China-Russia Ties on the Rise

After several years of steady growth, the close ties between China and Russia is becoming a major factor in world politics. At their

Richard Weitz

After many years of false hopes and frustrated deals, China and Russia are beginning to make progress in establishing their long-anticipated energy partnership. A March 22 agreement would see the China Development Bank lend Russia’s energy giant Rosneft $2 billion in return for 25 years of guaranteed oil supplies, amounting to at least 37 million metric tons of oil a year starting in 2018. The deal also gives China National Petroleum Corporation (CNCP) the right to join Rosneft and other foreign companies in exploring three areas in Russia’s Arctic territories, thought to be rich in oil and gas. Having China contribute capital to help generate new Russian energy production holds great “win-win” potential for both countries. China is expected to become the world’s leading oil importer sometime next year and the new arraignments would enable Russia to provide almost one tenth of China’s imported oil, likely making that country the largest importer of Russian oil (it is only the fourth-highest now).

China and Russia might even soon consummate their long-sought natural gas deal. For more than a decade, they have agreed in principle on building new pipelines to transport billions of cubic meters (bcm) of gas to China but have been divided over price. Russian negotiators want Beijing to pay the same price as Europeans, whereas Beijing wants the lower price that China’s energy companies charge their domestic consumers. Shortly before the summit, Chinese and Russian negotiators pledged to reach a deal by the end of the year. A new idea to break the deadlock is to have CNCP make a hefty advance payment, which would effectively become a large interest-free loan. If this idea works, some 38 bcm of gas would begin flowing to China in 2018. The amount could eventually reach 61 bcm annually.

Furthermore, Chinese and Russian negotiators signed many deals to invest large sums in the transportation and other infrastructure, natural resource processing, and leading manufacturing and services companies of both countries. China-Russia trade has doubled in the past five years, to about $87.5 billion in 2012. After meeting Xi, Putin said that, “The large number of joint projects gives us confidence that we will soon bring our bilateral trade up to the $100-billion mark, and in the not too distant future will see it reach $150 billion.”

After several years of decline, China has resumed purchasing major Russian weapons systems. According to many media reports, China and Russia are finalizing a deal for the PLA Air Force to buy 24 Su-35 multi-role fighters as well as four Lada-class diesel submarines. Future deals might include S-400 surface-to-air missiles, IL-476 transport aircraft and IL-78 air-refueling tankers.

Both domestic and international considerations drive Chinese and Russian leaders to pursue good relations. The generation of Chinese leaders that recently took office considers having strong relations with Russia a major foreign policy asset. The Russian government, meanwhile, is particularly eager to secure Chinese investment to help achieve their goal of modernizing the Russian economy. Putin appreciates how China has been able to combine an authoritarian political system with a vigorous economy.

In their joint summit statements, Chinese and Russian leaders denounced various U.S. policies, though without naming the United States. Their criticism ranged from the U.S. missile defense program, U.S. military intervention in regional conflicts without UN authorization, and the U.S. penchant for interfering in their countries’ internal affairs by promoting liberal American values.

Conventional wisdom holds that, unlike other hegemons, the United States will not face a counter balancing coalition from its main rival great powers, in this case Russia and China. The scholarly literature has argued that economic interdependence, nuclear weapons, and the U.S. contribution to maintaining the global commons mean that China and Russia will generally accept U.S. military superiority and U.S. political supremacy in managing global affairs.

The United States may be the first hegemon in world history not to confront a countervailing coalition of other great powers, but presuming this state of affairs will invariably continue is poor scholarship and bad policy analysis. Ignoring this potential development risk inadvertently bringing it about. Prudence warrants that the U.S. policy makers consider how a deeper China-Russia alignment might arise, what effects it could have, and how it can best be prevented or managed.

Richard Weitz is a Senior Fellow and Director of the Center for Political-Military Analysis at the Hudson Institute. His current research includes regional security developments relating to Europe, Eurasia, and East Asia as well as U.S. foreign, defense, homeland security, and WMD nonproliferation policies.