13 June 2012

Vladimir Putin, who took the chair of president for the third time in a row, made his first trip abroad in Asia to China. Putin also attended the Presidential Summit of the Shanghai Cooperation Organization (SCO) during the visit which took place between the 2nd and 7th of June. Both increasing the bilateral trade volume and energy deals, as well as the issues concerning Syria and Iran among the urgent matters of the international agenda, were included in the agenda of the meeting which was carried out as China is getting ready to assume the rotating presidency of the U.N. Security Council.

The article titled “Russia and China: New Horizons for Cooperation” was drafted by Putin before the visit, and was published by the Chinese newspaper, People’s Daily. The mood of optimism, which was created by international media organs because of Putin highlighting the potential of cooperation in the fields of civil aviation, common space research and high technology, fades away with a glance at the Russian media. Because even though the potential of their bilateral relations is mentioned with great hopes, Russia is aware that balancing China in the long-term is getting harder.[1] In this respect, it is difficult to conceptualize the dual nature of relations oscillating between cooperation and competition.

Putin’s Agenda in Beijing

Deputy Prime Minister Dmitry Rogozin, Foreign Minister Sergey Lavrov, Minister of Industry and Commerce Denis Maturov, Energy Minister Alexander Novak, Minister of Transport Maksim Sokolov, Vice President of the Federal Tourism Agency of Russia Alexander Radkov, President of the Federal Migratory Service Konstantin Romodanovsky, and Minister of Development of the Russian Far East Viktor Ishayev all accompanied President Putin. In addition, the General Director of energy giant GAZPROM Alexei Miller, Nikolay Tokarev who happens to be the Chairman of Transneft, the Chairman of Rosneft Igor Sechin, and General Director of Rosatom Sergey Kiriyenko were also included in Putin’s team.[2]

The inclusion of six ministers and the heads of Gazprom as well as other energy firms demonstrates that energy constitutes one of the priority headlines of the visit’s agenda.

Energy is an item the potential of which is not fully realized in Sino-Russian economic relations. While Russia is the largest producer of petroleum, China is not only the fastest growing economy, but the primary consumer of energy in the world. To express in numbers, China is the largest consumer of energy after the U.S. with its 10% share in the global consumption of energy. Russia fulfilled 7.8% of the total Chinese demand for energy resources in 2009, and 6.8% of it in 2008. The amount in question is expected to increase with the East Siberia-Pacific Ocean Pipeline Project (ESPO). The Skovorodino-Daqing branch of this very pipeline project was inaugurated on January 1, 2011, and thanks to this branch 300,000 barrels of oil are transported every day. Despite the advantage of geographical proximity, China does not meet its crude oil demand from Russian resources but from Middle Eastern and African countries.[3] In the mid-2000s, ex-Minister of Industry and Energy Viktor Hristenko indicated that they were planning to increase the amount of crude oil exported by Russia to the Asia-Pacific region from 3% to 30%, and natural gas exports from 5% to 25% by 2020.[4] The main address here is obviously China as one of the largest energy consumers.

With a glance over the delegation which accompanied Putin during his visit to China, it is understood that Russia is willing to increase cooperation with China in the field of energy. Before the visit, Cheng Guoping, Deputy FM of China, stated that “the leaders of the two countries will have an exchange of views over huge and strategically vital projects.” The construction of a natural gas line is also being discussed between the relevant institutions from both countries. According to Chinese news agencies, Russia and China are getting ready to initiate a great partnership in the field of energy. It is also mentioned that China will invest in Moscow’s oil and natural gas resources and a natural gas pipeline is to be constructed between the two countries.

The Asymmetrical Nature of Commercial Relations is Alarming

The economic relations between the two countries bear great importance in terms of global political economy. The most astonishing feature of the cooperation between Russia and its biggest economic partner China pertains to the development of Siberian provinces. The agreements signed during Putin’s visit to China in 2009 only pointed to this very situation. On the other hand, China procures whole items such as military equipment, and a significant portion of some other items (oil, timber, raw materials) from Russia.

The trade volume between the two countries reached the level of 80 billion dollars by 2011, increasing 43% in comparison with the numbers of the year before.[5] Russian President Putin and Chinese President Hu Jintao have stated that their target is to uplift the current volume of bilateral trade volume, which amounts to 84 billion dollars, to the level of 100 billion dollars in 2015 and 200 billion dollars by 2020.

While China is Russia’s largest trade partner, it is positioned as Russia’s second largest export market. Conversely, the arms trade which had begun during the Yeltsin era and continued during Putin’s has a significant influence on economic relations. Likewise, Russia was the primary supplier of military equipment to China from the 1990s until 2007. But China’s appetite for Russia’s supply of arms which are left behind from the Soviet era is decreasing as a result of China’s tending to develop its own defense industry. As a result of China reducing the scale of weapon systems and other technological products imported from Russia ever since 2007, the balance of trade between the two countries has shifted in favor of China. Beside China’s increasing capacity for weaponry production, its inclination toward joint production and licensed products will seemingly lead to a decrease in trade revenues on one side and on the other a reduced dependency of China on Russia. It can be said that Putin, while shifting to cooperation in the field of energy, is aiming to balance the situation which has the potential to evolve to the detriment of Russia.

Moscow-Beijing Relations at a Glance

It is visible that in the recent era, when the bilateral relations are analyzed, U.S. hegemony in the international realm incarnated after the attacks of September 11, as NATO’s intervention in Kosovo, the War in Iraq, and color revolutions in ex-Soviet geography have all contributed to the convergence between Russia and China. The unilateral initiatives undertaken by the U.S. and the common ideal for creating a multi-polar world order within which China and Russia will take their places as distinct poles both serve as reasons establishing grounds for enhancing Sino-Russian cooperation. Both sides also meet on the same grounds regarding the rise of religious fundamentalism.

However, the intensity of relations can be deceptive, inasmuch as there are natural boundaries for cooperation. Despite cooperation in selective fields, relations with the West are considerably important. China is no alternative for Russia, but a big neighbor and a focus of economic might.

Similarly, Beijing is also aware that Russia constitutes no alternative to its relations with the West. Hence, when the subject is billions of dollars of trade surplus, technical and administrative education for new generations, technology and foreign investment; Russia is also not an alternative for China.

From this point on, even though basic concerns regarding the structure of the international system lead Russia and China to find common grounds, the relations with the West bear a great amount of significance for both Moscow and Beijing. Russian officials are well aware of the fact that China is a power which is becoming more difficult to constrain and balance in the near future with regards to both its growing influence in Central Asia and its economic enormity. Also, the document named “Strategy 2020” which was prepared in Russia has pointed out this situation.

As a result, the relations between the two key countries of the region have shown their international character by the rising popular movements in the Middle East and Northern Africa. Putin and Hu Jintao, who have been converging with the help of motivational factors described above, have invited all sides to conform to the peace plan, as they have been repeatedly calling for peace for the last one and a half years. While doing that again, they have once again opposed international intervention in Syria in recent days. It is fairly difficult to describe the relations as an alliance between Russia and China, which oppose foreign intervention and base their arguments upon the principle of state sovereignty; it is the international agenda which brings together both sides as “partners.”

[1] “Шанхайская организация разрывается между организаторами”, Коммерсантъ, 7 June 2012, http://www.kommersant.ru/doc/1952696.

[2]“Владимир Путин закрепит дружбу с Пекином”, Коммерсантъ, 5 June 2012, http://www.kommersant.ru/doc/1951802?themeID=136.

[3] Erica, S. Down, “Sino-Russian Relationship”, Brookings Institute, http://www.brookings.edu/~/media/research/files/papers/2010/8/23%20china
%20russia%20energy%20downs/0823_china_russia_energy_downs.pdf.

[4]James, Bellacqua, “The Future of China-Russia Relations”, (Kentucky: University of Kentucky Press: 2010), s. 151.

[5]Федеральная служба государственной статистики, (Russian Federal State Statistics Service, Foreign Trade), http://www.gks.ru/bgd/regl/b11_12/IssWWW.exe/stg/d02/26-05.htm.