Sino-Russian Relations: Marriage Of Convenience

With US policy under President Trump pushing them into each others’ arms, the China-Russia friendship is warming up.

A skyline lightshow in Qingdao, China, created for the June 2018 China-Russia summit.

China just celebrated the 70th anniversary of becoming a People’s Republic, with elaborately staged parades and the unveiling of a new, more powerful version of its nuclear missiles that can reach the United States. The optics suggest an escalation from the trade wars unleashed by US President Donald Trump toward a return to Cold War relations between East and West.

At the same time, China’s relationship with Russia has been blossoming. Official Chinese media recently described ties between the Eurasian superpowers as being at “their best in history.”

Partly, this renewed friendship comes as a reaction to Western sanctions on Russia and US tariffs on Chinese goods. They have been pushed into each other’s arms. And while major friction points remain—over China’s ambitions in Central Asia and the Arctic region—for the time being, the age-old rule that “the enemy of my enemy is my friend” trumps all other considerations.

Then there is the strong personal rapport between Chinese President Xi Jinping and his Russian counterpart, Vladimir Putin. During a state visit to Moscow last June, Xi declared that “Russia is the country I have visited the most times, and President Putin is my best friend and colleague.”

“There’s such a thing as ‘bromance politics,’” observes Mathieu Boulègue, a research fellow at the London-based Chatham House think tank’s Russia and Eurasia program. “Xi and Putin get on so well these days. I think Donald Trump would have wanted something like that sort of relationship with Putin.”

At the most recent St. Petersburg International Economic Forum—Russia’s version of Davos—President Xi led a massive Chinese delegation and raised the friendship rhetoric still further by describing Russia as “a comprehensive strategic partner.”

“Today we maintain very deep and wide-ranging relations with China,” was Putin’s glowing response. “We don’t have such relations with any other country,” he added. “Indeed, we are strategic partners in the full sense of this word. We can say this without any exaggeration.”

Outside observers are not entirely convinced by the rhetoric. “It is not a strategic relationship,” says Boulègue. “Rather it sends a message to the West and the international community that Russia does not stand alone. And since Russia has been driven out of Europe, the pivot toward Asia is now complete.”

“Russia needs alternative markets because it has been locked out of Western ones,” says Raffaello Pantucci, director of international security studies at the Royal United Services Institute, a London think tank. Last year, ambitious plans were unveiled to double trade between China and Russia to $200 billion by 2024.

But these trade flows are structurally unbalanced. Oil, coal and other minerals made for 76% of Russian exports to China in 2018, with timber products responsible for a further 8%. China is now the largest export market for Russian oil, and much of last year’s boost to export revenues was due to rising oil prices rather than higher volumes. Looking ahead, a large part of projected increases in Russian exports will come from the opening of a new natural gas pipeline from the East Siberian fields to China. Meanwhile, more than half of Russia’s imports from China consist of electronics, machinery and automobiles, with other value-added consumer goods like clothing and footwear making up most of the balance.

That dynamic is unlikely to change. “Other than raw materials, Russia doesn’t produce much that China wants,” says Paul Goble, previously a US government specialist on nationality and religion in the countries of the former Soviet Union, “and compared to other countries, the Russians don’t buy much of China’s product.”

In response, the $2 billion sovereign Russia-China Investment Fund (RCIF) aims to boost bilateral investment. Formed jointly by China Investment Corporation and Russia Direct Investment Fund, roughly 70% of investments are to be inside Russia. Initially sectors like forestry and agriculture were the main targets; but the fund has since spread investments into heavy industry, banking, infrastructure and pharmaceuticals. Last year, Saudi Arabia’s sovereign wealth fund put another $500 million in RCIF. Major projects, including a $1.28 billion science park outside Moscow, are being funded jointly with external investors including China’s Tus-Holdings and China Chengtong Holdings.

“Russia simply lacks the economic base to compete across the board with China,” says Boulègue. “But they do not want to become junior partners, mere providers of natural resources. And while official trade and investment figures may look good, the deals being done are bringing neither development nor growth at the local level.”

“Chinese investments in Russia are more strategic than economic,” says Pantucci. “It’s the people close to Putin who are benefiting from many of the business deals being done.” Local communities are rarely consulted nor do they expect to benefit economically, says Goble; and this has triggered grassroots opposition to Chinese plans to extract water from Lake Baikal or to reverse river flows in Eastern Siberia toward China. And while Russian oligarchs are happy to cut new deals with their Chinese counterparts, as a rule they prefer London to Shanghai.

Given that Russia currently lacks access to Western or other East Asian technology, it stands in need of China as a technological ally and is likely to accept Huawei and other Chinese tech companies having a leading role in the shift to 5G. “But only provided their role is limited to civilian networks and doesn’t impinge on the military and strategic sectors,” says Boulègue. “The Russian military have previously had bad experiences in technology transfer to China. A line will be drawn.”

The unequal nature of the relationship is likely to cause friction in the Arctic and Central Asia. Opening up the Northern Sea Route has long been a Russian ambition, and now the Chinese are muscling in—building new icebreakers at a rapid pace and demanding “near-Arctic” status at international forums where crucial decisions will be made.

China’s plans for massive infrastructure investments in the Central Asian republics are a key element in its Belt and Road Initiative. “President Xi wants to put his own stamp on it,” says Pantucci. “The Russians see the Chinese push into what they consider their own backyard as relentless. Much depends on how it works out on the ground, but the basic dynamics point to a gradual erosion of Russian power across the region.”

If Moscow tries to block this new Silk Road, Boulègue points out, “China can bypass Russia altogether by focusing on the ‘Stans’ and Iran. And while China embraces this as a long-term project—the Belt and Road is to run through to the People’s Republic’s centenary in 2049—Russia’s leadership can’t see that far ahead.”

Russia’s renewed interest in Africa might also raise concerns in Beijing, though China is by far the more important player. “They do not compete directly in African markets,” says Boulègue. “With the Russians it’s mostly military hardware and training, while the Chinese take a broader economic approach.” And he detects a pattern in that “wherever China goes, Russia follows—to reap the benefits of access, but also to keep tabs on the Chinese.”

For most of the past 70 years, Sino-Russian relations have been characterized by deep mutual distrust. And while state media in both countries celebrate the revival of joint military exercises like last year’s Vostok-18, the generals and veterans on either side will remember that 2019 marks another anniversary—that of the undeclared Sino-Soviet war of 1969 along the Ussuri River—that nobody else now wants to remember.

Each nation has a very different approach to achieving its goals. “Putin’s Russia acts primarily as a disruptor—in Ukraine; in Syria—as a means to maximize its leverage globally,” observes Pantucci. In contrast, “Beijing sees its interests best served by championing the existing rules-based global order, and then tweaking the system to what suits it best.” Over the long term, the two are incompatible.