke, Semyon Vainshtok, head of national pipeline operator Transneft, took the opportunity to tout the Eastern Siberia Pacific Ocean Pipeline, being built to Nakhodka.

The first 800 kilometers of the pipeline were completed in record time, he said, adding that he was confident that China and Japan would receive new supplies at the same time once the project was completed.

The events were part of the second day of Hu's three-day visit. After leaving Moscow, Hu arrived in Kazan on Tuesday evening where he will spend Wednesday.

Hu was greeted at Kazan airport by Tatarstan President Mintimer Shaimiyev , Interfax reported, and was presented with bread, salt and, according to local custom, chak-chak, a sticky sweet Tatar delicacy.