WLadimir Putin likes to keep people waiting. The Kremlin chief is known for his – well-calculated – delays. According to observers of the Russian President, the big and only exception among the world’s heads of state seems to be China’s Xi Jinping. And Xi Jinping is pretty much the only one Putin has never made fun of in public.
This is all the more eye-catching because Russia’s arch-rival USA, under Donald Trump, took on China to at least slow down its rise to become a political and economic superpower. Putin took a different path. He has turned Russia away from its main partner Europe and turned to China. Initially quiet, since the imposition of western sanctions due to the illegal occupation of the Ukrainian peninsula of Crimea in 2014 loud and demonstrative.
The focus is not so much on geopolitics, which Russia is pursuing quite independently, knowing that China would at least not discipline it. What Russia is trying to demonstrate is an economic turn to Asia while reducing its previously heavy dependence on Europe.
“In economic terms, any sanctions that have been imposed on us have of course driven us to cooperate more actively with the Asian countries,” said the then Russian Prime Minister Dmitry Medvedev in 2015: “So many thanks to the states that adopted these sanctions. I’ll be honest with you. “
China needs Russian oil and gas
Indeed, Russia has just made some progress towards China. The bilateral trade volume rose from 88.8 billion dollars (73 billion euros) in 2013 to almost 111 billion dollars in 2019. China’s share of Russia’s foreign trade volume rose from 10.5 percent to 16.6 percent in the same period .
The corona crisis is accelerating this trend: In the first half of 2020, China’s share was already 18 percent. This is because China is the first country to recover economically after the pandemic and needs more oil and gas, writes Alexander Gabujew, Asia expert at the Moscow Carnegie Institute, in an analysis.
In contrast, the EU’s share of the Russian trade volume fell from over 50 percent to less than 45 percent recently. Without the UK, the share of the rest of the EU dropped to just 39 percent. The decisive factor here is not the absolute figures, which show a decline in the volume of foreign trade for Russia between 2013 and 2019 by a fifth because the oil price is low and the country is plagued by a severe economic crisis – it is the general trend that counts.
“The EU sanctions in 2014 and the subsequent Russian import embargo on European agricultural products pushed the shift to Asia,” said Timofej Bordachev, Asia expert at the Institute for the World Economy at Moscow’s Higher School of Economics, in an interview with WELT. “But thinking about the liberation from one-sided dependence on Europe began in 2008.”
China has ousted Germany from the top
Significantly, China overtook Germany as Russia’s most important trading partner in 2010. And shortly afterwards, in November 2013, before the military intervention in Ukraine and the subsequent sanctions imposed, the government in Moscow decided to strategically develop the Far Eastern part of the country as the “main project of the 21st century” and thus expand the volume of trade with Asia .
In the meantime, China has opened its agricultural market to Russian soy and poultry, which Russia produces near the common border with high subsidies – and with cheap Chinese labor until the outbreak of the Corona crisis. Asian expert Bordachev speaks of a “very great dynamic” and “contrary to expectations, completely rapid development”.
This is evident not least on the rails. Between 2013 and 2019, the transit of goods between China and Europe on the Russian railroad increased almost twenty-fold from 44,000 container units (TEU) to 750,000 TEU.
That is still little compared to the amount of goods moved via the cheaper sea route. But Xi Jinping started subsidizing the railroad after the New Silk Road initiative started. Due to the trade war started by Trump, he has further intensified funding for geostrategic reasons.
Similar regimes with similar problems
“In the short term, Russia has no choice but to move closer to China,” writes Gabuev. The reasons for this are not just the various crises, but “objective”: The common border requires security guarantees; In addition, the two regimes are similar and have to struggle with similar problems.
In addition, the structures of the two economies complement each other. Today Russia is getting modern technology from China after it is no longer allowed to buy it in Europe due to sanctions. In return, Moscow helped the Chinese set up their own missile warning system.
Moscow has staged the most publicly the raw material exports. Aside from the export of Russian wood, the Rosneft oil company signed long-term supply contracts a decade and a half ago. In 2014, at the height of the Crimean crisis, the gas company Gazprom was finally able to announce, after more than ten years of negotiations, that it had signed a gas supply contract with China for $ 400 billion and a 30-year term.
For a year now, the new “Power of Siberia” pipeline with its 38 billion cubic meters of capacity has been delivered. For the time being, however, only in small quantities. And for Russia under significantly worse conditions than to Europe including Turkey, to which Gazprom delivered almost 200 billion cubic meters of gas in 2019.
That is not the only imbalance in relations with China. Despite all the affirmation of the partnership, a mistrust that has grown over decades still dominates. “There is a lack of mutual experience, especially at the economic level,” says Asia expert Bordachev.
In the area of investments, it is noticeable that Chinese entrepreneurs are too uncertain about the situation in Russia and that the Russians for their part are keeping the Chinese away, especially since they are considered to be extremely tough negotiators. For this reason, and because of its geography alone, Europe will remain the Russians’ most important economic partner, says Bordachev: “especially if the second gas pipeline through the Baltic Sea is built”. What is meant is Nord Stream 2.
“While we have centuries of experience with the West, we don’t know who is who with the Chinese,” said Alexej Makarkin, Vice-Head of the Moscow Center for Political Technologies, in an interview with WELT. Makarkin puts it this way: “For a long time, Moscow has not understood that China, which is becoming ever more powerful, does not need partners, that China only sees Russia as a junior partner for cheap raw materials, as many observers believe. China is using Russia for its dispute with the USA. “
Chinese are adhering to US sanctions against Russia
Beijing’s trade with the US is much more important than that with Russia, if only because of its volume. It is no coincidence that Chinese companies have repeatedly failed to finance and invest in Russia because they adhered to US sanctions. Even Putin’s spokesman Dmitri Peskov had to admit that some time ago: “Of course, our Chinese partners are often careful,” he said.
Why Beijing also refused this year to provide Russian researchers with a live coronavirus strain so that they could develop a vaccine is not understood in Russia. Regardless, the country seems lured by China’s post-pandemic economic recovery to continue turning to Beijing.
The once demonstratively desired pan turns into a forced, involuntary one. “The virus and its consequences will force Russia and China to rapprochement much faster than is comfortable for both countries, between which there is still great distrust,” said Gabuyev. Putin’s unusually polite dealings with Xi Jinping could therefore not only be based on respect for the Chinese head of state – but also on great fear of him.