A Russia-China Alliance Brewing?

April 12, 2013 – By Scott W. Harold and Lowell Schwartz

Xi Jinping and Vladimir Putin’s recent summit drew wide international attention. Are we witnessing the dawn of a new alliance?

On March 22nd, shortly after assuming the post of President of the People’s Republic of China, Xi Jinping headed off to Moscow to meet with Russian President Vladimir Putin. Observers were watching the two leaders closely, looking to divine whether or not they could overcome past divisions to achieve a new level of cooperation in bilateral ties. What came out of the two leaders’ meeting and what does it augur for the future of Sino-Russian relations?

Three major areas appear to have been the focus: managing expectations about the relationship; expanding bilateral trade in energy and arms; and cooperation on international security affairs. Drawing on press reports from China and Russia we have attempted to determine how much progress was actually made on these issues at the summit.

Framing the relationship between Beijing and Moscow is an issue with both domestic and international implications for both countries. Domestically, Beijing’s leaders want to convey to their people that China’s rise is accepted and respected by major world powers. Similarly Russia, whose relations with major Western powers has deteriorated since the re-election of President Putin, appreciates the respect that comes from Xi Jinping’s selection of Moscow for his first visit abroad as China’s new leader.

Bilaterally, both Beijing and Moscow are looking to leverage their relationship to enhance their leaders’ standing domestically and maximize their influence among world powers. At the same time, they hope to avoid the costs they would incur if other states felt the need to counter-balance a renewed bond between Russia and China. Neither party seeks a world where their relationship is viewed as the second coming of the Sino-Soviet axis of the Cold War.

In the realm of bilateral energy trade, China’s goal is to acquire as much cheap and reliable energy as possible without relying too heavily on any single-nation source, which could be disrupted by an unexpected bilateral crisis. For its part, Moscow wants to retain as much leverage as possible over the price of the natural resources it sells and to avoid becoming dependent upon China as a destination for its energy exports.

Even in light of these differences, it is sometimes still surprising how limited energy sector cooperation is between China and Russia, despite Russia’s vast energy resources and China’s rapidly growing needs, the geographic proximity of the two states, and the strategic advantage of having an overland supply route invulnerable to U.S. Navy at-sea interdiction. Russia is just the fourth largest supplier of oil to China, supplying it with only 8% of its total oil imports. There is even less cooperation in the area of natural gas.

That may be changing. During the summit a great deal of fanfare was made over the conclusion of a deal to construct a pipeline to ship natural gas between the two countries. This was followed by an announcement that Beijing will extend a $2 billion line of credit to Russia’s politically well-connected natural gas giant, Gazprom, which could expedite a long-term supply contract.

Despite the progress, Rosneft CEO Igor Sechin said Russia and China still have not signed a final binding contact. The hold up once again is the pricing structure for Russian gas exports. Russia wants to set prices in line with the lucrative deals it has signed with European nations, while China believes the price should be set much lower. Disagreements about price have tripped up negotiations on a number of previous occasions so it is still possible the deal will fall apart before the end of 2013.

On the arms front, Beijing wants to pay as little as possible for advanced military technologies and hardware. Russia wants to increase its arms sales to China, but wants to avoid any deals that could compromise its own security.

Conflicting media reports suggest that the two sides may have been discussing the possibility of a resumption of major arms exports from Russia to China. If such trade were to resume, it would mark a major breakthrough in relations and possibly signal a return to the days when Russia was far and away China’s biggest arms supplier. Between 1990 and 2007, 90% of China’s imported conventional weapons were supplied by Russia. At one timeChina accounted for 40% of Russia’s arms exports with total sales approaching $30 billion.

After 2007 there was a notable decline in Russian arms deliveries to China as China began asking not only for military hardware, but also the design technology in its arms purchases. Russia has been reluctant to agree to these requests given China’s poor record in safeguarding intellectual property and the possibility that China could use Russian technology for its own arms sales to third countries such as Pakistan.

Reports in the Chinese state-owned press have trumpeted a new deal under which China would purchase 24 Su-35 fighter jets plus four Lada-class submarines from Russia, a deal that Russia’s official ITAR-TASS news agency has denied. The Su-35 has more powerful and advanced engines that those currently in Chinese fighters. Some press reports speculate that China wants to adopt the Su-35 engine technology for the stealth fighters it is developing. As was the case with energy, Russian officials through the Russian press appear to be indicating that negotiations are continuing with final results only likely to emerge by the end of the year.

Finally, the two sides also appear to have conferred on a number of issues on which they share common positions or interests. These include an emphasis on the value of sovereignty in international affairs; Syria; North Korea; Iran; and efforts to coordinate their positions on the establishment of a new international lending institution as an alternative to the International Monetary Fund and the World Bank.

Warning that each country has a right to determine its own pathway to modernity and development, President Xi called on third countries to respect Chinese and Russian choices and to stay out of other countries’ internal affairs, code language for telling the U.S. and European nations not to comment on human rights in China or Russia. Stung by Western criticism over Russian human rights violations, President Putin likely values Chinese comments suggesting that the international community should mind its own business.

On Syria, North Korea, and Iran, the two sides share interests in preventing these regimes from collapsing while avoiding the outbreak of inter-state armed conflict. Both Beijing and Moscow are on record as officially opposing the spread of nuclear weapons and sensitive technologies to North Korea and Iran, though neither is particularly enthusiastic about the use of stringent multilateral sanctions. Yet adopting too soft a line on either North Korea or Iran risks raising ire in Washington, Seoul, Tokyo and Middle Eastern capitals. Coordinating their policy stances on these tricky issues of international non-proliferation policy is a challenging, but important goal of Chinese-Russian summitry.

Finally, perhaps the easiest point of cooperation for Beijing and Moscow is the establishment of a “developing world” version of the IMF and World Bank with the other BRICS countries. That plan was advanced at the latest BRICS summit just days after the two leaders met in Moscow. China’s rapid growth and Russia’s return to great power status provide the two countries with an opportunity to articulate and defend an alternative path to modernity and development. The creation of an alternative set of international organizations by the BRICS countries, which include Brazil, India and South Africa in addition to Russia and China, could carry substantial diplomatic value for Beijing and Moscow. It may allow them in both rhetoric and substance to align themselves more closely with the rest of the developing world.

In conclusion, it is not clear whether Xi Jinping’s visit to Moscow resulted in any strategically significant new agreements. Chinese officials and the Chinese press during the summit issued a number of statements that indicated major agreements had been signed in the areas of energy and arms sales. However, according to the Russian press, these initial reports were premature with a great deal of hard bargaining still to come.

If Moscow and Beijing are able to consummate the major deals begun at the summit we are likely witnessing the start of a more robust Sino-Russian relationship. On the other hand, as we have seen in the recent past, historical suspicions, mutual mistrust, and divergent strategic interests may once again prevent the development of a deeper and more coordinated Sino-Russian relationship.

Scott W. Harold and Lowell Schwartz are political scientists at the nonprofit, nonpartisan RAND Corporation.

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