Geoeconomics Drivers of the Russian Chinese Partnership After the Pandemic

Over the last decade, the global political scenario has been shaped by a new economic “cold war”, between the United States and China. In this framework, Russia is trying to regain political priority globally, developing geoeconomics relationships with China. In fact, the Sino-Russian partnership strengthened after the Russian annexation of Crimea in 2014, leading to a significant deterioration of the cooperation between Moscow and the West. Moreover, Western sanctions on Russia have forced the latter to look in China for investment prospects. Currently, as the US is losing its world superpower status due to its failure to lead on the Covid-19 crisis, Western leaders fear that the Russian-Chinese partnership could threaten the geopolitical equilibrium. As Charles A. Kupchan writes in an article for Foreign Affairs, President Biden “needs to work the other side of the equation by weakening China’s own international partnerships (…) He can’t stop China’s rise, but he can limit its influence by trying to lure away from China its main collaborator: Russia”.

However, the Sino-Russian marriage is much more complex than it seems. An interesting analysis is given by Jonathan E. Hillman, director of the Reconnecting Asia Project at the Center for Strategic and International Studies, who examines the China-Russia connectivity and highlights the structural constraints of this growing partnership.

In 2006, President Putin declared Moscow and Beijing would have increased their bilateral trade to at least $60 billion by 2010. After a period of stagnation, the trade grew up to $100 billion in 2018. Eventually, the two leaders promised to reach $200 billion in trade by 2024. Yet, analyzing those numbers, an evident disparity shows up. Indeed, if China accounted for 15.5% of Russian total trade in 2018, Russia only accounted for 0.8% of its partner’s total trade. Russia’s largest export – energy, is strategically important, but as the trade relationship becomes even more lopsided, China stands to command more influence as a buyer than Russia does as a supplier, Hillman writes. Recently, energy exports intensified because of the increasing Chinese demand. As reported by Vita Spivak in an article for the Carnegie Moscow Center, “Oil and gas currently account for over 60 percent of Russia’s exports to China, and Beijing’s push toward greener energy will likely only increase the role of hydrocarbons in bilateral trade (…) Accordingly, Chinese demand for gas will double by 2035, forecasts McKinsey.”

However, President Putin declared that the two countries are aiming at diversifying the trade. Some examples that can be made are military armaments, as Moscow provides 70% of Beijing’s arms imports between 2014 and 2018. Yet, competition between the two countries appears in this field too. Indeed, China has become the global second-largest arms producer, outclassing Russia, although Russian firms have accused China of illegally copying Russian military hardware, reported Hillman.

In May 2015, President Xi Jinping signed an agreement with Putin establishing common transnational political-economic projects – Xi’s Belt and Road Initiative (BRI) and Putin’s Eurasian Economic Union (EAEU). The two economic initiatives, although slowed by the pandemic, are encouraging collaboration between the two countries. At first, Russian entrepreneurs’ difficulties to enter the Chinese market led to skepticism, which did not stop the trade to grow though. One common interest is given by the shared need to improving infrastructures across the Eurasian territory. “Despite sharing a 2,600-mile border, China and Russia have only a handful of railway crossings and roughly 25 crossing points in total. Three of the BRI’s six proposed corridors pass through the EAEU. Given China’s ambitions, and Russia’s need for better infrastructure, the BRI should be a natural match for greater investment”, Hillman observes. One of the most remarkable cross-border projects is the Power of Siberia pipeline, a 4,000 km-long gas transmission system aimed at distributing gas from the production centers in Eastern Russia to the Far East and China, which was brought into operation on December 2, 2019.

The current situation shows that the ongoing pandemic did not have such a significant impact on Sino-Russian trade. In fact, projections predict that the trade will set another record, surpassing $130 billion. Yet, some sectors are facing some issues, for instance the most affected one is the food sector. Russia is one of the main fish and seafood exporters to Beijing, but Chinese authorities have established restrictions and rigid sanitary protocols due to the possibility of frozen products transmitting Covid. For this reason, some fishing industries are suffering  tremendous losses and are willing to look away from the Chinese market. Anyway, experts think food exportations from Russia to China are set to increase in the next future.

For the next few years, even though trade is expected to grow, experts foresee that the two countries will still face some barriers. Indeed, Chinese investors are often doubtful to invest money in Russia’s projects due to its tentative economy, corruption, and red tape issues. On the contrary, Russia is eager to increase its partnership with Beijing. As Hillman reports, “the possibility that Russia could lean again toward the West and away from China seems far-fetched at present. China is not threatening enough, nor the West welcoming enough”.

 

 

Bibliography

China and Russia: Economic unequals. (n.d.). Center for Strategic and International Studies |. https://www.csis.org/analysis/china-and-russia-economic-unequals

Cockburn, P. (2020, March 27). Patrick Cockburn: The US has faced decline before – but nothing like what’s to come. The Independent. https://www.independent.co.uk/voices/us-trump-world-decline-coronavirus-brazil-bolsonaro-a9430566.html

Huang, Y. (2021, September 16). The U.S.-China trade war has become a cold war. Carnegie Endowment for International Peace. https://carnegieendowment.org/2021/09/16/u.s.-china-trade-war-has-become-cold-war-pub-85352

The right way to split China and Russia. (2021, August 19). Foreign Affairs. https://www.foreignaffairs.com/articles/united-states/2021-08-04/right-way-split-china-and-russia

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