The limits to Russia and China’s ‘no limits’ friendship

Author: Anna Kireeva, MGIMO

The summit in early February between Russian President Vladimir Putin and his Chinese counterpart Xi Jinping during the Beijing 2022 Winter Olympics came amid yet another crisis in Russia’s relations with the West. Putin and Xi had not met since the start of the COVID-19 pandemic, but the meeting highlighted a common desire to deepen cooperation. The major takeaways were in geopolitics and energy. China demonstrated a strong understanding of Russia’s security concerns over NATO but there were no fundamental developments.

China voiced its endorsement of Moscow’s policy vis-a-vis NATO and the West — primarily due to shared concerns about US policy. The Russia–China joint statement declared that the relationship surpasses an alliance and that there are no prohibited areas of cooperation. The two states demonstrated diplomatic and political support for each other to amplify their international standing against the background of turbulent global and regional dynamics. On balance, the summit was indicative of growing alignment between Moscow and Beijing, but it fell short of bringing about a drastic change in the relationship.

Rhetoric of opposing military alliances, exclusive blocs and institutions, and rules and norms articulated by a chosen few — as well as the US missile defence system — is hardly new for Russia–China joint statements. Neither is the not-so-veiled criticism of the United States for acting as a hegemon and its Indo-Pacific strategy. Following this logic, it is unsurprising that Moscow and Beijing articulated their concern about AUKUS, which they view as aggravating regional security, triggering an arms race and creating serious risks to the non-proliferation regime.

The joint statement also included a clear mention of Russian support for the ‘one-China’ policy, stating that Taiwan is as an inalienable part of China. But this position has precedent dating back to joint declarations of the 1990s and the 2001 Treaty of Good Neighbourliness and Friendly Cooperation.

What was really new was China’s support for Russia’s stance against NATO enlargement. The statement says that China respects and supports Russia’s proposals for long-term legally binding security guarantees in Europe, a clear reference to the document that Russia handed to the United States and Europe in December 2021. Although such a step by China’s leadership clearly indicates a greater level of diplomatic support for Moscow, it is unlikely to evolve into anything deeper.

As Moscow and Beijing feel pressure from the West simultaneously, they tend to be more supportive of each other. Yet this falls short of transforming the relationship into something more formal.

Rather than entering a full-fledged military alliance, it seems more likely that Moscow and Beijing may upgrade their security cooperation and improve interoperability without any formal obligations. Russia has no desire to become engaged in China’s numerous conflicts in Asia and prefers to maintain a neutral stance. The same is true for China and Russia’s conflicts with NATO — Beijing values its economic cooperation with Europe and the United States and has no desire to become entrapped in the conflict over Ukraine.

The military crisis in Ukraine puts China in a difficult position as it tries to avoid endorsing or condemning Moscow’s actions by highlighting peaceful resolution, refrains from criticising Russia or calling its actions an invasion, opposes Western sanctions and puts the blame on the United States for failing to implement the Minsk agreements. These statements represent China’s understanding of Russia’s actions, but are not signs of direct support or anything other than diplomatic goodwill. It remains to been seen how much economic support China will be willing to provide Russia and how it will be dealing with the Russian entities under American and European sanctions considering the much larger importance of its economic cooperation with the West and the challenge of secondary sanctions that it would prefer to avoid.  On the other hand, there is a view that with an increasing number of Chinese companies targeted by American sanctions, China might be more comfortable cooperating with Russia, including importing more natural resources and exporting its manufactured goods to fill the market vacated by European and American companies.

The economic agenda of the visit, with two energy deals, should not be overlooked. One deal between Rosneft and China National Petroleum Corporation (CNPC) entails Russia exporting 100 million tons of oil over the next 10 years via Kazakhstan. The oil will be processed in the northwest of China. The second contract, between Gazprom and CNPC, focusses on Russia’s export of 10 billion cubic meters of natural gas from the Russian Far East. Together with the Power of Siberia gas pipeline, it will amount to 48 billion cubic meters of natural gas exports per year.

These deals are the result of long-standing negotiations that reflect an expanding energy partnership and Russia’s policy to diversify its exports to make Asia one of its major customers. China, with its rising energy demand and proximity, makes a natural energy partner. In turn, Beijing is more than happy to diversify its own sources of energy imports. Exporting oil and natural gas to China is proving to be even more important to Russia because its exports to Europe are bound to contract following the military conflict in Ukraine.

As Xi mentioned during the talks, trade turnover between Russia and China in 2021 amounted to US$140 billion — a new record compared to the pre-pandemic US$110 billion. It is also a 35 per cent rise from 2020. But despite the positive rhetoric, economic relations still have a long way to go.

While the two energy deals will help both states achieve the goal of US$200 billion in trade by 2024, they are hardly helpful in changing the unbalanced character of economic relations. The increase in trade turnover in 2021 follows the rise of energy prices. Despite Russia’s attempts to ‘de-dollarise’ bilateral trade, only about 30 per cent is conducted in national currencies, with the Euro taking the bulk of it (48 per cent in 2021). Currently the financial transactions between Chinese and non-sanctioned Russian banks are proceeding in a regular manner. However, American and European financial sanctions and the difficulty of rouble-dollar and rouble-euro conversions are stimulating the banks of both Russia and China to employ national currencies in a greater way than before. Restructuring economic cooperation and initiating advanced value chains and high-tech ventures will not be an easy task given the latest Western sanctions against Russia.

Anna Kireeva is Associate Professor at the Department of Asian and African Studies and Research Fellow at Center for Comprehensive Chinese Studies and Regional Projects of Moscow State Institute of International Relations (MGIMO University).

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