Russia Direct’s new Brief outlines both the risks and opportunities that closer political and economic ties with China pose for Russia.

Russia's President Vladimir Putin, right, and his Chinese counterpart Xi Jinping in the Grand Kremlin Palace in Moscow. Photo:Reuters

Amidst the heated debates about the future of Russia-China collaboration, Russia Direct has released a new Brief - “Russia reorients to the Orient” - that describe the implications of collaboration between Moscow and Beijing for the world. The report presents several scenarios for the development of the Russia-China relationship.  

In a best-case scenario, China will become a reliable trade and technology partner capable of supporting Russia’s economic development in the Far East,” the report suggests. “In a worst case scenario, Russia may find itself deferring to China on important strategic issues as a result of its continued reliance on commodity exports for economic growth.”

At the same time, the report clarifies how recent economic developments – like the $400 billion gas deal between Gazprom and China National Petrolium Corporation (CNPC) – will impact Russian foreign policy in the Asia-Pacific region.

“For both Russia and the West, economic growth in China is the key to resolving a number of long-term domestic growth issues,” wrote the author of the report Vassily Kashin, Senior Research Fellow at the Moscow-based Center for Analysis of Strategies and Technologies. “While the U.S. pivot to China has been largely unsuccessful, Russia’s pivot to China shows promise of building the foundation for the nation’s long-term economic development.”

Kashin points to the Ukrainian crisis that, according to him, has significantly catalyzed Russia-China economic and political collaboration.

“Throughout the crisis, China has been careful not to express its direct support for any side,” he argues. “Despite the restraint of the country’s official statements, China’s steps in forging closer practical ties with Russia, as well as Chinese media coverage of the Ukrainian situation, have left no doubt that Beijing’s sympathies lie strongly with Moscow.”

In the report, Kashin describes in detail different aspects of Russia-China collaboration, including the energy deal between Gazprom and CNPC, bilateral military-technical cooperation, joint initiatives in space exploration and aviation as well as energy infrastructure projects such as the “Power of Siberia” gas pipeline, through which Russian gas will flow to China and which costs $70 billion ($20 billion more than the Sochi Olympics).   

In addition, Kashin warns against some threats that China might pose for Russian in the current situation and, consequently, that might encourage Moscow to diversify its economic and political ties with other Asian countries. 

“The main threat to Russia in the current environment is China’s monopolization of foreign relations,” he wrote. “The Chinese are tough trade negotiators, and total dependence on the Chinese market, where large state-owned companies dominate the commodity sector, is not in Russia's interests. In case of further Western sanctions against Russia, with the potential compliance of U.S. partners in the Far East, such as Japan and South Korea, Moscow will have nowhere else to turn but Beijing. As a result, in the coming months, we can expect to see Russia attempt to strengthen partnerships with other promising economic partners, particularly in Asia.”

While Russian-Chinese relations “display a high degree of mutual trust” in the military-political sphere, both sides “retain contingency plans in case relations suddenly deteriorate and military projects provide for such a scenario,” Kashin argues.

He calls for Russia to carefully balance the potential risks and gains from each project with China.

“The task of diversifying Russia’s foreign economic ties with Asia remains important,” he believes. “In view of the crisis in relations with the EU, which may drag on for years, if not decades, relations with the developed Asian economies — Japan and South Korea — will become crucial.”

What specific opportunities and challenges does China present for Russia? What will dominate in Moscow-Beijing collaboration in the future: rivalry or partnership? Will two geostrategic rivals be able to find common ground? Subscribe and download the full version of the Brief to find out.