Valdai Club

The political and economic spheres of Russia-China relations have a life of their own.

Theses for the Russia-China conference in Shanghai (March 25−26, 2016)

1. Russia and China: the project is becoming even more complex. Preserving the system: cold at the bottom (economy), hot at the top (politics)

Against the backdrop of the system-wide (economic and political) rise of China, ongoing sanctions against Russia, declining hydrocarbon prices and so on, Russian-Chinese relations are looking increasingly asymmetrical.

On the one hand, Russia’s air strikes in Syria and the possibility of peace talks in Damascus based on an agreement with the United States has confirmed Russia’s global military and political capabilities. Beijing, Washington and other world capitals now clearly realize that Moscow has returned to big politics, and did so not as an observer, but a creator and initiator of particular doctrines.

On the other hand, Russian-Chinese trade and economic relations are marked by weakness and one-sidedness, and Russia is taking too long to turn around and face the east, and so on. All of this keeps intact and sometimes reinforces the skepticism on behalf of particular Chinese circles regarding Russia’s economic revival. It looks as if the political and economic spheres of Russia-China relations have a life of their own. Many in China and Russia are talking about the difficulties involved in developing Siberia and the Far East (although some progress has been made already); however, everyone admires Vladimir Putin’s decisive military and geopolitical moves.

The adoption of the law on security in China can be, perhaps, attributed to Russia’s swift moves in the Middle East. Under the law, the Chinese military can now operate outside of China. Theoretically, China and Russia could jointly initiate – within the UN Security Council or other institutions – a new security system in the Middle East, without leaving behind the old (conventional) Arab-Israeli conflict, the Palestinian issue, and so on.

Against this backdrop, the United States is trying to make the new type of China-US relations a counterweight to Russia-China relations. Their relations are based on enormous amounts of trade and investments (the economic aspect), but there’s nothing that makes their relations appear like a geopolitical alliance. On the contrary, the contradictions are mounting all the way from the controversial issue of the islands in the southern seas to China’s attitude toward the TPP project sponsored by the United States.

The asymmetry also makes itself felt in the diametrically opposed approach of Moscow and Beijing to the Russia-Ukraine conflict.

On the one hand, the specifics of the Russia-China rapprochement in the sphere of global and regional security boil down to the fact that both countries have come close to the line that separates partnership from a military-political alliance. Currently, neither Moscow nor Beijing wants to cross this line, nor do they have plans to establish a bilateral military alliance. Within the existing partnership, many informal attributes of an alliance are clearly present and are effectively developing, such as regular military (land and sea) exercises in bilateral and collective (SCO) formats, defense minister meetings, etc. The Russia-China bilateral Treaty of 2001, Article 9 of which stipulates consultations in the event of a threat to one of the parties from third countries, is the basic document underlying our partnership.

On the other hand, China is implementing a number of important transport/infrastructure projects with Turkey and Ukraine, and officially supports Kiev with regard to the “Russian annexation of Crimea,” etc. However, informally (at the expert level), our Chinese colleagues speak about “friendly neutrality” with regard to Russia as it applies to Ukraine, or even their full support. Clearly, Beijing has to engage in this double game, because it has a number of similar issues (Taiwan, etc.) itself.

2. China and Russia as part of China’s One Belt – One Road megaproject

The Chinese megaproject is gaining momentum with each passing day. Russia has so far been affected by this acceleration only insignificantly. In general, despite a slight slowdown in its economic growth, China is boiling with ideas, money and projects, some of which go to the “priority” – Central Asian – states, which are the geographical starting point of the Great Road.

Russia is not eager to wait in that line, offering instead its own vision of how to combine the three projects: the Silk Road Economic Belt, the Eurasian Economic Community and the SCO, which was officially adopted by President Vladimir Putin and President Xi Jinping in the form of a joint statement in Moscow on May 8, 2015. Truth be told, a host of issues, both at the bilateral (Russia-China) and the multilateral levels, with the participation of the Central Asian region, have remained unresolved, even after this document was formally signed. Most of the outstanding issues concern two subjects: transportation and hydrocarbons.

The construction of a Moscow-Kazan high-speed rail is underway. At the expert level, it's necessary to diversify the discussion about the Chinese megaproject and to give it a structure. Two key components can be clearly seen, namely, transport and hydrocarbon energy, as they apply to the Central Asian region. In other words, we have a virtual triangle – Russia-Central Asia-China – which is now focusing on transport and energy (plus a raw material processing joint venture, developing local/light industry, water resources, etc.). However, this is all realistic thinking as there is a long way to go before we reach the practical implementation of any real-life projects.

Russia's plan to broaden the scope of cooperation in building transit corridors with China and other Central Asian countries runs up against the Central Asian countries’ plans to use their and China’s territories to form a new (their own) Eurasian corridor, which would become a source of foreign exchange earnings based on transportation of transit goods.

Clearly, additional transit corridors, including subsequent communication with the SCO member states and linking with China’s main railroads, will become actual competitors to the Trans-Siberian Railroad, primarily due to comparatively low freight rates.

Formally and informally, our Chinese colleagues support the idea of creating the Eurasian Beijing-Moscow high-speed transport corridor. Perhaps, in theory, this project could be mutually beneficial. It will clearly expand the export market for Chinese-made high-tech products and streamline the trade structure between China and Russia. Russia will get unique experience and acquire technology for building and upgrading high-speed railroads.

According to individual Russian experts, Russia is in fact becoming an increasingly insignificant partner for the Asia-Pacific Region, whereas the importance of the latter for Russia will inevitably increase, as the bulk of global economic activities are shifting toward that region.

The majority of Russian pundits still believe that the prospects for Russia’s full inclusion into economic and integration processes in the Asia-Pacific Region and Central Asia remain extremely important and necessary. This will give Russia the opportunity to start building high-tech transit and transport systems and use the few remaining capabilities that have not yet been completely lost.

3. Confluence, Chinese style. Does China need to consolidate its positions?

- The Russian-Chinese and Central Asian confluence (dui ze) has clear economic and geographical outlines and fairly detailed descriptions of the tasks of China’s individual regions in the project’s implementation. For example, the provinces of the upper and middle reaches of the Yangtze River are advised to cooperate with their partners in the Volga Region. In general, China’s inland areas are oriented toward cooperation with the central, southern and western parts of Asia. The Xinjiang Uyghur Autonomous Region is assigned the role of a “window” and “vanguard” in the movement to the West by land.

- There are at least six major routes in the Silk Road Economic Belt (SREB): 1) the aforementioned Beijing-Moscow high speed railway; 2) the China-Mongolia-Russia link; 3) the China-Central Asia-West Asia route; 4) the China-Indochina route; 5) the China-Pakistan route; and 6) the Bangladesh-China-India-Myanmar route.

- Although Russian and Chinese scholars also have other routes in mind, on the whole, the logistics and general direction of the presented routes coincide. Moreover, China has already developed a concept in this respect: “dungwen-beiciang-nanxia-xijing” （东稳 北强 南下 西进）: “stabilize in the East − strengthen your positions in the North − come down in the South − move forward in the West.” This formula is not an official doctrine for the time being, and can sooner be interpreted as a long-term stratagem for using transportation as an exit from the Celestial Empire, which is being actively carried out by President Xi Jinping.

It's clear that Russia should pay attention to China’s desire to strengthen its positions in the North, which primarily means Beijing’s intention to gradually carry out long-term projects in Russia: building transport and logistics hubs and investing in infrastructure projects, which also meets Russia’s interests.

4. The Great Road and challenges of international terrorism. The role of China and Russia

With Russia’s turn to the East and partially to the North (the revival of the Northern Sea Route may be described as part of the belt and road), the situation has also improved: the number of areas where Russia and China maintain technologically intensive cooperation according to the world’s best standards is growing. In theory, it is possible to organize an “Asian granary” as part of the Belt and an element of collective food security in Central Eurasia (Altai, Western Siberia and Northern Kazakhstan).

During the period of their independence, Central Asian countries made repeated attempts to establish regional associations and expand transport communications, but historical factors, political risks and uniformity of their economies impeded their joint efforts to create a common economic region. Proceeding from its powerful financial and economic resources, China gave a general impetus under its Belt and Road Project (One Belt-One Road) by pulling under its wing the bulk of countries that could not come to terms before, especially on transport and energy issues.

However, at present China’s resources are obviously inadequate for completely neutralizing potential challenges and threats of international terrorism, especially considering ISIS's penetration of Afghanistan and potentially some sections of the Road.

The duration of the current Belt and Road projects and the implementation of new ones directly depend on their security. How does China guarantee the security of its projects? Importantly, Chinese experts adequately assess the risks, but their idea about management is vague. Chinese analysts reason like this: since the Silk Road concept is based on equality, respect of the interests of others and a striving for a common gain, and rejects the Cold War mentality, it will automatically produce new rules and standards, replacing confrontation and competition with long-term cooperation. Needless to say, such a simplified view is very far from reality.

Most probably, transport communications in Russia, China and Central Asia will develop more intensively in 2016 because of the presence of China’s powerful financial and political resources (the opening of the Asian Infrastructure Investment Bank, AIIB etc).

The One Road-One Belt mega project is bound to encourage the development of the transport track in all directions, primarily Eurasia, although there may be some issues from the width of the tracks planned by China to geographical directions, most of which will bypass Russia altogether or will pass through half of its territory (upgrading of the Moscow-Beijing railroad via Kazakhstan).

In this case, Moscow is not going to declare a “transport war” on Beijing or try to create its own alternative of the Russian Silk Road. This is impossible for political, financial and technical reasons. China has presented to its neighbors, including Russia, a fairly large choice of beneficial and acceptable transport options (from six to eight).

Russia is no exception. To the contrary, it should use the opportunity to adapt Chinese technology for the construction of high-speed railways to Russian conditions and its complex terrain. Moreover, the transport dimension may play a major role in implementing the strategy of confluence of Central Asia, Russia and China by linking the EAEU, SCO and SREB with new roads and infusing fresh blood into their so far feeble bodies.

The conclusion is obvious: we must survive, endure and fight, seeking our benefits and placing stakes on our domestic resources but without ignoring Chinese or other Asian technology. There are no good or bad countries, but there are strong and weak countries. By the same token, there are no good or bad nations but there are hard-working and stalwart nations and peoples that are coddled and spoiled: some by high technology and others by expensive oil.