MOSCOW: Russia and China signed energy, trade and finance agreements on Monday proclaimed by Moscow as proof that a policy turn to Asia is bearing fruit and will help it to weather Western sanctions over the Ukraine crisis.

The 38 deals, signed on a visit to Moscow by Premier Li Keqiang, allow for deeper cooperation on energy and a currency swap worth 150 billion yuan ($25bn) intended partly to reduce the sway of the US dollar.

They are among the first clear successes of the eastward shift, ordered by President Vladimir Putin to avoid isolation over the sanctions, since the vast nations reached a $400bn, 30-year natural gas supply agreement in May.

“I consider it important that, in spite of the difficult situation, we are opening up new possibilities,” Russian Prime Minister Dmitry Medvedev said after the signing ceremony.

In a sign that mistrust has still not been completely buried, Li was less effusive, even when holding out the prospect of a deal in 2015 to build a second pipeline along what is called the Western route to ferry Russian gas to China.

“Cooperation over natural gas between Russia and China goes back quite a long way,” Li said. But he added: “Further discussion is needed between companies.”

For Russia, the agreements offer some relief, with the European Union and the United States showing no signs of lifting sanctions imposed over Russia’s annexation of the Crimea peninsula and its backing of separatists in east Ukraine.

The sanctions target the finance, energy and defence sectors, restricting some state firms’ and banks’ ability to raise financing in Western markets.

The currency swap strengthens China’s plans to promote international usage of the yuan following pledges by Moscow and Beijing to settle more bilateral trade in roubles and yuan. Spurred by their often fraught relations with the United States, Russia and China have long advocated reducing the role of the dollar in international commerce.

China, which has 32 per cent of its $4 trillion foreign exchange reserves invested in US government debt, would like to cap its vulnerabilities to any fluctuations in the dollar in the near term. Over the longer term, it wants to increase the yuan’s clout and turn it into a global reserve currency.

Medvedev said trade turnover between Russia and China had grown by more than 100pc over the past six years from $40bn to $90bn.

“We are very close partners,” he said, although trade with the combined 28 nations of the EU is greater than with China.

Under the new agreements, cooperation will deepen between state oil producer Rosneft and China National Petroleum Corporation, including in liquefied natural gas (LNG) projects and possibly LNG supplies to China.

Banks VTB, VEB and Russian Agriculture Bank — like Rosneft hit by sanctions — signed framework agreements with China Exim bank to open credit lines.

Published in Dawn, October 14th , 2014