TheMarketForIdeas

The relationship between Russia and China is an important subject of debate for the West in the context of the war in Ukraine and of the invaluable support which China gives to Russia in order to hold its ground against the Western sanctions and to continue the fight against Ukraine. The two countries are, also, engaged in an ample project of organising the Global South and the major emerging economies (plus important non-aligned actors such as the United Arab Emirates and nominal US allies like Saudi Arabia) in structures parallel to the ones supposedly dominated by the West, capable of producing alternate governance models which mark the transition towards multipolarity. Under such conditions, could Western commentators hope for a moderate/-ing Chinese influence on Russia’s actions in Ukraine or for an eventual split between these two powers?

Russia, courted by the West

After over a decade of quickly deepening their relationship, China and Russia declared an “unlimited partnership” only a month before Russia’s invasion of Ukraine in February 2022. For a country like China, which never makes formal alliances, this is as high a cooperation with another country as it can possibly have, to a degree which was reached not even with the U.S., despite the complexity and depth of the economic relations which they have developed up until the initiation of America’s “decoupling” from China by the Trump Administration. “Chimerica” yielded before what the international relations analyst Velina Tchakarova called “the DragonBear”.

Despite all this, the tensions specific to the framework of the relations between the two countries are often remarked upon, usually within the context of the border conflicts from the USSR period, after the Sino-Soviet “split”, as well as of the dormant Chinese irredentism which could target even Russian territories as part of a reversal and redemption campaign against the “century of humiliation” from China’s historiography.

We could also debate the depth and honesty/sincerity (or naivete) of the West’s intentions, even though there have been more attempts at openness towards better relations with Russia, oftentimes seen as an attempt at constraining and counteracting China’s ascension. There was the NATO-Russia Council, the continuation of talks between the U.S. and Russia after the war in Georgia (captured in the form of Obama’s caught-on-the-microphone promise that he would have more leeway in his relations with Putin after the 2012 elections) and the vocal attempts by the Trump Administration to nurture a rapprochement with Russia, which failed due to internal opposition as well as the suspicions of Russia’s meddling in the 2016 elections. Several generations of American leaders, with various ideologies, have recognised the value in getting closer to Russia and dealing with it independently of China. The greatest two crossroads moments of these efforts were the Ukrainian invasion of 2014, together with the annexation of Crimea, as well as the new invasion of 2022. After the first invasion, there was a possibility / an opportunity, albeit strongly publicly criticised, to start a positive interaction with Russia and make use of the inertia of the official narrative of the incompatibility between the structural interests of Russia’s and China’s in order to attract Russia into an anti-China coalition. After the 2022 invasion and Russia’s marginalisation by the majority of the Western-dominated fora to which it participated, such as the G8/G7, the World Economic Forum or the OSCE, its relationship with China took on a new weight with new dimensions. In this relationship, Russia appears to be quite content with an equal partnership rhetoric-wise, in which it is a dependent and practically junior partner, in exchange for the regime’s survival and its ability to keep fighting in Ukraine in order to reach some minimally feasible/acceptable (yet unknown) objectives. The situation creates a stark contrast against the one in 2014, when my second-to-last visit to the General Secretariat of the Shanghai Cooperation Organisation and my discussions with its Russian counsellors at the time revealed an ambivalent and sceptical attitude towards the potential for success of the Belt and Road Initiative launched in 2013 by Xi Jinping, as well as a certainty/conviction of the structural equality of the partnership between the two. Back then, Russia still had options and leeway.

Towards the unlimited partnership

The projects mutually-developed by Russia and China date back to even before the Russian revisionism in Eastern Europe. The Shanghai Cooperation Organisation and the BRICS Group were already planned / in the works. The Western-induced crisis from 2008-2009, which led to Western Europe’s stagnation, the West’s intolerable meddling in Georgia and especially in Ukraine (from both Russia’s perspective, as well as China’s, which aspires towards a hegemonic control of its close vicinity, just like Russia), followed by the financial sanctions applied to Russia after 2022, have convinced Russia and China of both the opportunity to generate an alternative order to the Western one (due to the internal and structural crises in the West), as well as of its necessity. After the post-2009 counter-cyclical stimulus of China enabled it to get over the crisis faster than others and to implement its plans of economic reform aimed at “innovation-based development” and “peaceful ascension”, their common initiatives developed much faster. There have already been three major directions – the institutional one (the New Development Bank, the Chang Mai Initiative and the Asian Infrastructure Investment Bank), the structural one (the gradual de-dollarisation of commerce and of the financial assets, the creation of new transnational banking transfer services such as China’s CIPS as an alternative to SWIFT) and the membership one (especially in the new wave of accessions to BRICS). To Russia’s misfortune, China’s Belt and Road Initiative trumped them all and it became the “strategic umbrella” for substantial regional and global investment in infrastructure, commerce and technology. Already, China’s size has allowed it to mobilize resources far exceeding Russia’s, which has itself developed regional projects such as the International North-South Transportation Corridor together with India and Iran, foreshadowing its future dependence on China and, quite probably, its geopolitical subordination to it.

There are two things that happened after 2014 which led to the creation of a breach in the internal barriers which Russia had against Chinese influence.

The first and most important one was the series of long-term energy (and, secondarily, grain) commercial agreements between Russia and China, which led to the building of the Power of Siberia natural gas pipelines. It is no coincidence that the agreement was signed in 2014, after over a decade of negotiations. Russia needed to diversify its energy export markets and the already-existing infrastructure did not allow for the export of Siberian energy to Europe. China has acquired the privilege of monopsony and imposed some very advantageous prices in the over-400-billion-dollar, 30-year agreement. The “pivot towards Asia” became a catchphrase preferred among the Russian elites and Putin’s first post-2014-sanctions foreign visit was in Shanghai. A series of other energy agreements followed, the most recent one having been also signed for a 30-year period, shortly before the invasion of Ukraine from 2022, an agreement which also featured the building of the Power of Siberia 2 natural gas pipeline. The most important structural advantage obtained by the Chinese, who managed to diversify their internal energy sources from Central Asia and from the maritime transport from the Middle East, so as not to become themselves dependent on the Russians, was gaining access to the areas of the Russian economy which had been off-limits up until that point – technology, infrastructure, and energy exploration/development. In the years following 2014, the once sceptical Russia became a major point of reference in relation to the new terrestrial Silk Road, the Arctic Silk Road and a series of other Chinese projects. Regarding the individual projects, we can mention the development of the Arkhanghelsk Port as well as of the Zerubino deepwater Port near Vladivostok for the Nordic transportation route, which was opened by global warming, the natural gas liquefaction and transport facility from the Yamal Peninsula, the energy terminal with a 400 kilometres petroleum pipeline and the Payakha petroleum field exploitation facility from the Taymyr Peninsula, in the Krasnoyarsk Region, the Power of Siberia natural gas pipelines etc.

The second factor of the Sino-Russian cooperation was the regime of augmenting anti-sanctions resilience which Russia started applying after the 2014 sanctions with the help of China, whose effects were seen after the imposition of sanctions against Russia in 2022. This cooperation led to the increase of Russia’s dependence on China. External commerce has been gradually de-dollarised (reaching a dollar proportion of 56% before the invasion of Ukraine and of 40% in the relations with China and other key partners), the Central Russian Bank fully renounced dollar assets for its sovereign wealth fund, for its reserves and for its portfolio and the Russian Government cut its dollar-based debt in half percentage-wise, on top of having reduced it by 200 billion dollars overall since 2014 up until the moment of invasion.

The post-invasion relationship

The unprecedented sanctions applied to Russia, going as far as to freeze its Central Bank assets (and initiate discussions about confiscation), would have had an even greater effect had China not been present in order to support Russia and increase its overall influence within it. Western products and companies have been replaced by Chinese ones, even if some Chinese enterprises also present in the West preferred not to continue their commercial relations with Russian enterprises. China supported Russia, not just as a customer for energy and grain, but also as a facilitator of the energy commerce between Russia and India (Russia is currently exploring an alternate energy route towards India, through Iran). Also, China has been an important source of technical components and industrial machinery (“producer’s goods”) to the Russian industry, even if it cannot replace Germany quite yet when it comes to high precision CNC machines and other specialised goods (as well as the contraband of such products taking place through Central Asia, among other places). Even though China insists that it did not provide Russia with weapons, ammunition, and other fighting equipment (such as drones), many of their delivered components are dual-use, both civilian and military, and so they can be used to sustain Russia’s war effort. The fact that a good chunk of China’s internally manufactured military equipment has Soviet roots leads to a significant compatibility which is very useful to Russia (which explains their relations with confirmed suppliers such as North Korea). Most recently, we can observe the fact that the Ukrainian attacks against the Russian infrastructure for petroleum refining (for fuel, lubricants and plastic products), led to peculiar instances in which Russia exports petroleum to China and imports refined products (refined with that same petroleum), increasing its dependence on China.

Last but not least, China’s attempts at establishing itself as a mediator in the Ukraine war was to Russia’s advantage, even though it did not work – mostly because China’s fundamental stated positions for such a process are in favour of Russia and of the official narrative it puts forward – the war being a legitimate and regrettable product of the West’s meddling in the internal affairs between Russia and Ukraine, the necessity that the negotiations should start “from the reality on the ground” (meaning the partial validation of Russia’s territorial conquests/annexations in Ukraine), the West’s ceasing of its meddling in these internal issues/affairs (and, implicitly, of aiding Ukraine), the unblocking of property confiscated from Russia and Russian figures, the requirement to lift all sanctions as a precondition to negotiations happening etc.

Even though China suffered losses as a result of the war, especially when it comes to its substantial economic interests in Ukraine and the global economic uncertainties, these costs pale in comparison to the strategic advantages it obtained due to the Russian and European declines favouring China and the U.S., the accelerated coagulation of a block of developing countries led, de facto, by China and the “economic marriage” it managed to make with Russia and which cannot really be broken.

Conclusion

Even though Trump will likely return to the White House, his plan to attract Russia on America’s side in a confrontation against China, a plan which was once desired by American realists, is, sadly, no longer realistic itself. The structure of the relationship between the two countries in the context of the war in Ukraine and of the preparations made after 2014 turned into an economic partnership which is irresistible to Russia, in which the asymmetry between the two countries is now obvious and the consequences of breaking it up would be disastrous for Russia.

Photo source: Manuel Alejandro Hung / PxHere.