Russian President Vladimir Putin is on a two-day state visit to China May 20-21 with a major gas supply deal high on the agenda. It was expected a deal could certainly be struck before Putin leaves China on Wednesday. It is his first visit to China since President Xi Jinping took office.

The state visit comes as China hosts a key summit of Asian states in Shanghai that includes delegates from nearly 40 countries and international organisations. Putin arrived in Shanghai on 20^th May to attend the 4th Conference on Interaction and Confidence Building Measures in Asia (CICA) Summit. The conference, chaired by Chinese President Xi Jinping, will run from 20 to 21 May, coinciding with a China-Russia joint naval exercise in the East China Sea. UN Secretary-General Ban Ki-moon also participated.

Russia's third time president Vladimir Putin during his visit has signed multi-billion dollar 30-year gas deal with China to supply natural gas to China. The deal between Russia's Gazprom and China National Petroleum Corp (CNPC) has been 10 years in the making. Putin described China as a reliable friend and Russia's leading foreign trading partner. China is Russia's largest single trading partner, with bilateral trade flows of $90bn (£53bn) in 2013. The two neighbours aim to double the volume to $200bn in 10 years.

The agreement, signed at a summit in Shanghai, is very significant as it is expected to deliver some 38 billion cubic meters of natural gas a year eastward to China's burgeoning economy, starting around 2018.

Russia and China have also kicked off a joint military exercise involving their navies.

Russia has been keen to find an alternative energy market for its gas as it faces the possibility of European sanctions over the crisis in Ukraine. No official price has been given but the Russo-China deal is estimated to be worth over $400bn. Russia considers the deal a milestone achievement in bilateral deals. Gazprom shares rose 2% on the news.

The main argument has been over price and China is thought to have been driving a hard bargain. Over the last 10 years it has found other gas suppliers. Turkmenistan is now China's largest foreign gas supplier, and last year it started importing piped natural gas from Myanmar.

The perceived motive for the deal is that Russia needs a second market for its gas, so it can face up to European sanctions. Given that the "Power of Siberia" pipeline won't start pumping gas into Chinese factories until 2018 at the earliest, its economic effect on the European crisis will be limited. More important may be the investment that China will make into Russia's power and transport infrastructure. Another sticking point on the deal has been the construction of pipelines into China. Currently there is one complete pipeline that runs across Russia's Far East to the Chinese border, called "The Power of Siberia". It was started in 2007; three years after Gazprom and CNPC signed their initial agreement in 2004. But financing the $22-30bn cost of sending it into China has been central to the latest discussions.

Bilateral agreements on natural gas will be an urgent concern for Moscow and it is beneficial for Beijing's long-term economic growth. China's energy market is very valuable to Russia because it is facing economic sanctions from the West.

The gas deal between Russia and China was signed early in the morning at 4 am China time after some delay over price and the signing gives some indication of the level of urgency over these talks. Putin appears to have been determined not to leave with Shanghai without a deal - and he got one. But the financial details are a "commercial secret", so we don't know how much he had to give away to get it.

A long history of falling into and out of alliances with Moscow has taught Beijing to keep a hard-nosed focus on its own national interest. It knows Russia needs a friend in the East and it is extracting maximum advantage. Certainly China needs the gas to help it cut its coal-fired smog levels, and it wants to diversify supply. It had the luxury of time in which to negotiate, something Putin was short of. The whole tenet of the deal has a symbolic value - it says that the two countries are prepared to work with one another. For instance there were other elements such as Chinese participation in Russian transport infrastructure and power generation. Putin may not have managed to sign the most advantageous of gas deals but the opening of economic doors with China could well be the greater achievement.

The red strategy is similar in many ways to China's investments in Africa where they drive a hard bargain over the price of raw materials but then provide infrastructure for the economies they are doing business with.

Putin's planned arrival in Shanghai has caused "anxiety" in the West, prompting speculation that Beijing and Moscow will be forming an alliance to confront the US and the EU. This 'imaginative alliance' does not suit the diplomatic strategy of China's new leaders. Beijing will only be an active participant in international order and it is a responsible and peaceful country.

Putin might have discussed the ongoing crisis in Ukraine with Xi, but it won’t be the main focus of the meeting. Terming the "alliance to confront the West" as "an outdated Cold War mentality", Beijing called for stronger unity among Asian countries. "All countries in Asia have realized the urgency and importance of security co-operation. They are voicing out that Asian countries should strengthen such co-operation and be in the lead to deal with regional affairs," it says.

Media welcomed Russian President Vladimir Putin to Shanghai, amid criticism of anti-China riots in Vietnam. It says the bilateral exercise will "improve military strategic partnership" and will "promote peace and stability in the region". Elsewhere, media continue to criticize Vietnam for encouraging nationalism as China suspends parts of its bilateral exchange program with Hanoi.

The speedy evacuation of the Chinese nationals shows the real strength of China, and also the determination of the government to protect its nationals based overseas. This step comes after anti-Chinese riots broke out in Vietnam last week, causing the death of two Chinese nationals and leaving dozens more injured. The protests have been triggered by China's decision to move an oil rig into the disputed waters of the South China Sea. China's decision to cancel parts of its exchange plans shows Beijing's firm will to safeguard its sovereignty and protect Chinese nationals. Vietnam has under-estimated China's determination and power in protecting its sovereign rights.

Meanwhile, the Chinese navy states that the joint exercise with Russia is "not targeting any third party".