Russian-Chinese Relations in 2014-2016 – How Far We’ve Come

The gradual Russian-Chinese rapprochement that began in the 1990s and continues today has not changed in essence. The Ukrainian crisis and the escalation in tension in the South China Sea have only served to accelerate the process somewhat.

Ever since Russia and China established a strategic partnership 20 years ago, in 1996, the two countries’ bilateral relations have been distinguished by vigorous attempts on both sides to maintain a positive general atmosphere while keeping the aims of these ties clothed in strategic ambiguity. Both sides insist that their relations have reached a zenith, but these assertions raise doubts among outside observers. At the same time, Russia and China reject suggestions that they plan to form an alliance or develop their relations along anti-Western lines. At the same time, officially declared or not, the two countries are already engaged in political cooperation. Since the Ukrainian crisis began, Russian-Chinese relations have become a popular subject of discussion among Russia’s political class and part of the expert community. These discussions tend to go round and round, looking at the two countries’ relations as if in a vacuum, and are largely divorced from reality. This is partly due to a lack of information on the real substance of the two countries’ relations. 

Anyone dealing with Russian macroeconomic statistics, for example, knows that data from Rosstat (Russian Statistics Agency) and the Russian Central Bank are all but useless in terms of identifying sources of direct foreign investment entering Russia. The bulk of investment in Russia (as in China) comes via offshore jurisdictions. Central Bank statistics show only negligible Chinese investment in Russia, a few hundred million dollars ($517 billion in 2015), with total cumulated Chinese investment coming to $1.7 billion at the start of 2016. Chinese statistics also give far from the full picture and show total investment of $8.7 billion in mid-2015. “Why doesn’t China invest in Russia?” is a popular question in search engines and a beloved theme of columnists in the Russian business press.

A more or less reliable estimate of the real amount of Chinese investment in Russia was made relatively recently by the Chinese themselves, who collected data piece by piece from Chinese companies known to have projects in Russia. This calculation gave a figure of $32-33 billion and the result was passed on to Russia during bilateral talks. If this estimate is correct, it means that China is already one of the biggest investors in the Russian economy and we could probably stand to ask ourselves how to increase Chinese investment, but not “why doesn’t China invest?”. At the same time, China is Russia’s second biggest trading partner, after the European Union, with bilateral trade exceeding $68 billion in 2015. Today, the EU’s share in trade with Russia is falling, while China’s share is growing.

The scarcity of information gives rise to another interesting question about the real level of Russian investment in China, which, if you go by official statistics, is on the level of statistical error. There are no reliable figures on the investment trend as yet, but information on individual projects announced over recent years give reason to suppose that there has been a considerable upward trend. 

The Ukrainian crisis gave new urgency to discussions on a possible Russian-Chinese union. For understandable reasons, both countries’ leaders publicly denied plans to establish a formal military and political alliance. Entering an alliance with a major power would deprive Russia of any arguments against NATO expansion, and would leave China unable to criticize a growing US military presence in Asia.

What would both sides stand to gain from announcing a formal alliance? Such alliances are needed above all so that the stronger partner can guarantee the weaker partner’s security. Their second purpose is to ensure coordination in military and political affairs. The situation with security guarantees is clear; neither Russia nor China needs them at present. Russia is a nuclear superpower. China’s nuclear capability does not match Russia’s, but it has not yet seen its relations with the USA dip so low as to have any real need for the kind of guarantees an alliance would provide.

What about the state of practical coordination? The two countries have expanded and added substance to their annual military exercises every year since 2005. Furthermore, China now plays an active role in the Russian Defense Ministry’s military competitions (tank biathlon, Aviadarts, Paratroopers Company and others). The level of operational compatibility is sufficient to be able to establish joint tactical groups under single command. 

Joint exercises focus on defeating large groups of ‘international terrorists’ on land, combatting enemy submarines and aviation, and carrying out troop landings at sea. Russian-Chinese air defense exercises and joint exercises between the Russian National Guard and Chinese People’s Armed Police were added to this list of events in 2016. 

We should add to this the annual visits the two countries’ leaders make to each other (Putin has made 11 official visits to China), ongoing coordination on international issues (Iran, Syria, US missile defense and more), and the announcement of joint initiatives (on global strategic stability and information issues, for example, during Putin’s recent visit to China). The Russian presidential administration and its Chinese counterpart have established mechanisms for permanent information exchange and dialogue, as have economic, security, military and diplomatic bodies in both countries. Russia and China also continue their cooperation on military and dual-purpose technology. 

This abundance of coordination mechanisms and the scale of military cooperation clearly go beyond the bounds of simple neighborly ties. The economic foundation on which Russian-Chinese ties are built may not be as impressive as the military and political component, but it is more solid than is commonly thought and is gradually growing stronger. Russian-Chinese ties in effect already constitute an alliance in many ways, only lacking the formal title. The title can be added relatively swiftly if and when the need arises. For now, though, both sides find strategic ambiguity to their advantage, whether in foreign or domestic policy. 

As evidence that Moscow and Beijing can never develop too close a relationship, people like to cite China’s supposed refusal to support Russia on the issues of Abkhazia, South Ossetia and Crimea, and Russia’s desire to avoid getting entangled in any conflict in the South China Sea. Certainly, China cannot openly support changing state borders on the basis of a referendum on self-determination, because to do so would mean to lose Taiwan. Russia would have liked China’s support, but it would change little in practical terms and would not, for example, be any help in getting unilateral US and EU sanctions lifted.

China nonetheless maintains economic ties with Abkhazia and has even allowed an Abkhazian honorary consul to work in Beijing. China also has economic relations with Crimea and Chinese companies played a crucial role in building the energy bridge to Crimea. At the most difficult moment in Russia’s economic crisis in December 2014, Chinese Foreign Minister Wang Yi expressed Beijing’s willingness to provide economic aid to Russia, but the offer was not taken up. Russia’s leadership obviously did not think the situation was so drastic and did not want to weaken its own negotiating positions in discussions on big joint projects. As for the South China Sea issue, China has obtained Russia’s support on what it considers the most important aspect of the problem. Moscow has condemned interference by powers outside the region on this matter and called for the disputes to be resolved through direct negotiations between all parties concerned. Russia has no intention of getting involved in China’s disputes with other Asian countries on this issue, but is happy to criticize the United States.

Of course, there are many difficulties in Russian-Chinese relations too. Both countries’ economies are dominated by enormous, unwieldy state-owned companies that turn discussions of each joint project into long and complicated exercises. Prejudices and bureaucratic inefficiency have also played their part. It is enough to recall the fate of the project to build a bridge over the Amur River near Blagoveshchensk. Construction finally began only in 2014, after more than 20 years of negotiations. These sorts of difficulties have their roots in the specific nature of the two countries’ political systems and do not affect the quality of relations, nor for that matter do competition or differences on a number of secondary issues. 

The gradual Russian-Chinese rapprochement that began in the 1990s and continues today has not changed in essence. The Ukrainian crisis and the escalation in tension in the South China Sea have only served to accelerate the process somewhat. In the future, the most important consequence of these crises could be the gradual disappearance of strategic ambiguity in the two countries’ relations as they become drawn into ever deepening confrontation with the United States.
Views expressed are of individual Members and Contributors, rather than the Club's, unless explicitly stated otherwise.