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Kozhirova S. Sino-Russian relations at the current stage: status-quo, issues and prospects

In recent years, China-Russia relations have been engaged in a complex development process. In the new conditions of a complex and volatile international situation, sustainable and resilient development of Sino-Russian relations is essential both for countries and their peoples, and for adjacent regions and the world as a whole. The international and regional situation has evolved considerably in connection with the conflicts in Ukraine, Syria, the nuclear crisis on the Korean peninsula, the South China Sea disputes. The countries had to stand a test connected with these conflicts, the situation put them the choice, the need to work out a unified position, and on many issues the approaches, the course of action and the political course differed. It is important that, despite this, China and Russia have maintained a strategic partnership and a high level of mutual trust, demonstrating the reliability of bilateral ties.

China and Russia are major neighboring countries, permanent members of the UN Security Council. In recent years, by strategic leadership of the leaders of China and Russia, comprehensive relations of strategic interaction and partnership between the countries have invariably been functioning at a high level, contacts are growing at a high level, practical cooperation is steadily advancing, and humanitarian contacts are developing rapidly. Intergovernmental and non-governmental mechanisms for exchanges in various areas are working successfully. The social supports and the foundation of public opinion are constantly strengthening, contributing to the development of friendship between countries. Favorable results of bilateral cooperation from day to day benefit both countries and their peoples [1]. Russian-Chinese relations have become a new model of relations between major powers. They demonstrate a mutual interest and a significant development potential.
 

Bilateral trade and economic relations

Trade and economic relations are an important manifestation of the high level of relations of comprehensive strategic interaction and partnership between China and Russia. Therefore they constitute the economic basis of bilateral relations. Despite the confrontation with many unfavorable factors, including the slow recovery of the global economy and the decline in global trade and investment, Sino-Russian trade continued to show a favorable trend towards stabilization, contrary to prevailing trends. In recent years, there has been an active development of Russian-Chinese trade relations.

Upon the totals of 2016, the trade turnover between Russia and China grew by 2.2%, reaching $69.53 billion. In January 2017, trade between Russia and China totaled $ 6.5 billion, which was 34% more than for the same period last year. In April 2017, bilateral trade increased by 15% to $6.59 billion. For the same period in 2016, this figure was $5.59 billion. [2].

In addition to developing cooperation between countries in such areas as electronic commerce, mining, agriculture, entertainment and construction, the PRC and Russia continue to strengthen their ties by increasing trade turnover and cooperation in strategic areas, which include the oil and gas industry, infrastructure, defense industry, aviation and nuclear energy

At the moment, more than 50% of Russia’s exports to China are energy. In 2016, the PRC imported 52.3 million tons of Russian oil, which was 23.4% more than a year earlier. Russia officially bypassed Saudi Arabia, becoming China’s main oil supplier. In the coming years, trade is expected to grow due to the beginning of oil supplies under a long-term contract between the two countries.

According to the Ambassador of the People’s Republic of China in Moscow, Li Hui, in the near future, China will continue to intensify its cooperation with Russia in this direction, while simultaneously increasing cooperation in the field of small and medium-sized businesses. Sino-Russian cross-border e-commerce is developing, it already accounts for more than 50% of the total volume of cross-border electronic commerce in Russia.

Russian Ambassador in China Andrei Denisov notes that the main role in mutual trade is played by deliveries within the framework of large construction investment projects, for example, enterprises and transportation facilities, which, in addition to quantitative growth in the volume of trade, are expanding the range of proposed products. That is, new agricultural products are actively added to building materials. «Our leaders have by no means lifted the task of bringing the commodity turnover to the level of $200 billion in 2020. Although, of course, this is not an end in itself, it’s still not quality that is important, but quantity. But all the same, we will not forget the tasks» [3].

As President of the People’s Republic of China Xi Jinping said, for the seventh consecutive year, China retains the status of Russia’s largest trading partner. According to him, at the present time «the structure is being optimized and many additional growth points are observed». In particular, trade in machinery and high-tech products is rapidly growing (in the first quarter of this year – by 20.8% and 19.4%, respectively). Gradually, the investment cooperation and financial cooperation are deepening [4].

 

Russian-Chinese investment cooperation

The joint Russian-Chinese intergovernmental investment commission was established and work was organized through two funds – RDIF and CIC (a sovereign fund of China). Russia and China are considering 73 joint projects, and 17 projects are already working actively. A deal was signed between Fosun Group and «Polyus», a possible transaction between Sinopec and SIBUR [5].

On June 27, 2017, within the framework of raising the level and expansion of the sphere of Russian-Chinese trade and economic cooperation in Moscow, the Management Company of the Russian-Chinese Investment Fund for Regional Development (IFRD) was registered. This company is called to promote expansion and diversification of trade and economic cooperation between Russia and China, which in the short term should become a new « calling card » of international business cooperation and cooperation between enterprises and regions of Russia and China.

IFRD carries out direct investments in leading and perspective Russian companies together with leading world investors. The Fund is ready to finance projects in the Russian Federation and China. The leaders of the largest Chinese companies have already announced their intentions to invest in Russian projects. We are talking about the construction, including transport infrastructure, energy, mariculture and agriculture, mining and cooperation in tourism. It is important to note that today China intends to make a breakthrough in investment cooperation with the Russian regions. The first tranche of IFRD was 10 billion yuan [6].

 

Military-Technical Cooperation (MTC) of the People’s Republic of China and the Russian Federation

China and Russia seek to strengthen bilateral relations in the military sphere. In 2016, the «roadmap» of military cooperation for 2017-2020 was signed, which is a general plan for military cooperation between China and Russia in 2017-2020. The signing of this document indicates a high level of mutual trust and strategic cooperation. Both countries are faced with new threats and challenges in the field of security and jointly defend regional peace and stability. At the next stage, the parties must formulate a specific plan for the development of military cooperation».

In May 2016, the People’s Republic of China and the Russian Federation held the first computer command and staff exercise on anti-missile defense «Aerospace security -2016» in Russia. This year, the second joint computerized command-and-staff exercises (CSE) on missile defense will be held, the purpose of which is to enhance the level of strategic cooperation between two countries, as well as to protect regional strategic stability [7].

Air force of China pays great attention to the development of cooperation with the aerospace forces of the Russian Federation. The military department of the People’s Republic of China reports: «Over In recent years, the heads of our countries support each other’s support in international and regional issues, constantly strengthen strategic cooperation». In particular, a system of interaction between the Chinese and Russian armed forces has been formed. The parties regularly conduct joint military exercises, strive to deepen inter-exchange exchanges, expand spheres and enhance cooperation.

It should be noted that the MTC of China and Russia is one of the most important components of comprehensive strategic cooperation and partnership between two countries. In recent years, contacts between the two countries’ armies have been growing at a high level, strategic mutual trust has deepened, and practical cooperation highly effective in their professional activities. The parties regularly organize joint military exercises and tactical training, as well as international army games. We can say that the structure of comprehensive cooperation between the two countries has already been formed.

July 24-27 of this year in the Baltic sea there has passed an active phase of Russian-Chinese naval exercises «Maritime interaction – 2017». During the exercises, seamen of two countries worked out a joint organization of anti-sabotage, anti-aircraft and anti-ship defense, conducted operations to provide assistance to a ship in distress.

It should be noted that starting from 2012, the Sino-Russian exercises of the Sea Interaction have been conducted 6 times already. One of the new areas of cooperation is the joint army games. This year, the army international games (IArG -2017) were held from July 29 to August 12 at the sites of five countries – China, Russia, Azerbaijan, Belarus and Kazakhstan [8]. In 2017, 6 out of 28 competitions were held at the PRC training grounds within the framework of these games: «Suvorovsky Onslaught», «Aviadarts», «Safe Environment», «Commando platoon», «Clear sky», «Master armored». In the past two years, all stages of competitions were held only in Russia and Kazakhstan. Thus, the International military games have become an effective tool of joint combat training of servicemen of different countries [9].

 

Strategic partnership or military-political union?

According to some experts, in recent years, China has confirmed more strategic partnership with Russia with rhetoric than with actions. So, according to G.Granovsky, widely advertised projects of deliveries of Russian pipeline gas to China openly skip. In particular, the price of gas and the terms of the construction of the highway have not yet been agreed on the Altai route «The Force of Siberia-2». The same uncertainty prevails in the system of financial relations. Here, the promised lending to Russian banks from China’s resources has not been properly developed. In the conditions of restricting Russia’s access to Western financial markets, Moscow relied heavily on Beijing’s support. They even agreed to borrow in RMB. The Chinese seem to have met, but they offered bonds that are exclusively traded on the domestic market of China. To withdraw these funds, or even a part of them, abroad is possible only by special permission, which must be requested each time. In other words, instead of helping Russia, it became dependent on China’s intentions. Moscow rejected this option. Approximately, it is also possible to evaluate investment proposals of strategic partners from Beijing. Numerous documents, signed during meetings and visits, are largely of a framework nature and are far from specific. To fill it with existing agreements, years of coordination, meetings and negotiations take years. On this viscous background of the “strategic partnership”, Beijing’s rapprochement with Washington [10].

«The locomotive» of Russian-Chinese relations is a «process of political convergence », which is difficult to specify t. This process occurs mainly within the framework of political propaganda rhetoric. Dialogue between countries is on general foreign policy issues: terrorism, religious extremism, drug distribution, separatism, and military technical issues are also on the agenda. Both countries do not yet have an understanding of the need for mandatory transformation of bilateral relations in order to bring them to a better level. It is necessary to abandon declarations, it is necessary to seek long-term interests, it is necessary to establish a real strategic partnership. Unfortunately, today there is not a single fact that would talk about the development of such relations. Such a state of relations between the two countries will make them even more unreliable and fragile. So far the only direction that the two countries unites for a short period is military-technical. For China, such cooperation is a unique chance for a short time to make a breakthrough in the development of technology. So far, Russia for China is a non-alternative supplier of military technology and advanced weapons, because Western countries adhere to the embargo on the supply of new military equipment to China [11].

Conclusions. The economies of China and Russia are largely mutually complementary, there is a huge potential for bilateral cooperation. After a brief period of stay at a low level, the positive factors of trade and economic relations between China and Russia began to constantly increase and intensify.

Currently, the Chinese-Russian trade and economic cooperation is undergoing an accelerated transformation from the model with an emphasis on scale and speed to the model with emphasis on quality and efficiency. The structure of bilateral trade is constantly being optimized, and new factors of trade growth are developing.

Between China and Russia, relations of comprehensive strategic cooperation and partnership have been established, but the US is trying to restrain the development of these relations. Under these conditions, Moscow emphasizes that the promotion of Russian-Chinese strategic cooperation fully corresponds to its national interests.

 

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[1] Интервью чрезвычайного и полномочного посла КНР в РФ г-на Ли Хуэя российским ведущим СМИ //http://ru.china-embassy.org/rus/sgxx/lxds/zyhd/t1454499.htm.

[2] Зетелепа Б. Тенденции развития торгово-экономических отношений между Россией и Китаем //http://izron.ru/articles/tendentsii-razvitiya-ekonomiki.

[3] Россия и Китай будут наращивать товарооборот в 2017 году //http://rossaprimavera.ru/news/rossiya-i-kitay-budut-narashchivat-tovarooborot-v-2017-godu.

[4] Cи Цзиньпин: торгово-экономические связи КНР и РФ имеют огромный потенциал //http://www.ved.gov.ru/news/23048.html.

[5] Шувалов: РФ и Китай готовят 73 совместных проекта //http://www.vestifinance.ru/articles/84028.

[6] В Москве зарегистрирована Управляющая Компания «Российско-Китайского Инвестиционного Фонда Регионального Развития» (УК ИФРР) //http://www.arfi.ru/news/index.php?SECTION_ID=3&ID=25768.

[7] Министерство обороны КНР: В этом году Китай и Россия проведут вторые совместные учения по противоракетной обороне //http://russian.people.com.cn/n3/2017/0331/c31521.

[8] Сформировалась структура всестороннего сотрудничества между ВМС Китая и ВМФ России //http://russian.cri.cn/3060/2017/07/27/1s611184.htm.

[9] Противовес НАТО: чему научат друг друга российские и китайские военные //https://ria.ru/defense_safety/20170607/1496029828.html

[10] Стратегическое партнёрство России и Китая поставлено на паузу? //https://topwar.ru/119280-strategicheskoe-partnerstvo-rossii-i-kitaya-postavleno-na-pauzu.html.

[11] Россия и Китай — «стратегическое партнерство» //http://www.mirprognozov.ru/prognosis/politics/rossiya-i-kitay-strategicheskoe-partnerstvo/.