Putin Heads to China as Ukraine Sinks Ties with West

Russian President Vladimir Putin heads to China on Tuesday to shore up eastern ties as relations with the West plunge to new lows over the Ukraine crisis.

During a two-day visit to Shanghai, Putin and Chinese host Xi Jinping will seek to clinch a raft of agreements including a landmark gas deal crucial for Moscow as Europe seeks to cut reliance on Russian oil and gas.

The two leaders will also take part in a regional security forum and oversee the start of joint naval exercises off Shanghai in the East China Sea.

Moscow's relations with the United States and European Union have dived to a post-Cold War low in recent months over Russia's seizure of Crimea and Western accusations the Kremlin is fomenting unrest in the east of Ukraine.

The West has slapped sanctions on some of Putin's closest allies and threatened broader punitive measures if Moscow disrupts presidential polls in Ukraine on May 25.

Amid the showdown the China trip -- previously billed as a visit with a heavy focus on energy ties -- has acquired new symbolism, analysts said.

"In the face of sanctions, Russia needs to demonstrate that it is not isolated," said Pyotr Topychkanov, an analyst with the Carnegie Moscow Centre. "This will be the goal of Putin's visit. He wants to show that Russia has allies."

Putin will be joined by a delegation including dozens of business tycoons and regional leaders and will oversee the signing of some 30 agreements, his top foreign adviser Yury Ushakov said.

In recent years Russia and China, both veto-wielding members of the U.N. Security Council, have sought to strengthen ties and often worked in lockstep to contain Washington.

Xi made Russia his first foreign destination after taking office last year and attended the Sochi Olympics in March.

The crisis in Ukraine has thrown up a hurdle however, with Beijing struggling to support Moscow while maintaining its stance on "non-interference" in other countries' domestic affairs.

 - Decade of gas talks - 

In the run-up to the visit, officials have sought to wrap up a decade of talks on a huge deal that could eventually see almost 70 billion cubic metres of Russian gas sent to China annually for the next 30 years.

Less than a week before the visit officials said differences over pricing remained. 

Analysts said China may be using Russia's growing isolation from Western markets as a bargaining chip to negotiate a lower price. 

Beijing has denied that but the Kremlin's Ushakov conceded the crisis in ties with the West was affecting the talks to "some extent".

Russian natural gas giant Gazprom said on Thursday the negotiations were "in the final stages," lifting hopes that Putin and Xi will oversee the signing of the mega-deal.

Analysts say the world's second-largest economy has a variety of potential suppliers to choose from but its leverage is limited by China's growing need for additional gas.

"Boosting gas exports to Asia will make Gazprom less reliant on revenues from exports to Europe, potentially making Russia's foreign policy more intransigent on Ukraine or other matters," the IHS consultancy said in a comment.

Ahead of the visit, Russian state oil firm Rosneft also held talks with Chinese oil refiner Sinopec with a view to signing a contract.

In 2013, the two firms signed a preliminary agreement that could see Russia send up to 100 million tonnes of oil to China over 10 years.

Among other key deals, the two countries will agree to develop oil and coal deposits, the Kremlin said.

China could agree to buy some 100 Sukhoi-Superjet planes, said Sergei Luzyanin, deputy director of the Far Eastern Institute of the Russian Academy of Sciences.

Russia could also sign a preliminary agreement enabling it to use China's payment card network UnionPay, Luzyanin said. 

In March, Putin said Russia would create the country's own credit card system after several local banks saw their customers barred from using Visa and MasterCard cards as a result of U.S. sanctions.

On Wednesday, Putin will take part in a regional security summit, dubbed the Conference on Interaction and Confidence Building Measures in Asia.