Chinese President Xi Jinping and Russian President Vladimir Putin held a second day of talks on China’s plan for the settlement of the Ukrainian conflict and expanding economic and trade ties during a meeting in Moscow on March 21.

“We are always on the side of peace, justice and historical fairness. We respect the UN charter. We have reached a consensus with President Putin and we have decided to expand and build our stable co-operation,” Xi said.

Dmitry Peskov, the Kremlin spokesperson, confirmed the two leaders had discussed the conflict and a possible peace plan but neither confirmed whether any progress had been made nor gave any details.

Putin suggested that Russia should endorse the Chinese peace plan and will work with Western partners, but gave no further details. China published a 12-point peace plan on the anniversary of the start of the war, which called for a ceasefire, the resolution of the humanitarian crisis in Ukraine and the resumption of talks between Moscow and Kyiv.

Xi has also not spoken with Ukrainian President Volodymyr Zelenskiy yet by phone. When asked why, Chinese Foreign Ministry Spokesman Wang Wenbin said that China was in contact with all sides involved in the Ukrainian conflict.

"China takes a steadfast and clearly defined position on the issue of Ukraine," Wang Wenbin said at a news conference to the question from a Western reporter. "The Chinese side maintains communication with all sides."

Peskov also gave no details of other major topics of conversation, including on whether the leaders had discussed the issue of natural gas contracts or military-technical co-operation, but said this would be addressed in their upcoming statements.

He also referred to the Defence Ministry for information on whether the Russian and Chinese defence ministers would hold a separate meeting during Xi’s visit to Russia. The US has accused China of supplying Russia with arms, although Beijing has denied the charge.

Chinese Foreign Ministry Spokesman Wang Wenbin says that Beijing intends to take an objective position on the Ukrainian crisis and, together with the international community, promote peaceful dialogue.

Xi visited Russia as part of his first foreign trip since his re-election as president for an unprecedented third term.

Deals 

The Russian Prime Minister, Mikhail Mishustin, also met with Xi the same morning and highlighted the importance of strengthening comprehensive partnership and strategic co-operation between the two countries.

"We have chosen Russia for the Chinese leader's first foreign visit. This fits into the bigger picture, because we are the largest neighbouring powers and all-round strategic partners," Xi said during a meeting with Mishustin.

Mishustin and Xi agreed on 79 projects worth over $165bn in the Intergovernmental Russian-Chinese Commission on Investment Co-operation, which focuses on energy, high-tech areas, and transport and logistics corridors.

"We prioritise investment co-operation. The Intergovernmental Investment Commission's portfolio includes 79 projects totalling more than $165bn," Mishustin said.

China considers it extremely important to link the Belt and Road Initiative with the Eurasian Economic Union (EAEU), Xi told Mishustin.

"China attaches great importance to co-operation to jointly create a link between the Belt and Road Initiative and the Eurasian Economic Union," Xi Jinping was quoted by China’s Central Television as saying.

He also noted that Beijing is ready to fully implement the agreement on trade and economic co-operation between the EAEU and China and carry out regional co-operation with Russia at a higher level.

Mishustin also highlighted the strategic energy partnership between Russia and China, emphasising co-operation in high-tech areas, and the agro-industrial complex. He also highlighted co-operation on some of the key energy projects, including Yamal-LNG, Arctic LNG 2, the Amur Gas Chemical Plant and the Ust-Luga gas processing complex, as all being examples of successful joint energy projects.

"I would like to highlight co-operation in high-tech areas. We are discussing aircraft construction, mechanical engineering, machine tool construction, space research, and end-to-end technologies aimed at creating innovative products and providing services. I am convinced that expanding innovative co-operation will strengthen Russia's and China's technological sovereignty," Mishustin said.

In some brief comments after the morning meetings Putin also stressed the co-operation in both logistics and technology so that both countries could become “technologically sovereign.”

"By joining our rich scientific potentials and production capabilities, Russia and China can become world leaders in the field of information technology, network security and artificial intelligence," Putin said. He also drew attention to the fact that the key to sustainable development of Russia and China is "to ensure technological sovereignty."  

As part of the sanctions regime, the export of tech and equipment to Russia has been banned. Likewise, in January similar restrictions on the export of technology to China were introduced by the US.

One of the few comments on energy co-operation was Putin’s announcement that almost all parameters of gas pipeline Power of Siberia 2 (Sila Sibiri 2) have been agreed.

After Russia’s exports of gas to Europe have been cut to a fraction of those in previous years and are unlikely to restart after the Nord Stream pipelines were destroyed last September, Russia is seeking to reorientate its gas sales from West to East but needs to build a very large new pipeline running to China through Mongolia.

Gazprom said on March 20 that gas exports to China via the existing Power of Siberia 1 pipeline reached a record 15bn cubic metres in 2022, but this still only a fraction of the approximately 150 bcm Russia used to sell to Europe.

Power of Siberia 1 has a nameplate capacity of 34 bcm and the new Power of Siberia 2 could have as much as 50 bcm or 60 bcm, but will take at least five years to build, and possibility longer.

"We have just discussed a good project, this is a new gas pipeline Sila Sibiri 2 running across Mongolia. Almost all terms of this deal were agreed. This means 50 bcm of gas, stable and reliable shipments from Russia," Putin said.

Putin also stressed that Russia wants to develop mutual payments in Chinese yuan in trade with Asian, African and Latin American countries.

"We support the use of Chinese yuan in payments between Russia and countries of Asia, Africa and Latin America," the head of state said. The Russian leader also expressed confidence that such "forms of payments will be developed between Russian partners and their colleagues in third countries."

"National currencies are more and more actively used" in the bilateral trade and two thirds of the trade turnover between Russia and China are already "made in rubles and yuan," Putin noted. "This practice should be encouraged further" and mutual presence of financial and banking institutions on Russian and Chinese markets should be expanded, he added.

Since Russia was cut off from the global payments system with the SWIFT sanctions that were imposed only days after Russia’s invasion of Ukraine in February, the country has been going through a rapid process of yuanisation of its financial system, adopting the Chinese currency as its reserve currency and for settlement of international trade deals.

US reaction

The high-profile meeting between Xi and Putin has strained relations between China and the US further. Analysts have argued that by the high-profile visit to Russia, China has adopted a more assertive role on the geopolitical stage and is openly challenging the US’ claim to be the global leader.

By offering to mediate in a peace process, China is also challenging the US authority there as well, which makes the issue of a conversation between Xi and Zelenskiy – which would be their first since the war began – of considerable weight.

In comments following Xi’s first day in Russia, US Secretary of State Antony Blinken was dismissive of the visit, blasting Xi decision only days after the International Criminal Court chose to issue an arrest warrant for Putin on charges of kidnapping Ukrainian children.

“China feels no responsibility to hold the Kremlin accountable for the atrocities committed in Ukraine, and instead of even condemning them, it would rather provide diplomatic cover for Russia to continue to commit those very crimes,” Blinken said at a press conference.

Notably, none of the US, China, Russia nor Ukraine are under the ICC’s jurisdiction. US President Joe Biden has called the arrest warrant “justified,” adding that “it makes a very strong point,” while China has called it into question.

The court should “respect the jurisdictional immunity of a head of state under international law, prudently exercise its mandate in accordance with the law, interpret and apply international law in good faith, and not engage in politicisation or use double standards,” China Foreign Ministry spokesperson Wang said.

In what appears to be a slight aimed at China during Xi's trip, the head of the Taiwanese administration, Tsai Ing-wen, is due to stop off in the US on her way to Guatemala and Belize and intends to meet with US House Speaker Kevin McCarthy.

Beijing has objected strongly to the plan and possible meeting, as it refuses to acknowledge the legitimacy of the Taiwanese government and hence objects to the official recognition by the US government that any high-level meeting applies.

The White House has countered that such meetings are standard practice and shouldn’t be used by China as a pretext for escalating the situation in the Taiwan Strait, a senior US administration official said, Reuters reported on March 21.

"We see no reason for Beijing to turn this transit, again, which is consistent with long-standing US policy, into anything but what it is. It should not be used as a pretext to step up any aggressive activity around the Taiwan Strait," the official said. "There is nothing new from our point of view."

According to the official, every leader of Taiwan had transited through the US, and Tsai has done so herself six times since taking office 2016, meeting with members of Congress during all of those visits.