China Power

When China, Russia Cosy Up

The US need not fear closer ties between Russia and China. They’ll face numerous obstacles in their relationship.

There’s been much discussion of the signing this month of the ‘Russian-Chinese Intergovernmental Memorandum on Cooperation in Modernization of the Economy.’ This agreement is just one of a string of recent cooperation arrangements between Moscow and Beijing. But what makes this one notable is the seemingly intentional mirroring of last year’s Russia-EU ‘Partnership for Modernization’ memorandum. With that earlier agreement apparently going nowhere, it looks like Russia really might be looking eastward. But what does that mean for Moscow’s relations with the United States?

Though it may be tempting to see the warming of Russia-China relations as a distraction and detriment to US-Russia relations, this view overlooks some major hurdles facing Beijing and Moscow. With its surging economy and powerful position as the United States’ analogue in the East, China may seem like a natural partner to Russia, but there are three fundamental issues standing in the way of a ground-breaking partnership.

First, energy is – and will continue to – serve as the foundation of Russia-China economic ties, making the diversification of trade a long and difficult process. It’s a reality that the Kremlin has become all too familiar with over a decade. Trade between the two nations – which, according to Prime Minister Vladimir Putin, will hit $70 billion this year – remains defined by energy. Even if both governments pursue diversification in the fields listed in the recent memorandum – China is to assist Russia in areas like high-speed rail network, shipbuilding, and alternative energy – this won’t in the near future serve as the foundation for sustainable economic integration. These projects involve high-level cooperation between some of the largest Russian and Chinese firms and thus face significant logistical difficulties (such as Russia’s notorious bureaucracy) and political difficulties, as was demonstrated with recent gas pricing disagreements.

Second, there’s a fundamental inequality between the two trading partners in terms of energy trade. Steering the negotiations is China, which doesn’t necessarily need Russia to fulfil its energy needs. Indeed, in recent years, China has looked beyond Russia to other gas producers in the Middle East and Central Asia (another point of contention, since Russia considers Central Asia a privileged sphere of influence). On the other hand, China is the only nation that serves as a major client for Russia, outside of Europe. Such an unbalanced relationship promises trouble for Moscow, and the recent foot dragging over a gas deal between the two indicates that the energy trade relationship isn’t exactly mutually beneficial.

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And, despite all of the meetings and agreements between the two nations, Russia still views China as a potential future enemy. Once lucrative Russia-Chinese military trade has all but disappeared. Many of Russia’s military technologies, which have fed China’s military industrial complex, were refitted and undercut Russia’s military sales abroad. Further exacerbating the problem is the overwhelming Chinese presence in the sparsely populated Russian Far East (RFE), which many have described as the basis for a Chinese takeover of the area. Chinese investors have invested nearly $3 billion in the RFE, three times the amount the Russian federal government has invested there. Even the Kremlin has acknowledged this disparity of influence, and has expressed the need to partner with China to cooperatively develop the RFE. But Chinese investors have yet to indicate any significant desire to invest in Russian enterprises or RFE’s infrastructure.

Ultimately, history offers ample evidence that appearances of major realignments are often deceptive – especially when economic and political realities set in. Indeed, the 1996 birth of the Shanghai Cooperation Organization (SCO), which many described as the launch of a Russia-China anti-US bloc, has done little to alter global economic or political realities.

Closer cooperation between Russia and China may still complicate Russia-US relations, and it undoubtedly offers the Kremlin a new array of foreign policy tools. But although policy makers in Washington will no doubt keep a wary eye on any Russian attempt to play the US off against China, for now at least, the cosying up of the two is no cause for alarm.

John K. Yi is an Alfa Fellow currently living in Moscow, Russia. He received his M.A. in Eurasian, Russian, and Eastern European Studies at Georgetown University, focusing on Russian foreign policy in East Asia and in the Six Party Talks.