Disparities limit the scope for a Sino–Russian strategic accord

Authors: Tom Lairson, Rollins College and Ilan Alon, University of Agder

Does the geopolitical relationship between China and Russia portend a major shift in global relations? Many observers focus on the similarities in these nations as the basis for expectations of a deepening relationship. But, despite some commonalities, Russia and China are unlikely to develop more than a tactical and limited relationship.

Vladimir Putin has spent much of the past 15 years reshaping Russia’s relationship to a global system dominated by liberal Western capitalist states. The domestic system of kleptocracy in Russia permits only a shallow integration with this system, limited to trade and oil-related investment. By contrast, China is now deeply integrated into the global capitalist system, based on a globally competitive economy and effective political system.

The Russian system of government under Putin is predatory and organised to generate large gains to a tiny elite. Approximately 35 per cent of Russia’s national wealth is controlled by 110 extremely rich Russian oligarchs, with very close connections to the state. The system has been held together through an ideology of rabid nationalism, intense xenophobia, the appearance of democracy and economic growth fuelled by high oil prices.

Many would point to similar features in China, emphasising corruption, princelings and the absence of even the appearance of democracy. But the deeper features of kleptocracy in Russia are quite different from the situation in China and call for important distinctions.

China is certainly an authoritarian society, but its political system is quite different from Russia’s. The political and economic elite in China is large and dispersed. Chinese Communist Party (CCP) members are recruited using meritocratic standards, and the party operates to generate effective governance down to provincial, city and village levels.

Perhaps most important, since 1978 China’s Communist Party has been in charge of the largest and longest period of economic growth ever recorded. Mobilising capital for nation-wide investment, restructuring the economy, opening to global investment and prices, and building up local firms — state-owned and private — able to operate successfully in a highly competitive economy is a remarkable feat. Russia’s only economic success under Putin has been to sell oil at global prices, which exposed Russia to considerable pain and few options when oil prices fell by 50 per cent.

The two economies are diverging. Both countries rely on and are significant players in international trade and investment, but China is much larger.

And while China consumes 6.8 per cent of Russian exports (second only to the Netherlands), Russia is not a major consumer of Chinese exports. The US is China’s largest consumer market, consuming 16.7 per cent of its exports. China’s economic reliance on the US is much higher than that on Russia.

But there are even deeper distinctions. Russian state-owned enterprises (SOEs), lacking the exposure to global competition experienced by Chinese SOEs, are extremely inefficient and require protection. The Russian kleptocracy prevents the development of competitive enterprises, especially in those SOEs closely tied to the system.

Russia’s economy is also extremely narrow, depending highly on oil, natural gas and similar products. The recent collapse of oil prices exposes this dependence and the need for extensive austerity. But austerity would conflict with the core system of rule by the kleptocracy and therefore challenges the state itself. Russia’s shallow integration with the global economy leaves little capacity to adapt to constraints like Western sanctions and low oil prices. The Soviet Union tried to build an economy entirely apart from the Western system. That experiment clearly failed.

A competitive economy aligning with an uncompetitive one does not offer a promising basis for a strategic relationship. But do overlapping geostrategic interests explain the relationship?

Global politics is usually seen in terms of strategic interests. It is often defined by common enemies, which bind nations into a close and strong relationship. Can this serve to bring Russia and China together? There are good reasons to doubt such an outcome. Sino–Russian and Sino–Soviet relations have both been partially defined by conflicting interests and intense hostility, and this legacy weighs on the present.

Much of this is linked to long-standing boundary conflicts, which culminated in military conflict in 1969. In the 1950s, during the decade-long period of the Sino–Soviet alliance, Chinese leaders concluded that the Soviets were unreliable allies in protecting China from a US nuclear attack. By the late 1960s, Mao Zedong had resolved that they were the greater threat to China. The semi-alliance between the US and China from 1972 to 1991 was premised on mutual fears of the Soviet Union.

Is a new shift now occurring that would see China and Russia aligning against a perceived major security threat from the US?

The potential ‘partnership’ becomes much clearer if we understand the shifting structure in global relations. Nuclear weapons mean that the alliances of the 19th and 20th centuries — in which nations were bound to each other for some potential war — are of little relevance today. Instead, nations today seek tactical relationships for achieving marginal bargaining advantages. Global interdependence is based on a system of complex forms of economic exchange, embedded norms and rules, and powerful international organisations and global firms. This creates powerful incentives for nations to avoid global confrontations and conflict. Both China and Russia need continued access to the global system more than they need each other.

Russia and China cannot be seeking, nor are they likely to achieve, an alliance directed at the US or the Western-based global system. Rather, both China and Russia may hope they can act together to deter the West from imposing penalties should they seek to act outside the Western-defined ‘rules’ of global relations. Should this succeed, they will be able to keep the gains from interdependence even as they avoid the consequences of ‘bad’ behaviour and maybe even reduce the effects of US’ structural power.

How effective a partner can Russia be for China? Russia has serious economic weaknesses, is based on a narrow and potentially unstable state, and is prone to reckless efforts at revanchism. Even if China launches an equally misguided strategy of territorial expansion in Asia, Russia can offer little more than verbal support. The cost would come at exposing China to a conflict between Russia and the West.

It seems the combination of differentiated interests, the legacy of past conflicts, and global interdependence will condition and temper the scope and strength of the Sino–Russian relationship. For China and Russia, having any powerful allies is a worthwhile objective. But neither will find major gains from each other sufficient to make for a binding and substantial alliance relationship.

Tom Lairson is the Gelbman Professor of International Business at Rollins College, Florida.

Ilan Alon is Professor of Strategy and International Marketing at the University of Agder and Editor of the International Journal of Emerging Markets.

An extended version of this article appeared in the recent edition of the East Asia Forum Quarterly, ‘Asia’s Minorities’.

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