Mixed signals from Beijing

ON Sunday, Chinese President Xi Jinping and Russian President Vladimir Putin signed an energy cooperation agreement, providing for a new natural gas pipeline to China costing US$400 billion.

Also under the agreement, the China National Petroleum Corporation will buy a 10 percent stake of a unit of Russia’s largest petroleum company, Rosneft, priced at US$30 billion.

The move marks Russia’s efforts at deepening ties with China, supplying China’s enormous demand for energy. It’s a nice bargain. Russia will gain access to a dollar credit line for repaying their dollar debt, in exchange for China having more control over their energy supply.

The Sino- Russian pairing could develop into a formidable alternative to the US-led Trans-Pacific Partnership (TPP), as Beijing called for the establishment of a Free Trade Area of the Asia-Pacific (FTAAP) and would set aside US$40 billion for improving trade links with other countries in the region. A new Cold War? Yet another development in the Beijing APEC Summit is more hopeful — an “icebreaker” meeting between President Xi and Japanese Prime Minister Shinzo Abe over their disputes involving the Senkaku/Diaoyu Island.

Prime Minister Abe told reporters that the two sides have taken the first steps towards reconciliation, establishing a crisis management mechanism. That signals a gradual resumption of political, diplomatic, and security dialogues.

On the other hand, President Aquino and President Xi Jinping met face to face for the first time and exchanged cordial words over the South China Sea dispute. President Aquino later suggested that the tone and the rhetoric framing the dispute would change henceforth.

These are two tension- easing developments in Beijing over the South and East China Sea. If followed through in all good faith, all of Asia might very well achieve Asia’s potential as the growth driver of the global economy.