Medvedev Goes to China on First Presidential Visit

May 22 (Bloomberg) -- Russian President Dmitry Medvedev arrives in China tomorrow for a two-day mission to persuade the world's fastest-growing major economy to buy more than just energy from his country.

``Natural resources dominate our exports to China,'' said Sergei Sanakoyev, director of the Russia-China Center for Trade and Economic Cooperation, a member of the delegation whose institute monitors the bilateral trade. ``This doesn't satisfy Russia. Discussions will focus on specific measures to increase high-tech and innovative exports to China.''

The visit is part of Medvedev's first international trip since becoming president on May 7. En route, he stopped off in neighboring Kazakhstan today to meet his counterpart, Nursultan Nazarbayev.

``The fact that Kazakhstan was chosen is an acknowledgment of the role it plays in the former Soviet Union and its increasing influence in the region,'' said Fyodor Lukyanov, an analyst at the Council on Foreign and Defense Policy in Moscow.

Kazakhstan, a former Soviet Republic, is the second largest of five states bordering the energy-rich Caspian Sea and holds about 3 percent of the world's oil. Russia is the biggest.

The two leaders signed agreements on cooperation in nanotechnology and space. Russia currently launches manned space flights from the Soviet-era Baikonur space center in Kazakhstan.

Glonass Navigation Network

They also agreed to co-operate on the Glonass navigation network, a rival to the U.S. Global Positioning System, and signed a $300 million loan agreement between Russia's state-run development bank Vnesheconombank and the Kazakh Development Bank.

The visit demonstrates the ``particularly trusting and fraternal relations'' between the two nations, Medvedev said during his meeting with Nazarbayev in the capital, Astana.

Several Russian businessmen are accompanying Medvedev on his trip, Sanakoyev said. They include: Vladimir Yevtushenkov, the billionaire chairman of AFK Sistema, which has interests in telecommunications, technology, real estate and retailing; Mikhail Pogosyan, chief executive officer of OAO Sukhoi Aviation Holding Co.; Valery Okulov, CEO of OAO Aeroflot, Russia's largest airline; and Andrei Kostin, CEO of VTB Group, the country's second-largest bank.

China's economy expanded by 11.4 percent last year. Its trade with Russia grew almost fivefold to $48 billion during the eight-year tenure of Medvedev's predecessor, Vladimir Putin, and may rise to $80 billion in 2010, Sanakoyev said. Russia is the world's biggest energy exporter.

Olympic Facilities

Russia may seek investment in more than 30 projects worth about $3 billion, presidential aide Sergei Prikhodko told the Interfax news service. He said Russia wants China to participate in plans to build Olympic facilities in Sochi, a Black Sea resort and site of the 2014 Winter games, and develop projects in Vladivostok, which will host the Asia-Pacific Economic Cooperation summit in 2012.

China has indicated that it will be a receptive host.

``Russian exports of machinery and electronics have slowed down in recent years,'' Chinese Assistant Foreign Minister Li Hui told reporters in Beijing. ``China's ready to work with Russia to find a solution to this issue.''

A unit of Yevtushenkov's Sistema has been in talks with China's ZTE Corp. to produce telecommunications equipment in China. Sistema CEO Alexander Goncharuk said last week that negotiations were ``three-fourths of the way'' to completion.

China is also likely to buy more nuclear-power plants from Russia. ``There is a high probability'' that China will order more Russian nuclear reactors, Russia's ambassador to China, Sergei Razov, told reporters in Beijing May 20.

Nuclear Reactors

Agreement may be reached on the purchase of two additional reactors for China's Tianwan nuclear power plant, said Irina Yesipova, a spokeswoman at ZAO Atomstroyexport, Russia's nuclear-reactor builder. The company completed construction of two units last year at the plant, on the coast north of Shanghai, under a 1997 contract.

Russia and China are core members of the Shanghai Cooperation Organization, a regional-security group established in 2001. They held military exercises in 2005 and 2007, asserting power in energy-rich central Asia. Putin, who became prime minister upon Medvedev's ascension, last year told Chinese President Hu Jintao that Russia won't change its policy toward China ``in the next few years.''

Medvedev's visit to China ``is a strong statement that he'll oversee the continued internationalization of Russia rather than simply lead it into the West,'' said Chris Weafer, chief strategist at Moscow-based UralSib Financial Corp.

 
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