The recent meeting of Xi Jinping and Vladimir Putin in Moscow highlights the growing importance that Russia and China have for each other in re-shaping both the economic and geopolitical agenda in Eurasia.
Russian President Vladimir Putin, center, and President of the People's Republic of China Xi Jinping, left from center, at a ceremony to lay flowers at the Tomb of the Unknown Soldier in Moscow.Photo: RIA Novosti
When Chinese President Xi Jinping visited Russia last week, most eyes focused on the most eye-catching part of the visit: Xi’s and First Lady Peng Liyuan’s honorary place at the traditional Red Square Victory Day parade, next to Russian President Vladimir Putin. Thus, the working part of the visit, which took place the day on May 8, remained overshadowed. However, it turns out that the core of Xi’s visit to Russia was looking for more ways for economic cooperation, not so much for a political or military alliance.
Russia’s Eurasian Economic Union meets China’s New Silk Road
One of the two framework declarations signed during the visit was related to the economy. Russia and China pledged to cooperate, even if only in a generalized manner, on the realization of two potentially competing projects involving Russia and parts of the former Soviet Union: the Russia-initiated Eurasian Economic Union and the China-initiated New Silk Road initiative.
Vladimir Petrovsky, a researcher at the Russian Academy of Sciences, at a pre-visit press briefing hosted by the think tank Russian International Affairs Council, predicted that if the declaration on The Eurasian Economic Union (EEU) – New Silk Road coordination were signed (as it eventually was), it would become “the main intrigue and the main sensation” of the Russia-China summit.
Previously, experts viewed potential confrontation between Russia and China in the post-Soviet space, especially in Central Asia, as a major risk for the two powers’ bilateral relations. Famously, in an anecdote widespread in the Russia-China diplomatic and scholarly community, Russian diplomats would have told the Chinese that, “Central Asia is our lady,” and asked them “not to dangle there.” To which the Chinese reply apparently was: “He who treats the lady dances with the lady.”
Russia and China have luckily evolved from this potentially offensive anecdotal definition of their relations with the independent states of Central Asia. Ever since China officially unveiled, on March 28, 2015, the blueprint of its “One Belt, One Road” strategy, an ambitious plan to more tightly connect Asian, European, and African continents through transport and infrastructure development in Eurasia, the region which includes Russia and Central Asia, terms such as “win-win,” “mutual benefit,” and “inclusiveness” have become a sine qua non part of the Chinese official jargon.
Signing of the joint declaration symbolizes that Russia, too, acquiesced to the inevitability of growing Chinese regional influence, and pledged to start a dialogue. According to the concluding terms of the declaration, the ultimate - although remote - result of their Eurasian cooperation could be the establishment of a “common economic space.”
The choice of other countries on President Xi’s Eurasian tour also demonstrates his search for establishing linkages between the Silk Road and EEU frameworks. His Russian visit was complemented by trips to Kazakhstan and Belarus, two other members of the Eurasian Economic Union. As Vladimir Petrovsky puts it, “Apparently, for Xi, the main item on the negotiations agenda is coordination between the Silk Road mega-project, Xi’s baby, and Eurasian integration within the scope of the Eurasian Economic Union.”
Steps to boost Russia-China bilateral trade
In the list of substantial bilateral agreements signed during the Xi-Putin summit, two joint declarations excluded, 93 percent are related to the economy. Counter-intuitive as it may seem to the audience used to natural resources as the main area of Russia-China cooperation, this time only 24 percent of agreements are natural resources-related.
The area of finance, banking and investment clearly stands out, accounting for 38 percent of all agreements, followed by R&D and high tech (21 percent), and transport and infrastructure (10 percent). The remaining 7 percent are related to media and information security.
High priority given to banking, finance, and investment is a reasonable policy to support the desired increase in bilateral trade volume. Russia and China have pledged to increase the volume of bilateral trade up to $200 billion in 2020, which will require an average increase of over 13 percent year-on-year for the next 6 years.
As Professor Xu Poling, an economic expert at China’s Liaoning University explains, “The crux is that Russia and China lack industrial and mutual investment cooperation, which makes it difficult to significantly increase the trade volume alone.” He calls financial cooperation, which involves credits from the Chinese banks and facilitation of investment mechanisms, “a major driver for deeper investment and industrial cooperation.”
The agreements in the high-tech and R&D area demonstrate the attempts to boost Russia-China innovation cooperation. They involve plans to develop a heavy lift helicopter model, joint exploitation of GLONASS and BeiDou satellite navigation systems, and more advances on the Russian telecommunications market for the Chinese company Huawei, this time through cooperation with Russia’s United Shipbuilding Corporation. Huawei is already an experienced player in the Russian market - its clients include Megafon, Russia’s second-largest mobile phone operator, and the state company Russian Railways, which currently ranks among the top three largest transport companies in the world.
By means of increased high tech cooperation, Russia and China plan to restructure their bilateral trade, making it more active. Both countries estimate that increasing the share of high tech production in their exports can resolve the dilemmas of their development models. For Russia, this implies overcoming its current dependency on the extensive exports of natural resources and for China, its reliance on polluting and labor-intensive manufacturing.
Russia and China search for equal status in the geopolitical order
It is too simplified to view closer Russia-China relations simply through the lens of Russia’s so-called “Asian Pivot.” What this view implies is that Russia, facing Western economic sanctions and political isolation over its involvement in the Ukrainian crisis, was forced to rely on China as a more “understanding” partner.
In reality, what brings the two countries together is that both Russia and China have long felt uneasy about the traditional Western-centered international development model. In both countries’ opinion, real or perceived, they have not been treated as real equals by the West, and they are struggling to change it.
For Russia, equal status is a natural right. Its approach, influenced by the Western egalitarian philosophy, promotes that equality of treatment should not need any justifications, such as a strong economic base or democratic government. Therefore, Russia, which did enjoy the status of a world-class power at least for a part of its history, is in the middle of an assertive political debate about its treatment by the West.
Russian leaders have repeatedly argued, and Putin reiterated it in the recently issued documentary “The President,” that Russia ended the Cold War “voluntarily,” not under Western pressure, realizing the flaws of the development model the Soviet Union had been promoting.
They expected that the subsequent fall of ideological barriers would result automatically in Russia’s idyllic integration into the Western community of nations. Therefore, issues that went counter to such integration, such as NATO enlargement to Russia’s borders and visa requirements for Russian citizens visiting Western countries, became stumbling blocks in Russia’s relations with the West.
In China’s view, equal status is a merited right. China is ready to make efforts to justify its equality mainly by underlining its economic power, as well as by improving the education of its population, promoting better social manners, and more recently, attempting to strengthen rule of law. In its political debate, China is cautious and reserved, behaving more like a “warm guy” (in Chinese, Nuǎn nán).
Although China’s imperial history might constitute a magnificent myth deeply engraved in its societal soul, Deng Xiaoping’s “reform and opening up” explicitly promoted that the “backwardness” of China should be admitted and that China should learn best practices from the West.
Subsequently, China maintained cooperative relations with international development institutions, such as the World Bank, looking for opportunities to gradually increase its presence and influence over them. Neither did China challenge the Western view of international development, according to which less developed nations need to adapt well-tested practices from more developed nations, even if it maintained the right to be selective in the process of adaptation of the international best practices to its own needs.
Despite these differences of methodology, both Russia and China arrived at the conclusion that, besides vertical ties with the West, they need to develop horizontal ties between themselves, as well as with other emerging countries and peripheral nations. Due to the relative lack of competitiveness of their economies, exclusive ties with the West left them with roles that are inferior to their ambitions and self-perceptions. In the case of Russia, it is the role of natural resources supplier, and in the case of China, that of cheap labor manufacturer.
The Ukrainian crisis had a catalyst effect on boosting Russia-China cooperation but did not change the existing structural framework. Russia’s relative strengths, including basic science, military and dual usage technologies, are more competitive and likelier to find a niche in China than in the West.
For China, exploring the under-served markets of Eurasia is an opportunity to capitalize on what it now feels experienced about: development infrastructure, transport and ready-to-use civilian technologies. And once markets are open and opportunities become abundant, chances are that fresh ideas will develop along with deepened experience.
For the West, which is used to promoting diversity within its own societies and has enjoyed engaging in self-righteousness when it comes to less developed countries, it is high time to hear, not simply dismiss, these dissident voices.
In the aftermath of Xi’s visit, on May 29, 2015, the Russian International Affairs Council, a leading foreign policy think tank, will hold a high-level conference, “Russia and China: New Partnership in a Changing World.” The conference agenda follows the general lines of the Xi-Putin summit. Three out of four parts of the conference will relate to economic issues, including trade, high tech and scientific cooperation, finance, investment, and Eurasian transport and infrastructure development. The remaining session will look into the role that Russia and China could play in redefining the rules of the game for the world order in order to make them fairer.
The registration for the conference is open to audiences and media from all countries. The working languages will be Russian and Chinese.