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China flexes its international muscle

Few readers have probably heard of the Conference on Interaction and Confidence Building Measures in Asia, a regional security forum established by Kazakhstan in 1992 with 26 members, including China, Russia, Iran, India, Israel, South Korea and Turkey.

However, the CICA held last month on my doorstep in Shanghai made up for those two decades of obscurity when China and Russia signed a long-anticipated, US$400 billion gas deal on the sidelines.

The 30-year agreement has major implications for both countries, well beyond the huge sums involved.

The US isn't part of CICA. Like Japan, it has only observer status - but its influence was strongly felt in Shanghai.

The conclusion of the gas deal after a decade of difficult negotiations was seen as collateral with the cooling relations between Russia and the US and a conspicuous way for Russian President Vladimir Putin to show he has big friends in the East with whom he can do

business.

For China, its hosting of the forum highlighted its keenness to flex its international muscles to achieve and develop alternatives to Western-dominated bodies, such as the World Bank.

The week before CICA, news broke of China's collaboration with the African Development Bank in a $2 billion investment vehicle called the "Africa Growing Together Fund". Commentators saw this as a switch from China's "chequebook" diplomacy of bilateral deals in Africa to working through multilateral institutions.

China is also setting up the Asian Infrastructure Bank. While details are still sketchy, the multilateral bank will fund infrastructure

project across the region with

capital of $50 billion from its

members.

First announced by Chinese President Xi last October, the bank will complement the work of comparable organisations such as the Asian Development Bank, which tends to focus on poverty reduction, and is seen as more Western-aligned than China may be comfortable with.

Other examples of China's

determination to forge its own

path - at the same time as Washington pivots to Asia -

are the "16+1" grouping with

central and eastern European

countries and the proposed free-trade agreement of the Regional Comprehensive Economic Partnership involving 16 countries from Asia-Pacific, which is a direct counter to the US-backed Trans-Pacific Partnership that excludes China.

It would be overstating things to say China is turning a cold shoulder to the US. After all, their trade was worth $579 billion in 2012 and their responsibilities as the world's two largest economies mean they will continue to work together on many fronts.

But as CICA demonstrated, China's century is steadily taking shape.


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