xi jinping vladimir putin sochi china russia relations

The 2014 Winter Olympics will kick off in three days' time. As many will already know, the host city is Sochi, a subtropical resort city on Russia’s Black Sea coast.

There are more controversies surrounding the Sochi Olympics than there are dolls in a Russian Matryoshka. The games have cost the country US$50 billion, US$7 billion more than China spent on the most expensive summer games ever in 2008. According to an investigative report released in December , fully US$26 billion of the cost of the Sochi Olympics consists of kickbacks and embezzlement.

The spectre of terrorism looms large  in a region separatists have long sought to turn into an Islamic caliphate. Russian anti-gay laws introduced last year made headlines worldwide. The games' alpine and Nordic events will be held near Sochi at Krasnaya Polyana, the site of the Imperial Russian Army's 19th century genocide against the Circassian peoples. 2014 is the 150th anniversary of the genocide.

All in all, world leaders could be excused for not attending the opening ceremony, to be held on Friday. The US has already announced its delegation would not include the president, vice-president or first lady. The last time that happened was in 2000 (no word yet on what Sydney did wrong).

One brave world leader venturing into the bear pit is Chinese President Xi Jinping. In an interview with Xinhua on 25 January, China's Ambassador to Russia Li Hui said  Xi's visit shows the 'high level and uniqueness' of China-Russia ties. He added that China was a 'good neighbour, friend and partner of Russia', and that Xi would hold talks with Russian President Vladimir Putin during his stay in Sochi.

Since the turn of the millennium, China and Russia have grown closer together as they have moved further away from the West.

The two dominate the Shanghai Cooperation Organization, a Central Asian security and economic bloc seen as a counterweight to American interests in the region. China supported Russia's push for a political solution to the Syrian civil war in September. The countries held joint military exercises in the Sea of Japan last year, the largest naval drills China has ever conducted with another nation.

Xi and Putin are said to enjoy a strong personal relationship. Xi's first foreign trip as president was to Russia; Sochi will be his first foreign trip this year. Xi was even present at Putin's 61st birthday celebrations at October's APEC Summit in Bali, and clapped along to an awkward rendition of 'Happy Birthday'.

So on the surface, Sino-Russian relations appear friendly. The countries have a shared interest in redesigning the post-Cold War global political architecture to reflect a multipolar distribution of power. Both regimes find other countries' 'meddling' in their internal affairs reprehensible, and derive prestige from touting their partnership to the world. Complementarities in industry drive bilateral trade.

But look a little closer and the friendship isn't so clear-cut. 'Pragmatic alignment' is a more apt phrase to describe the relationship than 'friendship'.

For instance, China has a long history of pilfering Russian defence technology, a fact in which Russia's military press periodically indulges. Far East Russians also worry that increasing economic integration with China will turn their prime piece of Pacific real estate into a de facto Chinese province. Much of the Far East's fresh produce is already grown on Chinese-run farms, both in China and Russia.

Last year saw the consummation of a slew of deals to transfer the Siberian resources south. One deal saw Rosneft agree to supply China National Petroleum Corporation with 365 million tons of oil over 25 years, worth US$270 billion. Yet China is frustrated by Russian demands that the Siberian deals reflect European prices. At the end of January Gazprom again failed to seal a 30-year natural gas supply accord with China. Negotiations have been dragging on for 15 years.

These issues have been a thorn in the side of Sino-Russian relations for years. But heading into 2014, there are signs of further strain in Central Asia. Traditionally a Russian sphere of influence, China is outcompeting its northern neighbour in the race for the region's abundant natural resources. China is already the largest trade partner of four of the region's five countries. In 2012 China’s trade volume with Central Asia was 100 times what it was when the countries' achieved independence from the Soviet Union.

In the past year, political tensions have also surfaced in the Shanghai Cooperation Organization. Russia initially baulked at a Chinese proposal for an SCO development bank to finance projects in Central Asia. The move was met with exasperation in Beijing. The author of a Global Times op-ed wrote that  'Moscow is unwilling to see any other big powers dominate this region...it is more concerned about China's growing economic strength in this area and it has been demurring from contributing funds to the proposed bank.'

Russia eventually acquiesced to the bank proposal, but issues remain in the SCO. China sees value in strategic relationships with the 'Stans' in its fight against Uyghur nationalists, who demand independence for Xinjiang, a Chinese autonomous region that borders three SCO members. SCO military exercises have thus focused on putting down separatists and terrorists. For Russia the separatist issue is more peripheral in Central Asia.

China needed Russia when the SCO was founded 2001. But now it is clear the SCO was always a vessel for the projection of Chinese economic and strategic interests into Central Asia. As Russia’s increasing irrelevance to the region it once dominated becomes clearer to the leadership in Moscow, there may be ramifications for the bilateral relationship. The fallout will be contained in public; the two derive much benefit from presenting a united front on the world stage. In private, however, disagreements will likely multiply.

Photo courtesy of REUTERS/Alexander Nemenov.