"Novaya Gazeta " under the heading "Current events guarantee victory for China. Russia's dependence on the Celestial Empire will begin to grow at a gigantic pace. Why?" published an interview with a well-known Russian sinologist, director of the Center for Integrated European and International Studies at the Higher School of Economics (HSE) and a former employee of the Center for Analysis of Strategies and Technologies (CAST)Vasily Kashin.
Steel Production in China (c) Xu Congjun / VCG / Getty Images
- China, as a rule, supports Russia when voting in the UN, and now it has abstained twice. What does this say about his position?
Vasily Kashin: - The Chinese usually associate themselves with Russia, but in some cases, when the Russian position is too contradictory, when support will directly involve China in some deep conflict, where it does not want to go, then it refrains. An example is the Chinese vote during one of the meetings of the UN Security Council during the aggravation of the crisis around the Syrian city of Aleppo in 2016. There was an assault on the city, Russia was terribly condemned, and China refrained.
When it comes to territorial issues, China also refrains, for example, when Russia annexed Crimea. Therefore, it was predictable that China would abstain from voting on Russia's condemnation of the territorial conflict in Ukraine. A yes vote would cause direct foreign policy damage to the Chinese.
They will never support the violation of territorial integrity on the basis of referendums. That is why they could not support either the Crimea or the recognition of the "people's republics" of Donbass.
- They have Taiwan right next to them.
- That's right: the referendum is a favorite tool of the Taiwanese separatists. And the Chinese will not approve such a precedent, they will not sign under it. However, this does not reflect their attitude to Russia's actions in any way. On the issue of the same Crimea, the Chinese provided some practical support to Russia.
- What kind of practical one is that?
- For two years, in 2014-2015, they gave Russia loans to refinance the debts of companies for more than $ 30 billion. And they built an energy bridge to the Crimea, since a special underwater cable of such power is produced only in one of the European countries and in China. They did what they could. But they certainly won't shoot themselves in the foot out of love for Russia.
- But is there love for Russia itself? If, say, China has to choose who to "love" more - Russia or the United States, who will it choose?
- We have common interests with China. Both countries are involved in a confrontation with the United States. In China, it began in 2018, and in 2020, against the background of covid, there was also a sharp deterioration in relations. At some point, even before the outbreak of hostilities in Ukraine, China was close to Russia in terms of hostility to the United States. When the "military special operation" in Ukraine began, we simply had a break in ties, and China still has only bad relations.
At the same time, Americans have an understanding: Russia, no matter what it does, does not pose a systemic threat to American dominance in the world economy and cannot claim world leadership. And China is really an existential threat to the United States. Their economic models are incompatible. Therefore, the struggle between the United States and China will continue until one of the parties loses and retreats.
So far, we have a common interest with China: to resist and harm the United States.
- Can China use this as a tool against the United States? Will he help Russia to spite America?
- As I said, they helped us significantly in 2014-2015. Now our stability is based on the fact that, judging by the latest data, we have transferred a significant part of our gold and foreign exchange reserves to Chinese securities. We have about $130 billion in yuan assets now. That is why the actions of the US and the EU led to the arrest of only half of the Russian gold and foreign exchange reserves. And given that the reserves were initially excessive, the situation is not as sad as it could be.
In addition, China has been very actively replacing Europe in recent years in a number of market segments related to the supply of components, industrial equipment, and so on. We have gradually seen a decline in Europe's share and an increase in China's share in trade, last year China was already about half of the European level. I expected China to equal Europe in terms of trade with Russia within about 10 years. But now we have practically a blockade on the part of Europe, energy supplies and individual goods remain, and it is unclear what will happen to them next.
And now, I think China will become our main trading partner either this year or next.
And then Russia's dependence on trade with China will begin to grow at a gigantic pace.
- What is the use of transferring reserves to yuan if it is a non-convertible currency?
- The yuan is included in the basket of reserve currencies of the IMF, although there are indeed certain restrictions, it is not as convenient for making international payments as the dollar and the euro. But the share of the yuan in the calculations has been continuously growing, and in principle it is possible to conduct international trade in the yuan, albeit with somewhat higher transaction costs.
And with China, you can simply trade in yuan, we have had a legal framework for this for a long time. And there are trades in the yuan-ruble currency pair, that is, you do not need to convert them through the dollar, there is infrastructure for this.
And, as I understand it, you can try to use the yuan in settlements with third countries. China generally has a goal - to promote the yuan as an instrument of international settlements. I think what is happening today will give the potential for a powerful breakthrough in this direction. This could be a good moment for China.
- What can we get from China when the volume of trade increases? For example, automakers stop supplying cars and spare parts to Russia. Can China replace them?
- China is the world's largest producer of industrial products of all kinds. I think Chinese automakers will take the places of Korean and European ones. Apparently, they can somehow get production assets.
- Will all these factories in the Leningrad Region, Kaluga and others go to the Chinese?
- I think so. We already have assembly plants of Chinese car manufacturers, for example - Haval. At an earlier stage, the Chinese tried to enter Russia, but they were not very competitive. Now they will come here again - and this will be a powerful export breakthrough for the Chinese automotive industry, after all, Russia is not the smallest market, and the Chinese here, as I assume, will become the dominant force.
- Their cars are bad.
- It's not like that anymore. They invested heavily in improving the quality, going roughly along the path of the Koreans. And now the reputation of Chinese cars as "buckets with nuts" does not correspond to reality, the quality is acceptable. In some ways they may, of course, lose, but in some ways they are comparable to budget models of European cars. Plus, they have competition disappearing in Russia. That is, the Chinese have two directions here. The first is the occupation of the Russian car market where European imports will leave, the second is the gradual replacement of Europeans in the supply of automotive components.
- Once I inadvertently bought Chinese headlights for Volkswagen, then I was very sorry.
- What year was it?
- About eight years ago.
- It was a different reality, then the reputation of the Chinese automotive industry was different.
- In Russia, the fleet is mainly European and Korean, in the coming years, spare parts will be needed for it.
- I think the Chinese will be able to supply them. The same cars are sold in the Chinese market, where they have a much higher localization, and all this will surely go to Russia. Even if the Europeans try to prevent this, then, taking into account the Chinese realities, there will immediately be a huge number of resellers who will provide any flow of spare parts. Although here, of course, it is necessary to talk with experts in the automotive industry.
- A much more serious problem awaits us with the fleet, when Western companies will withdraw the leased aircraft, stop servicing those that will remain in Russia, and will not even sell spare parts. We will stay with the "Superjets", and there are a dozen and a half of them produced per year.
- We can produce more "Superjets"…
- Only their engines consist of French components, which will be gone.
- It's true. But China cannot help us in this regard. The Chinese are in an even worse situation than we are, because their civil aviation programs are even more dependent on foreign components than our Superjet. And if we have the possibility of at least limited production of old and completely Russian models - the Tu-204 or Il-96, then the Chinese have no such prospects.
They probably won't be able to help us in the aviation industry.
- How will China help our "special operations" industrial complex? Does it also depend on supplies from the West?
- It's just easier with our military-industrial complex. Both we and the Chinese have been under almost comprehensive Western sanctions for a very long time. The Chinese have been strengthening in recent years, and we have cooperated with them in the military-industrial sphere. Apparently, cooperation will grow, and I think sanctions will have the least impact on it. The only thing is, due to the complete inability to purchase Western industrial equipment, we will buy more Chinese.
- We received not only equipment from the West, but also technologies and software. Can you count on China here too?
- Of course, it is impossible to talk about all technologies at once, this field consists of thousands of different directions. For some of them, China has already become one of the world leaders, and for others it can only copy something dismally. There is a group of industries where we can have a powerful synergy with China, we can work together.
They will be interested in using Russian developers, mathematicians.
There are areas where they may be interested in industrial cooperation, there are areas where they are able to cover our equipment needs. And they already have enterprises that are under American sanctions as part of the economic war with the United States. Including manufacturers of electronics and certain types of industrial equipment. Such enterprises were simply ordered by God himself to go to the Russian market. Although it is clear that there will be a number of areas where Chinese equipment will not be able to replace European equipment, and Russia will still try to buy it in Europe through some channels.
- Will China be able to replace equipment for the oil and gas sector?
- Some kinds of will be able to. China is doing quite well with equipment for the electric power industry, as well as with transport engineering. If our friends start denying us service, say, "Peregrine Falcons" or spare parts, so China copied similar trains a long time ago, improved and produces. Although there are areas where they will not be able to help us.
- For example, medical equipment?
- In fact, the Chinese are just large manufacturers of medical equipment. This also manifested itself during the covid crisis, when it was they who increased exports, for example, of ventilators.
- And the quality?
- Yes, in general, the whole world bought their equipment, including the Americans, no one really complained. Although medical equipment is a delicate thing, I cannot speak with confidence here, we need to ask narrow specialists.
- Russia, apparently, will have to not only look for imports somewhere, but also put its exports somewhere. Does China need such an amount of gas, oil, metal and everything that Russia supplies to Europe?
- Potentially, yes, it is necessary. China is 80% dependent on iron ore imports, 70% on oil imports. And he will greatly increase gas consumption, as he has set an ambitious goal of reducing CO2 emissions. At the same time, China's relations with the United States are escalating, and this is expressed in economic wars involving America's allies - Canada, Australia and New Zealand. And these are our direct competitors as suppliers of wood, gas, oil and other raw materials to China. Therefore, China will be interested in reorientation.
- Where will the infrastructure for this come from? Experts laugh at the "Power of Siberia": there is no gas at one end, there are no consumers at the other.
- A sharp increase in supplies to China really requires a new export infrastructure - the construction of new pipelines, the expansion of the railway network, the construction of port facilities. This will take time and investment. That is, it is impossible to instantly increase exports to China. In addition, when China becomes a monopoly buyer for many of our goods, it will have the opportunity to dictate prices. And you have to live with it.
This will allow our industry to survive and provide employment, but we will lose money until there is a reduction in foreign policy tensions around Russia.
- That is, until we can return to trade with the West?
- In general, yes. This will be a very high degree of dependence.
- After all, the Chinese do not give investments just like that, they put forward very strict requirements for their share of profits.
- They are not so tough, they behave like normal investors: if they see an opportunity to squeeze you somewhere, they will do it.
- As a result, Russia will have a huge dependence on China, much greater than it is now from the West. What does this threaten us with, besides the fact that the Chinese will start dictating prices?
- If economic dependence reaches a very high level, then China will have the opportunity to use the levers of economic diplomacy to influence our political positions.
- Is China, in principle, inclined to political pressure on those who depend on it?
- China has been developing a good policy of sanctions pressure and economic coercion recently.
In cases where they believe that someone has violated their fundamental interests, they do it very harshly.
This may be for any wrong position on the issue of Taiwan, for supporting any opposition movements within China. They have been waging a sanctions war against Australia since 2020. They didn't do that to Russia.
- Bye.
- You just have to take into account that they can do that too. Before the "special military operation" in Ukraine began, it was believed that China would reach the level of the European Union in trade with us for another ten years, and in the meantime we would be engaged in developing ties with other Asian countries. And by the time Europe reduces its importance, we will have, in addition to China, good trade with other countries. But sanctions have already dealt a blow to our relations with South Korea and Japan. Now everything has accelerated, and I think we will have a complete reorientation to China within a year or two.
- If China decides to put pressure on a partner, does it concern the position on some purely Chinese matters, such as relations with Taiwan, or may it want to correct something in Russian domestic policy?
- What the Chinese are good at as partners, for which many people love them, is their non-interference in internal affairs.
- That is, they will not demand respect for human rights and other "nonsense"?
- They won't. And there is a concrete example that dates back to the 1990s. He played an important role in creating an atmosphere of Russian-Chinese trust. If you remember, there was a period when the Communists controlled the executive power in many Russian regions and had the largest faction in the State Duma. They showed China in every possible way that they love it and want to be friends. But China, having such a trump card, did not take a single step. They had no activity, except for inter-party ties and joint trips to the Mausoleum. The leadership of Russia back in the time of Yeltsin, as I understand it, appreciated it. Therefore, there is a certain level of trust.
- In the 1990s, China could not have much influence on anything.
- They had an opportunity to get into politics with us, but they didn't use it.
- They did not help Russia in the 1990s the way the West helped.
- Our entire defense industry has survived at the expense of China. That is, the Chinese still played their role.
- It turns out that not directly, but China can actually support the "special operation" in Ukraine? Because sanctions are designed to stop the fighting, and China can smooth out their effect for Russia?
- It would be correct to formulate it this way: China will not spoil relations with Russia for the sake of pressure towards ending the "special operation".
Western sanctions will not be lifted, even if they are stopped now, they are designed to destroy the Russian economy and lead to regime change. And China is clearly not interested in this.
The Chinese do not like the "special operation" in itself, they were surprised by it, there is a statement by Foreign Minister Wang And on this occasion, but they do not need Russia's defeat.
- It turns out that China is the only beneficiary in this situation. Is he sitting quietly and waiting "for the enemy's corpse to float by"?
"That's right. Armed conflicts, as we know, benefit most from those who do not participate in them. In fact, all these events guarantee China's victory in the new Cold war. Everyone involved in this will suffer the heaviest economic losses, and China - hardly. It will probably be affected by the rise in energy prices, but strategically its position will have to strengthen. And Russia will become economically dependent on it. Another important factor: after the introduction of extreme sanctions against Russia, the United States has no tools left to deter it, except the military. Accordingly, significant American military forces will be tied to Europe and will not be able to be used to contain China in Asia.
