At first glance relations between China and Russia look like a success story, particularly in the field of energy. In 2014, China’s purchases of Russian oil increased by 36 per cent. If the much-touted Sino–Russian gas deal of May 2014 materialises, this would create a mutual dependence.
The huge gas deal was signed at the height of the Ukraine crisis. Given that Russia and China had been in negotiation for nearly two decades over price issues, there was speculation that the Ukraine crisis had spurred Russia to clinch the gas deal. Previously price had been an issue for Russia, but given the economic ramifications of the Ukrainian crisis, Moscow appeared to have run out of options. China — with its huge economic potential — became a far more attractive partner.
While the deal looked impressive, it left much to be desired. China also bought Manas Airport from Russia’s Rosneft oil company, leading to speculation that the economic impact of sanctions was forcing Russia to yield economic positions to China here too.
The dependence of the Russian economy on oil and gas revenues is particularly evident in Sino– Russian relations. Russia’s increasing dependence on China (rather than interdependence) remains a cause for concern. The idea of Russia as China’s ‘resource appendage’ is frequently invoked.
Russia has attempted to portray itself as a potential ‘swing supplier’ between Europe and Asia, but this is a difficult strategy because Europe has become quite an unstable market in energy terms. So the markets of East Asia, and China in particular, appear increasingly attractive to Russian energy companies. Yet the amount of gas going to China is still only around one-quarter of what Russia supplies to Europe. Russia risks becoming over-dependent on China in the energy sphere, while at the same time remaining a minor supplier in relative terms. The chances of Russia becoming a ‘swing supplier’ between Europe and Asia are low. Russia has put all its energy eggs into one basket.
Despite the outward show of a ‘strategic partnership’ with China, Russians have been sceptical about the longer-term prospects of the partnership. Although the subject of the ‘China threat’ has been virtually taboo since the mid-2000s, more recently it has been referenced at least privately by officials.
Economic and trade relations have become a ‘safe area’ from which to criticise Sino–Russian relations in Russia, given the sensitivity around direct references to any hypothetical military threat. Russian officials regularly make reference to the fact that Russia remains an exporter of raw materials to China, while China finds in Russia an easy market for consumer goods and manufactured products. China has also invested little in Russia’s efforts to expand its oil industries.
In the wider Asia Pacific, Russia has attempted to diversify relations with other countries, such as Vietnam. Yet China was able to restrict Russia’s room for manoeuvre. It directly interfered when Russian gas company Gazprom allegedly tried to develop an area with a Vietnamese oil company inside the so-called ‘nine-dash line’ in the South China Sea. Gazprom was forced to abandon the idea at the request of the Chinese authorities.
Russia needs to be careful not to align itself too closely with China in the Asia Pacific. This would risk alienating potential alternative partners like Vietnam, which fear China’s military might and its territorial claims. Russian tactics that focus on energy exports work far less well in Asia than in Europe: many Asia Pacific countries already have significant diversity of supply and any increase in energy imports from Russia is meant mainly to reduce supply risk.
Overall, Russia’s position vis-à-vis China is to continue the economic relationship — which brings economic rents for Russian elites — while maintaining a policy of equidistance in the Asia Pacific and not clashing with China directly.
The political dimension of Sino–Russian bilateral relations has long been the locomotive of relations, without which it would be difficult to make progress in other areas. Both Moscow and Beijing have highlighted their perception that the economic relationship has long been lagging behind.
As one economist has pointed out, because the focus on increasing economic ties between the two countries is primarily a political project built on grandiose deals, China’s economic downturn will make little difference to major projects. But China’s longer-term position as a driver of global economic growth could now be called into question.
Trade between the two countries has been declining. Chinese exports to Russia fell by 36 per cent in the first half of 2015 and trade has stalled at US$90 billion, although the agreed target was US$100 billion by 2015. The exception is the Russian Far East, where trade between Russian border provinces and Heilongjiang and Jilin has more than doubled between 2009–13. Yet China complains that infrastructure, transport and logistics remain woefully underdeveloped.
There are signs too that China is irked by the ‘resource appendage’ discourse in Moscow. Chinese academics told their Russian counterparts that this image doesn’t square with reality and urged Russians to be more ‘objective’: China accounts for only 10 per cent of all Russian oil exports, and has imported virtually no natural gas from Russia. Tensions in the relationship clearly remain.
It appears that Russia’s Asian pivot is still all about Beijing, despite attempts at diversification. The debates that raged in the 1990s and in the early Putin years about the extent to which Russia should hitch its wagon to the Chinese economic locomotive have largely subsided. But as the Chinese locomotive loses speed, Russia may find itself wishing it could change trains.
Natasha Kuhrt is a lecturer in the Department of War Studies at King’s College, London.
An extended version of this article appeared in the recent edition of the East Asia Forum Quarterly, ‘Japan–China Relations’.