Exploring Sino-Russian Relations: The Dynamic Partnership

08.23.12

Exploring Sino-Russian Relations: The Dynamic Partnership

08.23.12
RIA NovostiRIA Novosti

Exploring the dimensions of Sino-Russian relations reveals a perplexing question, “who is the junior partner?” No definite answer presents itself because Sino-Russian relations change depending on different issues and situations. In the post Cold War era, China has proved to be very adaptable to change while Russia has struggled to restructure to the new order. However, elements of this relationship afford Russia the facility to reassert authority over the international scene. The equation behind these circumstances is that the relationship benefits Moscow’s interest in the short term and Beijing’s interest in the long term.

Since the Soviet Union dissolved, Russia has been experiencing a national identity crisis. Russia went from being a superpower to a source of regional military and economic instability. An illustration of the stark contrast between these two countries’ economic growth over the past two decades is that in 1991 their Gross Domestic Product (GDP) was at comparable levels. Today, China’s GDP is three times larger than Russia’s. Over the last decade, they have made progressive steps in advancing their economic, political, and military cooperation. An external factor that is fostering this relationship is the common perception that America’s role as the only superpower is undermining their national interests.

America’s intrusion into Central Asia with the war in Afghanistan is strengthening this bond because both powers envision this region as their sphere of influence. Countering American influence is a key reason behind developing the Shanghai Cooperation Organization. However, individually they desire to use this organization to further their separate national interests in Asia.

Historically, Russia‘s vast size and abundant natural resources are one of its greatest economic assets. China’s large population enables it to keep production and manufacturing costs at a minimum. With the fall of communism, Moscow was forced to restructure its politics and economy to fit the needs of a free market. When the Soviet Union began privatizing the state’s assets, a large portion of its vital industries and resources fell into the hands of a few oligarchs.

These executives largely failed to make these industries more productive, resulting in significant portions of Russia’s infrastructure remaining neglected. Since Putin expanded his influence over Russian politics, he has pursued the prosecution of some oligarchs in order to reassert state control over important industries. An example is the dissolution of the Yukos oil company. The state arrested the corporation’s top official on tax evasion charges. The business’ assets were sold at auction to cover its tax debts, which were acquired by Rosneft, a state majority owned company.

In Sino-Russian relations this bodes well because one of Beijing’s national interests is securing the resources needed to fuel its economic growth. These developments are important in Sino-Russian relations because, since China started to import oil in 1993, securing a reliable source of petroleum and natural gas is a security interest. However, Moscow’s energy industry has a poor performance record. While Russia has vast reserves in Siberia, it lacks the capital for proper development.

Eastern Russia is a strategic location for China’s energy needs but turning it into a secure and stable source is the paradox. This has resulted in the construction of the Eastern Siberia-Pacific Ocean Oil Pipeline, which incorporates a deal that Russia provides China with twenty years of oil in exchange for a 25 billion dollar loan. Through this arrangement, Beijing hopes to achieve its long-term goal of energy security by developing Russia’s petroleum and gas industry.

China is not the sole beneficiary from this association. Russia is able to pursue its short-term interests by reasserting itself on the international stage as a major energy supplier. In order for Russia to reach its full production capability, its infrastructure needs to be dramatically modernized. If this does not occur domestic demand for energy may significantly decrease the amount of natural gas and oil available for export. Developing energy exportation for China is not the only way that Beijing’s investment can benefit Russia. Through developing natural gas and petroleum reserves in the Ural and Caucasus, Moscow can increase its share in supplying Europe’s energy needs. This is imperative because Russia can use Europe’s dependence on foreign energy as leverage in pursuing Moscow’s national interests.

Russia has demonstrated its willingness to use energy exportation as a strategy of exploitation, as illustrated in Belarus and Azerbaijan where Rosneft demanded a cost increase of natural gas to match Western European price levels. When their respective governments refused to renegotiate their contracts, Rosneft cut off the supply. In the interim, Moscow can use Beijing’s foreign investment to develop Russia’s energy and natural resource industry, which can dramatically increase Russia’s ability to pursue its national interests through influence over energy and commodity markets. If commodity prices remain high in the long term, Russia could possibly reinvest its proceeds into diversifying its economy and spurring economic growth. This is speculative because it is difficult to calculate how much profits from state-owned companies are returned to public expenditures.

A key region for both countries is Central Asia. Beijing views Central Asia’s underdeveloped and vast natural resources to be vital to its long-term economic security. The Shanghai Cooperation Organization’s primary purpose is to handle issues regarding this region. China and Russia seek to use the international agency to further their own interests. Due to Russia’s previous history, it has extensive economic, social, political, and cultural connections in Central Asia.

Through the Chinese Petroleum National Corporation and China Metallurgical Group Corporation, Beijing is investing billions in the economic future of the area from creating a network of pipelines stretching across Asia to buying the mining rights to unprecedented amounts of mineral deposits. From Beijing’s perspective, as economic growth outpaces the ability of its traditional sources to provide a supply of energy, it will have to increase imports from regions such as the Middle East and Africa. Central Asia’s geographical location is a strategic crossroad as an overland route for vital petroleum and natural gas suppliers. In addition, the area’s natural resources hold the future to vast energy supplies that are vital to Beijing’s long-term energy needs.

A significant aspect of this relationship is the development of military technology and capacity. After the Soviet Union’s fall, Russia had to make massive cutbacks in terms of military spending that severely decreased its power projection capabilities. Russia’s defense industries can develop technological innovations but domestic orders do not suffice to keep the industry afloat. On the other hand, China has a growing budget and the desire to modernize its military but its arms industry lacks the technological expertise of its Western rivals. Therefore, Beijing’s only reliable source of advanced weapons is Russia. As China continues to modernize its military, Moscow’s importance in the relationship increases.

Military sales benefit Moscow temporarily by providing the incentive to develop more advanced weapons systems but in the long-term, it benefits Beijing because of business practices. Part of the CCP’s domestic policy is that internal production and manufacturing receive preference over foreign imports. Even though China has signed various international laws protecting copyrights and intellectual property, it does not implement them when the CCP considers that it undermines China’s national security.

When China began importing foreign goods in the 1970s it started to develop the ability to reverse engineer advanced products in order to acquire the technological innovation necessary to produce them domestically. The situation is a critical concern for Moscow because it has numerous contracts with Beijing for a variety of military orders and technology transfers. Portions of these agreements stipulate that a share of the production and assembly work would involve Chinese defense industries. This is imperative for Beijing because it enables domestic companies the ability to develop the expertise and tools necessary to manufacture advanced weapon systems.

An example of this would be the sale of 200 Sukhoi Su-27s. Of the 200 aircraft originally ordered by Beijing only 95 were delivered before Moscow canceled the deal. China has used the Su-27 part kits to develop the Shenyang J-11, a domestic version of the Russian fighter plane, which Russian officials view as a violation of its agreement.

A realm of this relationship that deserves special attention is the consequence of China’s foreign policy of using financial and commercial expansion to increase its international authority. Chinese companies invest not only in Russia’s energy sectors but also in public infrastructure and tech industries. Russian officials are wary of this expansion of Chinese influence in their country and for good reasons. In countries that Beijing has extensive economic connections with, Chinese corporations will bribe government officials through infrastructure development and social welfare projects in order to win bids on mining and energy contracts. However, the standard trend for these companies is to hire first local workers who experience low pay and miserable working conditions. When the employees demand safer working conditions and higher pay, the executives simply fire the domestic population and bring in Chinese who work for the same wages they would make at home.

In the overall development of Sino-Russian relations, no dominant issue defines the superior partner. Their association can be described as a form of symbiosis in which cooperation increases their capability to pursue their foreign and domestic objectives. In the short-term, Moscow will benefit from using Chinese investing to develop the Russian energy industry and natural resources. Enabling Russia to exercise its position as a global power using economic influence especially in the areas it considers being a sphere of influence, the Caucasus, Eastern Europe, and Central Asia. This relationship will allow China to secure some long-term goals. Economic and commercial cooperation with Russia will assist Beijing in developing the domestic ability to manufacture and develop advanced technological industries specifically those related to military.

In addition, China will be able to secure part of its future energy needs by collaborating with Moscow in East Russia and Central Asia in developing natural resources. However, there remain issues that can cause diplomatic and economic tension. There is the debate over which party will have dominance over Central Asia, the cultural and economic clash over the development of East Asia and Greater Mongolia, and the sustainability of both country’s economic policies. Nevertheless, there are more areas of co-interests than conflicts. The most important to the international community’s concern is the ability of the Sino-Russian relationship to counter America’s global economic and military influence, a joint concern that only strengthens the bond of this partnership.

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