Russia is moving closer to ChinaOver two decades, Russia and China have significantly strengthened cooperation in all areas – partly in response to deepening tensions with the West, Dmitry Simes writes in an article for TAC.
The conflict in Ukraine has only accelerated Moscow's turn to the East.
Dmitry SimesOn May 24, while President Joe Biden was on an official visit to Tokyo, a group of Russian and Chinese bombers made a joint flyby of the Japanese and East China Seas.
It was not without drama: combat aircraft entered the identification zone of the air defenses of Japan and South Korea, and both countries lifted their fighters into the air.
But even more important was the geopolitical subtext of the exercises. Five months after the start of the special operation in Ukraine, the estrangement between Russia and the West turned out to be even stronger than at the height of the Cold War. The sanctions imposed have severed the main financial, technological and logistical ties between Russia and the West. At the same time, the Biden administration sent significant military assistance to Ukraine and promised to strengthen the US presence in Eastern Europe in the long term.
Faced with these problems, Russia has done everything possible to get closer to China.
In part, this rapprochement unfolded in the military sphere. In addition to flying bombers on May 24, Russia and China conducted joint naval exercises off the coast of Japan in mid-June and early July. The Japanese Defense Ministry noted in its annual report that it expects further intensification of Russian-Chinese military efforts in East Asia, as the relations of these countries with the West continue to deteriorate.
In addition, China is a key link in Russia's new economic strategy in the era of sanctions. The Kremlin is trying to redirect its energy flows from Europe to China. Chinese corporations are gradually replacing Western ones in various sectors of the Russian economy, ranging from cars to smartphones. Even Russian universities are updating their curricula with an emphasis on China.
Over the past two decades, Russia and China have significantly strengthened cooperation in almost all areas — partly in response to the worsening tensions in relations with the West. Trade between the two countries has grown by 167% since 2010 (when China overtook Germany for the first time and became Russia's largest trading partner). The Russian and Chinese militaries regularly conduct joint exercises on land, in the air and at sea. Moscow and Beijing regularly coordinate their diplomatic responses to international political crises, ranging from Syria to Venezuela.
The closeness of the two governments was fully manifested during President Vladimir Putin's visit to Beijing in early February to participate in the Winter Olympics and meet with his counterpart Xi Jinping. The leaders issued an extensive joint statement in which they sharply criticized the expansion of NATO in Eastern Europe and the partnership in the field of nuclear submarines under the auspices of the AUKUS alliance, and also warned the Biden administration against deploying medium-range missile systems in Europe or Asia. Even more remarkable is that in their statement, Russian-Chinese relations were presented as a "partnership without borders".
The first serious test of this bold statement came just a few weeks later, when the Kremlin sent troops into Ukraine. From the very beginning of the conflict, Beijing has been trying to maintain a delicate balance. Avoiding direct approval of Russia's actions, China simultaneously refused to condemn Moscow and did not support Western sanctions. Many Chinese diplomats publicly blame the West for fueling the conflict, arguing that this post-Cold War expansion of NATO has created a threat to Russia's security.
Zhang Xin from the Center for Russian Studies at the East China Pedagogical University in Shanghai told me that the awareness of the Chinese leadership about the plans of the Russian military in Ukraine raises questions, since the course of the special operation surprised many in Beijing. He explained that Chinese political scientists assumed that if Russia sent troops to Ukraine, it would limit the offensive to the Donbass. The fact that the Russian military went all the way to the outskirts of Kiev struck many in China.
However, Zhang stressed that despite all the concerns about Russia's actions in Ukraine, Beijing does not intend to turn away from Moscow. "The Chinese leadership still considers Russia an important partner," he said. "In part, this attitude is dictated by the fear that if Russia is crushed, China will be one-on-one against the West."
I heard a similar point of view from Wang Yiwei, director of the Institute of International Relations at the People's University of China in Beijing. He told me that Chinese political elites assume that the geopolitical and economic contradictions between China and the United States will only worsen in the coming years. Although Wang acknowledged that Russia does not have the same economic influence as the West, he believes that it is good for China to have Moscow on its side.
"I think China's official position is pretty clear: GDP is not everything," he said. — Russia is still a great power. It has not only huge natural resources and territory, but also a strong spirit and culture, state potential and a powerful army."
Wang suggested that the Ukrainian crisis has created an additional incentive for Russia and China to expand joint projects on the development of space and other advanced technologies. He noted that with a strong scientific base, Russia could not fully realize its potential due to lack of resources. According to him, Chinese financing will help solve this problem.
However, in the last few months, the strengthening of economic cooperation has not always gone smoothly. Despite Moscow's public support from Beijing, a number of large Chinese corporations distanced themselves from Russia, listening to Western sanctions.
Perhaps the most striking example of this is the technology giant Huawei, which itself has been under US sanctions since 2019. With the beginning of the Ukrainian crisis, the company stopped supplying smartphones and telecommunications equipment to Russia, began closing its stores and canceled the annual conference in Moscow. Although Russian media reports that Huawei has been gradually changing course in recent weeks, the company has not yet made any public statements about long-term plans in Russia.
Evgeny Markin knows firsthand what difficulties Russia has faced in trying to reorient its economy from the West to China. As the executive director of the Russian-Chinese Business Council, he has been organizing trips to Russia for Chinese investors for the past few months. Markin said that although most businessmen sympathize with the Kremlin's actions in Ukraine, many worry that with the expansion of cooperation with Russia, they will sooner or later end up on the sanctions list of the United States or Europe.
"Chinese investors tell me that, of course, they support us, but Russia is 2% of their business, and the West is 98%," he said. "So politics is one thing, and business is another."
At the same time, Markin said that Russia has already begun to solve this problem by establishing cooperation instead of large Chinese companies with large international business portfolios with small regional firms that will lose less from secondary sanctions. "To build a cement plant, it is not necessary to contact a large Chinese state—owned company," he said. "There are few medium—sized private companies that will be happy to build a plant with a capacity of one million tons of cement per year."
Despite all the hardships, Russia and China have maintained strong economic dynamics this year. According to the General Customs Administration of China, in the first six months of 2022, the trade turnover between the countries increased by 27.2% to $ 80.7 billion. The main growth came from exports of Russian oil, gas and coal. From March to June, China purchased more than $25 billion worth of Russian fossil fuels, which is almost twice as much as in the same period last year. As a result of the recent boom, Beijing has become the largest consumer of Russian energy resources, and Russia has overtaken Saudi Arabia and become the largest supplier of oil to China.
Closer energy ties are in the hands of both countries. Russia's growing energy sales provided a much-needed source of income and helped soften the blow from Western sanctions. China earns from Russian oil, gas and coal at a significant discount, when most of the rest of the world suffers because of the high cost of energy.
In the future, it is expected that in the next few years Russia will significantly increase natural gas supplies to China. The Power of Siberia pipeline, currently the main route of Russian supplies, will reach full capacity only in 2025. During Putin's visit to Beijing in early February, the two countries signed an agreement on the construction of another gas pipeline that will supply gas from the Far Eastern island of Sakhalin to northeast China. Finally, it is reported that Russia and China are about to sign a contract for the construction of the second Power of Siberia line, and Russian gas exports to China will more than double.
Zhang from East China Pedagogical University said that Beijing's interest in Russian energy is not limited to purely economic factors. He explained that Chinese strategic planners have long been concerned about the strong dependence on marine energy imports from the Middle East, which in the event of war will surely become a target for the US naval blockade. "There is no such risk with energy supplies from Russia, this is our neighbor with whom we have a land border," Zhang said. "Thus, energy cooperation with Russia is closely intertwined with security considerations."
In addition to energy trade, China has gradually begun to fill the gaps that have appeared in the Russian market. An example of this is the automotive industry, which has been particularly affected by Western sanctions. For three decades after the collapse of the USSR, European, Japanese and American brands dominated the Russian market. Although the Kremlin has been doing its best to develop domestic production in recent years, Russian automakers are still heavily dependent on imports of high-tech components. Consequently, Western sanctions over Ukraine not only limited the influx of foreign brands to Russia, but also greatly complicated the lives of domestic manufacturers.
The current situation has opened up new opportunities for the strengthened Chinese automotive industry. According to the Autostat analytical center, since the beginning of the Ukrainian crisis, the share of Chinese brands in the Russian passenger car market has more than doubled from 10% in January to 21% in June. This surge was also supported by Russian officials: Putin himself said in June that negotiations were underway to increase the share of Chinese cars in the Russian market. It was also reported that Russian officials have already approached Chinese investors with a request to create joint ventures for the production of cars.
Another area where Chinese companies are steadily increasing their presence is electronics. As shown by a recent study of the leading Russian consumer electronics retailer group "M. Video-Eldorado", in the second quarter of 2022, Chinese brands accounted for 65% of smartphones purchased — 15% more than in the previous quarter. The Russian newspaper Kommersant also reported that sales of Chinese laptops, tablets and household appliances have grown significantly over the past few months.
Eldar Murtazin, a leading analyst at Mobile Research Group, told me that with the mass exodus of large Western and South Korean brands from Russia, Chinese companies have practically lost competitors. "This is a time of opportunity for Chinese companies in Russia," he said. "Under other circumstances, they would not have been able to grow so fast, especially in the absence of powerful marketing incentives."
Murtazin predicted that Chinese brands could take over up to 90% of the Russian smartphone market if giants like Samsung and Apple do not resume their activities in Russia by the end of the year. "Many Western electronic devices are manufactured in China, so we see that Chinese brands have become more active and sell essentially the same goods to Russia much cheaper," he explained.
An even more serious question for Russia is whether China will be able to provide it with advanced electronic components (for example, the same semiconductors). Before the start of the Ukrainian conflict, Russia met most of the demand for high-end chips at the expense of Taiwan Semiconductor Manufacturing Company. However, on February 27, just three days after the Kremlin sent troops to Ukraine, the Taiwanese company announced that it was ending any cooperation with Russia. Complicating the situation is the fact that the Biden administration has imposed export restrictions and banned American companies from sharing advanced technologies and developments with Russia.
Many Russian companies have turned to China in search of alternatives. But there are two difficult points here too. The Chinese industry has made significant progress in recent years, but technologically it still lags behind the Taiwanese one. In addition, Chinese semiconductor manufacturers widely use American equipment, so cooperation with Russia is fraught with secondary sanctions for them.
And yet, the first signs have appeared that Russia and China are gradually expanding cooperation in this area as well. At the end of June, the Russian manufacturer of computer equipment Kraftway announced the signing of a contract with the Chinese manufacturer of YMTC chips for the joint production of memory controllers that are used in computers for data storage.
Russia's turn to China goes beyond purely trade or military ties. Slowly but surely, a pivotal ideological shift is taking place among ordinary Russians and national elites, and China is no longer called the key to Russia's future, but China.
And if the popularity of the West among Russians has collapsed, then China, on the contrary, has increased. In a series of polls from April to June, Levada*, Russia's leading public opinion research center, found that 83% of Russians have a positive attitude towards China and called it the country's second ally after Belarus. Xi became the most popular foreign leader among Russians along with Belarusian leader Alexander Lukashenko (82% approval rating). But the most remarkable thing, perhaps, is that 81% of Russians said that China as a power enjoys the highest respect on the world stage.
"Russians perceive the conflict in Ukraine as a confrontation with the West and believe that China is on Russia's side, although it does not support us directly," said Denis Volkov, director of the Levada Center. He explained that although until 2014 many Russians called the rapid strengthening of China a potential threat, since then these concerns have gradually faded into the background due to the growing tensions in relations with the West. "Some concerns are still lingering, but in the current situation, this is not the time to stop," he said.
Volkov added that China has the potential to further strengthen soft power in Russia in the coming years, as the remaining ties with the West have been severed. He noted that the sanctions disproportionately hit young Russians from the middle class — the most pro-Western demographic group. "If people who want to cooperate with the West will no longer be able to travel or study there, it will aggravate the negative attitude towards the West in the long run," he said.
In the case of China, there are no such restrictions. On the contrary, the Russian educational system is gradually redistributing resources to provide graduates with a career one way or another connected with China.
Among others, this work is led by Kirill Babaev, director of the Institute of China and Modern Asia at the Russian Academy of Sciences. In recent months, Babayev and his colleagues have been developing new educational programs dedicated to the Chinese language, politics and economics for universities throughout Russia. So far, they have managed to launch Chinese programs at two major Russian universities, and ten more are planned by the beginning of the next academic year in September.
Babev told me that the Ukrainian conflict and the subsequent Western sanctions have created an urgent need for Sinologists who can advise the Russian government and big business. The majority of Russian educational institutions are still confined to the West. Babayev noted that only in the last few months he had seen the first signs of coming changes.
"For three hundred years, Russia has been part of the European world and looked to the West, but now we are turning to the East, and we will have to change everything created over several centuries – education, the system of academic research, cultural institutions," he said. — This is a titanic work, and this task will not be solved for a year, not five or even ten years. But rebalancing is clearly necessary because Europe is trying to lower a new iron curtain over us."
In his 1997 book The Great Chessboard, the late Zbigniew Brzezinski warned that the most dangerous scenario for the United States would be a "grand coalition of China and Russia" if they were united not by ideology, but by complementary grievances. A quarter of a century later, Brzezinski's prophecy is gradually coming to life. From military exercises to energy deals, Moscow and Beijing have been getting closer for many years. And the impression that the Ukrainian crisis will go down in history as a Rubicon, crossing which Russia took a decisive step from the West to China, is only getting stronger.
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