Russia and China are strategic partners with similar and, at times, identical interests. Of course, this does not mean there is no economic rivalry between their companies, many of which, in particular energy companies, are competing for markets, at times with the support of their respective governments.
Prime Minister Vladimir Putin will go to China on October 11-12 as part of the protocol on the Russian and Chinese prime ministers’ annual meetings agreed in 1997. “The sides plan to discuss a wide range of issues regarding bilateral economic, research, technological and cultural cooperation,” reads the official statement of the Russian government’s press service. “They will focus, in particular, on improving the system of mutual trade, expanding investment interaction and cooperation in high-tech spheres, and implementing long-term power generation projects. They will also share their views on high-profile issues on the regional and international agenda.”
What stands behind this dry, official statement? The prime ministers of Russia and China are responsible primarily for economic development, and so their meetings usually focus on bilateral trade and economic cooperation.
Economic cooperation with China is a vital part of Russia’s foreign economic policy. In 2010, China for the first time became Russia’s largest trade partner, surging ahead of traditional leaders Germany and the Netherlands. China is a major investor in the Russian economy, the fifth largest in 2010 after Britain, the Netherlands, Germany and Cyprus. It is also one of the top three destinations for Russian tourists: between 2 and 3 million Russians visit China annually, while the number of Chinese tourists to Russia is three to four times smaller.
During Putin’s previous visit to China in 2009, the sides signed over 20 agreements on bilateral cooperation projects, including agreements on the mutual notification of ballistic missile and carrier rocket launches and on the establishment of culture centers; memorandums of cooperation to improve customs control and mutual understanding in organizing and developing high-speed rail transportation in Russia; cooperation agreements between Russian special economic zones and Chinese economic and technological development zones; and several agreements between financial organizations on funding projects in Russia. That visit significantly boosted bilateral investment cooperation.
Oil and gas cooperation holds pride of place in the bilateral relationship. Russia is one of the top five oil exporters to China, which needs the commodity for its rapidly growing economy. Russia started shipping oil to China through the Skovorodino-Daqing oil pipeline on January 1, 2011. When the pipeline reaches its design capacity of 15 million metric tons a year, Russia could become China’s biggest oil supplier. The pipeline is an offshoot from Russia’s only eastward-bound oil pipeline, running from East Siberia to the Pacific and playing a crucial part in diversifying Russia’s oil exports.
However, bilateral relations in oil exports have recently been disrupted by differences over oil prices. The sides have also been in talks on Russian gas deliveries to China for several years but yet cannot come to terms on pricing. However, the impact of these differences in bilateral relations should not be overestimated.
Russia and China are strategic partners with similar and, at times, identical interests. Of course, this does not mean there is no economic rivalry between their companies, many of which, in particular energy companies, are competing for markets, at times with the support of their respective governments. Yet economic rivalry between companies should not be seen as competition between states, because competition can exist even between close allies. Relevant examples are the potato war between the United States and Canada in 1982-1983, the banana war that involved the United States, Britain, the EU and several Latin American countries, and perennial trade conflicts between the United States and Japan. Though acute, these economic conflicts have not affected the countries’ political ties, which rest on the solid foundation of alliance.
However, there are genuine problems in Russian-Chinese trade and economic cooperation, such as a level of bilateral trade far below the potential, Russia’s declining share of China’s foreign trade, the small share of machinery and equipment in Russian exports to China, and so on. But these problems are mostly due to the general state of the Russian economy and hence can be resolved only by Russia alone, not in the framework of bilateral relations.
Yet the above does not fully explain the heightened interest in Putin’s upcoming visit to China. It may look like any other pro forma visit, but it has been acknowledged off the record in China that this year’s visit will be different. “The significance of this trip exceeds that of a normal prime minister-level visit,” said Zhao Huasheng, director at the Center for Russia and Central Asia Studies at Shanghai’s Fudan University, as quoted by Reuters.
China places great emphasis on the fact that this is Putin’s first foreign visit after the announcement of his intention to run for presidency in 2012 and his last visit as prime minister. China is also facing a transition in leadership next year, and so it will be the last time President Hu Jintao will welcome Putin in his current post. It is therefore logical that Russia, China and the rest of the world will pay a great deal of attention to their statements.
The Chinese like Putin very much. They believe that he made Russia a more important and predictable partner during his first term as president. Putin’s two presidential terms were marked by major achievements in bilateral relations. Russia and China signed a basic treaty of neighborliness, friendship and cooperation, established the Shanghai Cooperation Organization in 2001, and settled their territorial disputes in 2004.
“This visit to China will be Putin’s last as prime minister: next spring he will likely be elected president again. Russia’s revival after the dissolution of the Soviet Union began during the Putin era,” writes china.org. Diplomatically omitting mention of the period that created the need for such revival, the Chinese author nevertheless makes it clear that he is referring to the rule of Mikhail Gorbachev and Boris Yeltsin, the attitude to whom is rather more complicated in China.
For the past four years, Beijing has been closely watching for signs of a reemergence of that period’s uncertainty, and so welcomed Putin’s nomination for president. It is easier for China to understand the Russian system of power of the 2000s than subsequent political innovations. China needs Russia politically to balance its complicated relations with the West and economically as a supplier of raw materials and a consumer of Chinese labor. In terms of domestic policy, China needs Russia as an example of a predictable and manageable political system – one that does not inflame dissatisfaction with one-party rule in China. But will Russia continue to play this role? Only time will tell.