Eurasia Economic Union leaders, photographed December 2016, courtesy of http://en.kremlin.ru/

CHINA has reached a milestone in the Belt Road by completing a trade agreement with the Eurasian Economic Union (EEU). The agreement is significant for the Belt Road initiative because it directly meets its objectives in liberalizing trade and investment along the Eurasian landmass.

According to a statement from China’s Ministry of Commerce, commerce minister Zhong Shan formally completed negotiations with EEU trade minister Veronika Nikishina in Hangzhou, Zhejiang Province in early October, after several days of talks.

The ministry described this as the first important institutional agreement reached between China and the EEU in the economic and trade field, and also important for linking the Belt Road initiative with the EEU. Negotiations were officially launched on June 25 2016.

The Eurasian Economic Union comprises the Russian Federation, Kazakhstan, Belarus, Kyrgyzstan and Armenia, and so includes important land routes from China to Europe.

The agreement will help reduce non-tariff trade barriers, facilitate trade, create a favourable environment for industrial development, promote the Belt and Road Initiative, and push forward further development of China's economic ties with the EEU. The talks touched upon 10 chapters, including customs procedures, trade facilitation, intellectual property rights, department cooperation, government procurement and e-commerce.

Eurasian integration was one of the key topics of the third East Economic Forum held on September 6 and 7 in Vladivostok. Under discussion were the role of the Eurasian Economic Union in the Greater Eurasia project and the development of the Union trade policy and its importance to the business community in Russia.

Meanwhile, the latest example of the steadily shifting network of global trade and investment relationships was illustrated in early October, with the visit of King Salman of Saudi Arabia to Russia, accompanied by a large Saudi business delegation.

While there is growing cooperation between Russia and China in the oil & gas sector, the two countries are also jockeying for position, as Saudi Arabia opens up to foreign investment and also looks to set up overseas joint ventures. Saudi Arabia is anxious to keep up its exports of oil to China, where it has now been overtaken by Russia. It is a complex three-way relationship.

The first Saudi-Russian Investment Forum was held in Moscow on October 5, to coincide with King Salman’s visit. On the same day, a memorandum of understanding on possible cooperation and investment activities in Russia and Saudi Arabia was signed by Russian Direct Investment Fund (RDIF), Saudi Aramco, and the Russian oil and gas company SIBUR. According to the MoU, the companies will estimate the potential of the petrochemical markets in Russia and Saudi Arabia and explore opportunities for future cooperation.

RDIF also signed an agreement with Mubadala Investment Company on investment in the Russian transport infrastructure, and an agreement with Saudi Aramco and the Public Investment Fund of Saudi Arabia to collaborate on a new platform which will invest in areas such as oilfield services.

RDIF is a Sovereign Fund of the Russian Federation established in 2011 to make equity co-investments, primarily in Russia, alongside reputable international financial and strategic investors.

China and Russia are themselves moving closer together in the oil & gas industry. It was recently announced that CEFC China Energy will acquire a 14.16% stake in Russian oil giant Rosneft for US$9.1 billion.