Dr Yu Jie
Good morning, ladies and gentlemen, and good afternoon for those who have come from Asia. Today, we’re joined by three delightful colleagues and to dealt with relatively easy subjects of two titans between China and Russia, and perhaps it’s one of the very few non-COVID-related seminars we’re running for this institute today.
Now, what I’ve noticed that recently, in this country, in the UK, two countries’ name has been dominated on the press. So, on the one hand, we’re talking about how UK should figure a new China strategy and then, on the other hand, there was an interesting Russian report being released by the Joint Intelligence Committee, within in House of Com – of House of Parliament last week. So, instead of we have Moscow-on-Thames and yesterday Sunday Times put forward a article, the so-called Beijing-on-Thames. So, irrespective what are the relationship, it seems to be the real estate’s investment between China and Russia towards the UK become one of the popular subject.
Anyway, put the press aside and let’s start with the serious business today, talking about the future relations between Beijing and Moscow. Now, joining me today I’m delighted to have Dr Maria Shagina, CEES Postdoctoral Fellow from University of Zurich. And, also, I’m delighted to have Professor Bin Ma of Institute of International Studies and from Fudan University, who’s the Russian specialist and who’s one of the young and upcoming Russian scholars in China. And last, but not least, I’m joined my – by a delightful friend and my dear friend and colleague, Mathieu Boulègue from Eura – Russia and Eurasia Programme of Chatham House, our very own Russian specialist, to talk about this rather complex subject today.
Now, today’s event it is on the record, so Chatham House Rule will not apply, and I would be delighted if most of you and all of you and all the audience, would join me by asking a lot of questions to our three distinguished panellists. So, I would like the three panellists to have a little bit time to explain their views and give their opening remarks and then I shall invite audience to type in your question in the ‘Q&A’ function. Now, let’s start looking to the E – Russia-China economic relations. You know, obviously, how does – how interdependent of these two titans between each other? And, obviously, we hear so much talking about decoupling between China and the United States and perhaps, if we are facing a real scenario of decoupling between Beijing and Washington, perhaps this will push Beijing and Moscow getting even closer. So, Maria, would you think so?
Dr Maria Shagina
Hello, everyone, and good afternoon and good morning. I would like to start with the economic side of the relationship and I’m very happy to be invited to this webinar. And in the first couple of minutes, I would like to talk about the nature of Russian-Chinese relationship and then I delve deeply into the economic side of the strategic partnership.
First of all, it’s important to know that Russian-Chinese relationship evolved over time and over the last 20 years, we’ve seen a shift from China being perceived as a threat by the Russians in the late Soviet times, then with the Global Financial Crisis 2008, we’ve seen that the Russian side looked at China as an opportunity and sometimes as a necessity to develop its under-developed Eastern territories. And recently, we’ve seen this shift to so-called a ‘wary embrace’, to embrace the Asian potential for its own development, as well, and also to shift its foreign policy to the Eastern side.
So, roots of their alignment run deep traditionally, but so is mistrust between them. And second point is that Russia is in more need to display their relationship as the closed one and we’ve seen constant references at the Russian side to alliance, that they define it as an ‘alliance’. Whereas, from the Chinese side, we never – the Chinese side never refer to this as an alliance and recently, the Russian side reconfigurate as a comprehensive strategic partnership of co-operation.
The last call between Vladimir Putin and Xi Jinping we’ve seen a new phrase, is ‘multifaceted strategic partnership’ and in the next minutes I’ll talk about how multifaceted it is in economic co-operation. And Putin talk about ‘unprecedented heights’ of this relationship, but, in fact, it is important to know that this relationship is also very much driven by external factors, by the US [inaudible – 07:42] foreign policy that drives this relationship closer than there is a genuine desire for it. And, also, the convergence is very much driven by negation, and here I mean is that there is things that unite them, there’s – against then, there are things that unite them for. And, also, the very personal bond that was forced between Xi and Putin is an important one to note. So, it will be interesting to see whether there will be a change with – change in their foreign policy.
When it comes to trade and investments, the relationships are very much asymmetrical in their nature. Russia’s share in China’s trade turnover is quite marginal, it’s below 1% and Russia ranks as the 12th largest partner for China. Whereas, China’s share in Russia trade turnover reached 15% last year and we’ll see how it changed after the pandemic a bit later. Also, the trade pattern had hardly changed over time, so we’ve seen this formula, whereas, China exports to Russia highly – high deal value goods and Russia exports hydrocarbons or raw materials and the percentage of this reaches 70%. There has been a failure to spur the non-energy exports with US-China trade war. We’ve seen some movement on this front of soya beans, but this is probably an exemption and, also, Russia didn’t manage to sign a truly – an FTA with China, due to its uncompetitive economy.
Also, on the investment side, we’ve see in this asymmetry that there is more investment from Asia than there was more – than – Russian investments in Asia, and the main impediment of for this is, of course, the adverse business climate in Russia that doesn’t incentivise Asian and in this case, Chinese, investments to come to Russia, and the compounding effect of sanctions also doesn’t help in this precarious situation. So, the area of co-operation we’ve seen it’s, for example, in the Arctic, where there is an overlap of business interests, despite the fact that, overall, the business climate is adverse, where interests overlap, Chinese investments do come.
On the Eurasian Economic Union and BRI, we’ll hear probably a bit more about this, but the bottom line is that there is a lack of economic fundamentals for these so-called win-win projects and out of 40 joint projects, none of them has been approved by the Chinese side. So, again, the adverse business climate and the, sort of, politization of their projects don’t help to advance on this multilateral front.
Post-Crimea we’ve seen, sort of, heightened expectations from the Russian side, “The Chinese will come and replace Western capital, Western investments.” That didn’t happen and there was certain overestimation by the Russian side to what extent the Chinese Government could push their private sector to invest. And the sober assessment came after 2016, when the Russians realised there is a need to change the strategy and the change in strategy has been a, sort of, traditional one, is government-to-government lending, government-to-government deals, and backing the with government-backed institutions, to fund certain projects. In all of these projects, high-level political involvement was crucial. It was take – the Russian side was taken by surprise that Chinese private businesses de facto followed the US sanctions. There’s been overcompliance and lack of expertise about the region, whereas, the surge in transactions haven’t been approved, even though they were illegal with the sanctions’ legislation.
The Chinese side used the, sort of, Russian isolation to its benefit and it capitalised on this isolation and they leveraged prices on a lot of sanctions hit projects, be it in energy sector or in defence sector, and China used Russia as a testing ground to advance its own equipment and technology. At the end, it became detrimental to Russia’s efforts to advance its input substitution and also, we haven’t seen a lot of trans – technology transfer from the Chinese side, whereas, we’ve seen movements that Western companies are eager to participate in the special investment contracts. To provide technology transference is one of the conditions to get state funds for that. There hasn’t been much movement on the Chinese side, and all of these points refer to one project in particular.
Yamal LNG illustrate this development post-Crimea, heightened expectations that Chinese supplied 80% of the equipment and also, mastered the technology in the Arctic first time and in the Chinese media has been touted as a Chinese triumph, whereas, in the Russian media, there’s been little reference to how much Chinese help was crucial for that project.
My third point is about diversification and since 2016/17, as I said, there’s been a sober assessment to what extent the Chinese private sector can step in and eliminate the sanctions burden. The Russian side advanced its diversification to other partners to minimise the stereotype of senior-junior partnership, and the pivot to other countries, as India, South Korea and Japan, intensified. And there has been, also, certain mis – understanding between China and Russia to maintain this distance, to avoid the optics that would be detrimental to Russia, to be the junior partner. So, China was very much aware of Russian sensitivities. But, also, this diversification to other countries is contingent on the incumbent domestic policies, be it India, South Korea or Japan. They also impeded by this lack of economic foundations, and when it comes to India, which is the most, probably, intensified pivot, as we’ve seen since 2019, India is probably not powerful enough to counterbalance China and due to its relationship with the US, there has been – there will be certain limitations to what extent it can balance. And other countries like Japan and South Korea are probably even less eager to jeopardise its relationship with theirs.
Post-pandemic, we’ve seen a growing asymmetry in economic terms, even more, and the first quarter of 2020 marked that China’s share has risen from 15, from last year, to 17%. Also, the share of the US dollar in cross-border payments dropped. So, China is becoming the country as the – the first country to recover from the pandemic, it will become the country to rely on for future loans or for future energy demand. And the recent forecast indicated that in South Korea, the L&G is not reviving to its levels, but also, GDP will be marked by -3%.
Also, China will have more influence as a buyer than Russia as a supplier and we’ve seen the developments on the Chinese front, when oil companies merged, formed a consortium to co-ordinate oil prices in the future, so that will diminish Russia’s leverage. But also, China is much less dependent on Russia as a sole supplier and post-pandemic, intensified their debates about the localised supply chains. Also, the emphasis on localised domestic production and the shift to the green energy, energy transition to the renewables is, by default, is more localised than imported.
But it’s important to note that this economic dependence doesn’t equate to political subordination and we shouldn’t expect any vassalisations or code between China and Russia. China will be clever enough to maintain these optics of more or less equal partnership on the political scene and, in fact, the pandemic probably decreased this distance between them in political terms, whereas, China’s image worsened, and we’ve seen that China’s been using Russian disinformation campaign techniques. But also, Russia has been emulating the digital surveillance programmes to monitor the COVID-19 patients. So, the main question will be to what extent China is willing to exercise this strategic self-restraint in the future, to what extent it will be willing to pander to Russian sensitivities and to maintain this? And post-pandemic we’ve seen, also, China’s foreign policy becoming much bolder and we’ve seen the sanctions coming now from China, something that’s been widely discussed at Valdai Club recently, that China’s been looking at Russia’s practice of imposing sanctions. So, this cohabitation is…
Dr Yu Jie
Yeah, obviously, Maria, I understand the key message coming from your talk is, obviously, the relations – even though – irrespective COVID or not COVID, it is asymmetico – asymmetrical relations. And, obviously, Mathieu and I did a long piece at work today, recently, just talking about why there’s so much asymmetry between Beijing and Moscow and perhaps, Mathieu, you could explain to us a little bit further on this?
Dr Mathieu Boulègue
Absolutely, thank you very much, Cherry and Maria, and good morning and good afternoon, wherever you are today. So, yes, the – I want to focus on the, sort of, the upside down of this relationship when we look at the Russia-China relations. We often talk about what works, where they co-operate and what it means to the West, in terms of balancing this co-operation. And we also tend to focus a lot on labelling the very nature of Russia-China relations, whether it’s an access of convenience, as Bobo Lo described, or a strategic alliance, or more a marriage of convenience.
But I’d like to take this problem upside down and look at introducing the irritants in this relationship, what doesn’t work. Because if it’s really a marriage of convenience, like any marriage, then, necessarily, you have some drawbacks and some low points. And it’s specifically because for Russia, this marriage is increasingly inconvenient, and I would like to introduce this from the Russian point of view and look at what are the insecurities in the Kremlin in managing China as a partner?
So, when you look at the sort of strategic ambitions, or at least the day-to-day management of the relationship, then it’s very clear that Russia needs China more than China needs Russia. Specifically, because whatever the theatre, specifically in the Asia-Pacific, but also in the wider world, Russia needs to balance out against China’s increased presence in parts of the world. Russia both needs to be close, but also trying to be distanced from China, and I’ll introduce these regional factors a bit later.
If you look at the way they view the world, then they have a very clear and different diagnostics of world affairs, different objectives in world affairs, and different means to achieve their desired end states. If you look at, for instance, the Liberal World Order and their world view on the Liberal International World Order, China benefits from it. They need the rules and regulations, but to turn them a bit more to China’s side, while Russia wants to do away with said rules and seeks to, in a way, destroy them to create a rule that is better, according to what the Kremlin believes it would be, whatever that is.
So, I would only state that there is a short-term alignment of very short-term interests in this relationship. Even through crisis, when you look at COVID, for instance, they’ve actually had tenser relations when it comes to border management, for instance. So, even in the day-to-day management of the pandemic, Moscow, at the end of January, for instance, unilaterally closed its border with China because of the virus. And you had a lot of disinformation and information coming from China and also, coming from Russia, saying that the main source of the coronavirus cases were coming from each other’s side of the border, which is not helping, in terms of building trust to fight the pandemic. And in broader strategic terms, a lot of activities Russia is doing in its far abroad reassertion, with Russia taking over entire parts and segments of relationships in Africa, in South America and in the wider Asia-Pacific, has a lot to do for Moscow on – in terms of keeping tabs on Chinese activities. So, there is always, as any marriage, this co-operation competition logic that I think need to be reintroduced in studying Russia and China more widely.
I will not linger on economic and financial terms, because they were brilliantly exposed by Maria. It’s just that the Kremlin is increasingly disillusioned about upholding this fallacy of a win-win equal fitting relationship. Russia fears that he might be defined as the junior partner and the relationship is actually about what Russia needs from China and what China wants from Russia, which is basically energy supplies, raw material, passage for the BRI, more projects and infrastructure to allow and become enablers for Chinese projects, not the other way round. Russia can only be a partner to China, but not the capital partner to China, which is, sort of, an irritant for the Kremlin.
If you look more closely at military security affairs, for instance, yes, there has been a very clear increase in joint military activities, with joint strategic exercises for the past three years between Russia and China across all the board, from ground, to naval, to aviation exercises. But I would argue, these are very limited in terms of the scope, in terms of what is actually done during these exercises and, also, because if you look at the very nature of this relationship, military-to-military contacts are still very low and the number of exchanges has actually – hasn’t increased that much.
There is always this mutual distrust coming from Russia, but also from China, to actually be forming a genuine military alliance, which is limiting the impact of having a purely integrated military or defence policy. And, also, because Russia still remembers the other Chinese technological theft, specifically in the military sector, when it comes to cannibalising entire parts of Russia’s military industrial segments that were replicated very quickly in China, which means that posture and profile has increased, in terms of co-operation, but not necessarily the content of this co-operation.
If we look more closely at regional affairs, for instance, if you take a map of the world and you look at where, actually, these irritants are showing, I would argue they show in four different places. The first one is the Arctic, obviously, because there is a difference normative, legal and economic understanding of Arctic governance. China wants global common, even for near-Arctic states, as China defends itself, where Russia wants to keep it a zone of national interest and national security, specifically for the passage of the Northern Sea route. So, basically, Russia and China will, and might, become commercial and normative opponents in the High North.
If we look at Central Asia more closely, I would argue that the Burden Sharing Agreement that has, sort of, defined post-Cold War bilateral relations between Russia and China in Central Asia is crumbling. China is making increased inroads militarily and in the security of Central Asian States, which is making Russia very uncomfortable with how it can leverage its interest to keep what it argues to be its sphere of influence, specifically in military and security terms.
If we look at the Far East, Russia would argue it’s already a contested environment, with a lot of propaganda coming on from the Kremlin about this ‘us’ versus ‘them’ narrative, the ‘Yellow Peril’ or the fear of the Yellow Peril coming to take Russian jobs in the Far East. It sort of sounds like the, “They took our job” logic from Donald Jump in – with Mexico. But this is the sort of same logic that is overamplified in Russia, the fear of the growing presence of Chinese workers and economic subsidies in Russian Far East regions. However, this has not materialised, and this is evidenced if you look at numbers of investment levels, or actual number of Chinese migrants, this remains very limited, but this is still an irritant that Russia is amplifying.
The last irritant is the fear of horizontal escalation in the Asia-Pacific, with Russia arguing that Chinese increased military and security assertiveness in Southeast Asia, for instance, specifically in the South China Sea, is making Russia very uncomfortable when it comes to potentially having to take sides, basically, either between Russia and the United States and/or because of fear of horizontal escalation that would affect Russian security in Northeast Asia.
So, quickly, in conclusion, Russia has a very dichotomic approach to China these days. I don’t want to try to coin the perfect label of what it is, but it appears that Russia wants a, sort of, closer relation, that would look like an alliance, more than China does, which also limits the ability of Russia to co-operate more extensively. Also, because Russia would want this relationship to be turned more actively against the United States, which is something that China’s not ready to do, lest it antagonised the United States even more than the relationship they are managing now. The problem is that Russia is an old geopolitical player in a world where China is shaping what looks like geoeconomic and geotechnological competition, which means that Russia will, in a way, have to balance out its influence, balance out its relationships, and position itself, according to Chinese influence, both at home and abroad. So, to be continued, thank you.
Dr Yu Jie
Well, thank you, Mathieu, as clear as always. Now, what I’ve noticed is that you refer to this partnership as between the so-called “fallacy of win-win relations between Beijing and Moscow.” I wonder how that would be seen in eyes of leadership in Beijing? So, perhaps Professor Bin Ma, you can enlighten us on this, how the – how Beijing actually see its own relationship with Russia? Was there really, truly a sense of romance between Xi Jinping and Putin? So, Professor MA, the floor is yours.
Dr Bin Ma
Thank you very much, and before my – I will focus on faux pas in the first days of the Sino-Russian relations in the free market, yeah. The second is about the challenges, the third is about the two countries into Asia. The fin – the last one is the BI, and before that, I think I have two things to make a declaration. The first is, a lot of thing we discussed is the starting point of a lot of discussion is China is – China and Russia is an alliance or is only the nor – their relations is an alliance or it’s only the normal relations. If we start from the two countries as alliance, there must be a lot of problems and, oh, a lot of alternatives. But if we start – if we look – when we look at the two country relations, we start from the coun – the two countries to normal stations, normal relations, a lot of – maybe a lot of – maybe we have a different spective.
The second is about the information of the different opinions from both countries, especially in the background of the social media. You can get a lot of radical ideas, a lot of people can give their own opinions or ideas about two country relations, or the other countries. But the ques – but the problem is that could we use these informations as the evidence to improvr – to prove it is these countries’ relations or it is these country – these countries’ governments’ attitude? And I think these two differences is very important for us, for our understanding about the two country relations.
Oh, the first thing I hope to share is the Sino-Russian relations in the China’s foreign policy framework and, as we know, Sino-Russian relations are an important part of China foreign policy framework. But Russia’s economic importance for China is much lower than EU, US, Asia and Japan, except to energy fields, such as oil and gas and this is a very basic fact for our judgment of two country relations. And China and Russia will not become a long-term alliance, but their consistence on some major issues is more prominent, such as the counter-terrorism, responding to the US pressure. And compared with the policies about access of Communist, which based on, kind of, commentaries, what we should worry more about is abo – is that the two countries working together, without obvious interests between each other.
And there are deep fissures between the surface is the normal and build on the facts, especially when we think our two countries’ issues over trade, FDI, etc., and evolving into a new normal, which dominated by ideologies, emotions, or some other similar factors, will bring much more challenges. And part of the challenges among two countries is that if the turbulent challenge between US-Russian relations up to 2007 or 2008 have caused huge challenges to Sino-Russian relations and now, there’s drastic changes in Sino-Russian relations have become a new challenge in the two country relations. And the drastic changes in the Sino-Russian relations are an opportunity for Russia to ease the pressure from the US. Although the triangular relationship between – triangular relationship in the Cold War area is different, China, Russia and the US have increasingly showed the characteristics of the triangular interaction in nowadays.
And about the two countries in Central Asia, the communities of the two countries are as prominent as their differences. How to manage the disputes is a big challenge to China-Russia relations. Commentaries such as anti-terrorisms, drug – and drugs crime and maintaining regional stability, different interests, such as how to view the growth of China’s economic influence. Compared with China, which mainly focus on the economic field, Russia has obvious comprehensive influence and advantages in situation. Therefore, how to manage the continuous expansion of economic and the trade exchanges between the Central Asian countries and China is a challenge to the two country relations. And at the present, the positive aspect for both parties to deal with the Central Asian issues is that there are already some practices and mechanisms to play as a co-ordination platform. The negative aspect is that there are many uncertainties in the situation in Central Asia, such as the economic and the political uncertainty. If those factors stable – unstabilise the – this region’s situation, well, how the two countries will see each other? And if they see each other as the causes of those instability, this will cause new challenges to the two countries’ relations.
And about the BI and EU and Chin – Sino-Russian relations, this analysis has an important prerequisite, which is whether BI and the EU have brought huge changes to the foreign policy models of China and Russia. If there are huge changes, the BRI and the EU will become an important new factor in shaping the Sino-Russian relations and if it’s not, then, this judgment requires further thinking. The second thinking is that the relationship between BI and the EU, although there are negotiations between China, the Russia – China and EU, it’s obvious that the scope and indeed the co-operation between BI and the EU are far less than the current China and the consecutive relations, China and the Russian relations. Therefore, it may be questionable to regard the relationship between the BI and the EU as a key indicator affecting the relationship between the – referred to as many – how thinking and many have analys – analysed. It is not enough to deny that this kind of relationship will add new content to the relationship between China and will relate to the countries or regions, but the influence of such content should be over – should not be overstated. And for a long time, China and the EU member states, their co-operation, mainly through the bilateral relations, not for the multilateral relations, but when we’re thinking the BI projects in this region, and it seems the BI and the EU have signed a lot of agreements and have a lot of progress. But if you look at the projects, actually, they are – the progress is not as good as we think.
And about the BI and the Sino-Russian relations, and as we know, at the beginning of the BI – at the BI was put forward that Russia’s attitude was not very active and when the EU was put forward and the two projects, BI and the EU, have negotiated, but China and Russia dominated this process. But there are – no matter – in my opinion, no matter the BI and the EU have agreements or co-operations, is those kind of co-operations will be much less than the China and the – than the co-operations between China and Russia and not the versus. And the BI and the EU will be the new – will be – it’s help be the – help becoming the new part of two country relations and the Sino-Russian relations maybe have still – have motivation to the BI and the EU, but not the BI and the EU will replace the – some other parts of the two countries’ relations.
Okay, that’s my abstract I’m sharing, thank you.
Dr Yu Jie
Well, thank you Bin Ma, for this. Now, I’ve seen a couple of questions from the audience and then I will try to group them and then let my panellists to answer a – well, I will try to fit into everyone in here, since we have, like, a fist of good questions in here. Now, let’s start with since Bin Ma talking about BRI and Mathieu was talking about the competition or co-operation between China and Russia and erratic, now, let’s start focusing on erratic. I mean, to what extent would you consider the issues with the erratic would be, somehow become a potential flashpoint of conflict between Beijing and Moscow, rather than an angle of co-operation? Now, firstly go to Mathieu and then Bin Ma, then Maria.
Dr Mathieu Boulègue
Thank you very much. It’s a really good question, as it is definitely a topic of interest. China is not looking for conflict in the Arctic, inasmuch as they change increasingly normative facts on the ground to make it a global commons, in an area defined as national interest in general, by the Arctic Coastal States. What China did with its Arctic strategy is, basically, to already put the, sort of, normative facts with near-Arctic policy, as if a state can define itself as near-Arctic and already create a bit of a stir up and in amongst Arctic Coastal States.
Now, Russia needs Chinese influx of money, technology and also outlets of energy to make sure the Arctic zone of the Russian Federation is active economically and in terms of – in energy terms. Which means that Russia is in, sort of, a conundrum, when it comes to a little China is necessary, if not mandatory, but too much China could be problematic for the very management of the Arctic Sone of the Russian Federation, which Russia turned into a very Russia thing, by hardening access and operation inside the NSR, the Northern Sea Route, to make sure that it happens on their terms and not on anybody else’s, which is already contested, because it is changing the very nature of Arctic management and governance.
Now, China can bid for time, because by the time China has a full-fledged approach to the Arctic, let’s say in the 20/30s/40s/50s, then it will no longer be a question of the Russian Arctic, but what happens North of North, the Central Arctic Ocean? And this will technically be unchartered waters, unchartered, not territories, but technically, international waters, according to UNCLOS, which will, for Russia, be a different layer of understanding because they will not be able to make it Russian, they will not be able to exert full control and comprehensive access over this theatre. Which will make things even more complicated for Russia, because what happens even North of North is something that will happen in the future. But China can bid for time, wait out until the 20/30s/40s/50s, when a potential Central Arctic Ocean is accessible, economically viable and interesting for transport. Until then, it will be very careful management and China will, of course, avoid antagonising the Kremlin into the management of the Arctic Zone of the Russian Federation. And I’ll stop there, thank you.
Dr Yu Jie
Maria?
Dr Maria Shagina
Right, I fully agree. Just to add a couple of points that Russia will invite China, at Russia’s terms, to the Arctic, as Mathieu pointed out. A Chinese capital investment, technology, in particular, is very much needed, something that is currently under sanction. So, this is one of the loopholes where Russia can acquire something that it can’t currently produce. But obviously, there is a, sort of, a thinking of sovereignty mistrust that’s been very much pronounced in the Arctic, in particular, recently, and we’ve seen the case where the now alleged espionage by Professor from a Russian university, who allegedly supplied information about the nuclear submarines. The information is probably one of the few competitive advantages that Russia has currently. It’s important for Russia to hold on this information.
So, there are some written worries to what extent the Chinese can develop their relationship, not just with Russia, but also with other countries, as their, sort of, relation LIR approach, to what extent Russia can control this expansion and I think it’s sort of, driven by two opposite sides. On the one side, it does need a Chinese investment, as the one that can be assigned more by, sort of, political order, by political command. Whereas, for example, Chinese and South Korean investments are much more limited in their extent, as I pointed out, yeah, in my talk, to what extent the Asian governments can force the private sector to invest in the Arctic. And we see in that South Korean companies, the KOGAS, ultimately did not participate in Arctic LNG 2, despite so much talks. Japanese did participate, but if we know the background of the story, the Mitsui Trading House only participated when 75% of the investments were covered by JOGMEC and JBIC, those are two government institutions and this was their, sort of, insurance that it won’t be detrimental to their own business.
And recently, Russia has been trying to invite, no, been trying to lure other Asian countries, such as India, to – Modi came to see the Zvezda Shipyard recently, to look how much progress Russia’s done with the leader, as this world’s powerful icebreaker. Also, Japanese companies have been, Sechin came to Japan a couple of times to invite him to Vostok Oil, because there is an understanding we need to hedge to other Asian countries, we can’t just rely on China so much. That’s it from me.
Dr Yu Jie
I have a quite funny question for Professor Bin Ma, perhaps, and I think he will be in the best position to answer this one. Now, essentially, from one of the member of Chatham House referring how, actually, close it is between Xi Jinping and Vladimir Putin, given their different background and systems, and how well they can understand each other? I mean, Bin Ma, from your observation from the senior leaderships in Beijing, I mean, what that tells you? Obviously, I cannot read this from peoples that remain involved, but I can only ask you to reading tealeaves from Beijing, so Bin Ma?
Dr Bin Ma
Okay, thank you very much and about the two people’s relationship, I don’t know how close they are, and – but according to the public materials, we can see that the two leaders have met a lot of times in every year, but – and about this phenomena, some people said it was the example of two countries have very good relations. But for my opinion and from – but from my opinion, the two countries probably met too much is not – maybe is not a good indicator of the two countries’ relations. Because if the two country relations are very good and the bureaucracies, and I mean the different departments in the government, they can solve the problem, there no need the two countries’ top leaders to deal with the issues by themselves, and that was my personal understanding. But as you know, both Xi and Putin have very active and very critical to deal with the two countries’ relations in the past several years. When the two countries have met some issues and the ministries could not, or the Diplomats, they could not figure out and the – and those two people, those two leaders were involved in this and they will have their advice or have their negotiations to push those issues to be resolved. So, according to my understanding, the two people’s – the two leaders’ personal relationship is not a factor to show the two countries’ relations and it depends on a lot of the other things. Okay, that’s my simple understanding about this one.
Dr Yu Jie
Thank you for this. Now, another question, I think this was perhaps pointed towards Maria and Mathieu. Now, given the recent rise in tensions between China and United States and, for the obvious reasons I was trying to see, will become a potential flashpoint again. So, are we expecting Russia to take a neutral stance in here, or are we expect to consider Russia will be taking either Washington’s side or Beijing’s side? Because what I’ve noticed something quite interesting is, as soon as President Trump announced to shut the Chinese Consulate in Houston and then Vladimir Putin and Donald Trump had a direct phone call with each other, so, possibly, what are these two being – has been discussing? So, Mathieu and Maria?
Dr Mathieu Boulègue
Maria, do you want to go first, or – okay, what are they discussing bilaterally that we don’t know and that we want to know, but we will never know, because there’s no way of knowing and do we really want to know? The thing is, thank you, Martin, for your question on, you know, managing neutrality and non-interference in an increasingly non-neutral and interfered world. I think it’s a question for Russia, mostly, now, of balancing China and making sure that Russia’s window of opportunity is as large as possible when it comes to managing Chinese inroads in an increasing number of dossiers in the world, as it were, with China being present everywhere now, in terms of wider geopolitical decisions and even day-to-day financial political management of – in the world, not just with Russia, but also in our systems in the West.
I don’t think China needs Russia, for instance, to manage its escalatory relationship with the United States, including the trade wars and so on. And just as much as Russia cannot risk antagonising China for a better relation with the United States, so there’s only limited option and policy options or – in the menu of options at the moment in the, sort of, love triangle between the three countries. And when you look at the policy of non-interference in internal affairs, if you look at the way China’s been behaving around the illegal annexation of Crimea or the war in Donbass, or the way Russia’s been handling the South China Sea claims, it’s a very complicated relationship, as well, because China is very much afraid of Chinese – of Russian military inroads and the way it is using brute force as a tool of foreign policy. Just as much as China is probably very weary about what is happening in the South China Sea could be replicated in other parts of the world, in terms of fait accompli policy, closer to Russian borders.
So, it’s a very dangerous bargain at the moment for the Kremlin to leave as many policy options and policy doors as open as possible, all the while balancing its interest, but without being able to fully align, for instance, with Global West, whether it’s the United States, or whether it’s the European Union. Now, yeah, I will stop there, because we’re on the record, but…
Dr Yu Jie
Maria?
Dr Maria Shagina
And just a couple of points to add to what Mathieu said, which I fully agree with, is that Russia is patiently watching this escalating trade war and China’s turning into this warrior in diplomacy. It doesn’t want to get entangled too much, because it will be clearly to the detriment. Russia is fighting many fights already, so this is something where they don’t want to get involved and to take a clear stance on that. And as I pointed out again in the talk, they would, sort of, prefer to a free ride on this trade war and, for example, to exploit as providing some agricultural products, while this trade war is going on, as with soya beans. So, they wouldn’t want to get into – involved in this, as China did with, yeah, a Russia-West relationship previously.
Dr Yu Jie
Okay, thank you for this. Now, I’ve noticed another contentious area between Beijing and Moscow is, obviously, regarding China’s increasing influence in Central Asia. Now, I know, Bin Ma, you have done some studies about Central Asia Republics and perhaps you could illuminating us to what extent would you consider that China’s increasing influence in Central Asia would perhaps lead into a final breakdown of the bilateral relationship between Beijing and Moscow, Bin Ma?
Dr Bin Ma
Okay, thank you very much, and I think for China and the Sin – for China and Russian relations, Central Asia is a very, very important region, who will affect the two coun – bilateral relations. And as we know, the two countries trying very hard to build the platforms to co-ordinate their relations in that – in this region. For China’s perspective and China have a lot of co-operations with the Central Asia countries, especially – mainly in the economic fields, like trade and FDI. But for the other fields, of course, there are other co-operations, economic and security. It includes the anti-terrorism, such as the border regions security is China and the Central Asian relations. But when the China and Central Asian countries have – their relations are agreeing and their corporations agreeing, and they’re turning – China also worry about the Russia’s concerns about this kind of co-operation. And as you know that two – China and the Central Asia’s co-operation in economic and security, but the security is limited, not the normal security, maybe, very low, very limited in the anti-terrorism, such as.
So, when the two country – when China and the Central Asia countries have new projects, like, for example, the [inaudible – 54:26] Co-operation or the Shanghai Co-operation Organisation, the Russian usually stand on the opposite side and they are reluctant to put those kinds of co-operations forward. And the – maybe the – maybe it is the worry about the China’s influence expanding this region through economic, through an – through economic way. But as we said, as we know, the China – the Russia have more comprehensive influence in this region and their relations with the political elites, you know, in Central Asia and their relations with the other elites and the society is very deep and stable. So, compared with China, Russia is much more influential in this region and, actually, they’re a long way to catch up Russia for China in this region. And so, as you mentioned, as they – as there are some – that as there are some issues will break the two countries’ relations, I think Central – although Central Asia is very important to China and Russia and the bilateral relations of Russia and China is much more comprehensive and important than the third pass, which can effect the two country relations.
Dr Yu Jie
Lovely. I notice of the shortage of time and then we need to just finish off pretty soon, which is the last one question and I’d like to invite all the panellists just to use one sentence to give a answer to me on this. Now, this question is, giving all these obvious reasons what we have described on China and Russia, and obviously, on the one hand, you have United States and UK talking about Liberal West, whereas, on the other hand, have United States and United Kingdom would consider this whole idea as a so-called illiberal international order, and what would you consider will be the best word to describe the so-called Sino-Russian relations? And do you actually see Russia pulling away from the alliances or from the partnership with China? Now, the order will go – we shall start with Maria first and then Mathieu, then Bin Ma. Maria?
Dr Maria Shagina
That’s a very difficult task to give an answer to, sorry.
Dr Yu Jie
One sentence.
Dr Maria Shagina
Okay.
Dr Yu Jie
Just one sentence…
Dr Maria Shagina
Right.
Dr Yu Jie
Yeah.
Dr Maria Shagina
I would stick to strategic partnership, which underlies the opportunistic nature of the relationship.
Dr Yu Jie
Okay and Mathieu?
Dr Mathieu Boulègue
I couldn’t do better than this, opportunistic partnership, and I would add in Greater Eurasia, which is something that is close to President Putin’s personal interest, something that he hammered down several times in official rhetoric, that, “It’s no longer about Global West, the liberal order is dead. It’s about Greater Eurasia and what happens there.” Because it is very much about non-hegemonical relations with China, which is very hypocritical, but that’s the way they describe it.
Dr Yu Jie
And Bin Ma?
Dr Bin Ma
Okay and one simple sentence is for two country relations in this agree – background I think is, they are two lost empire who needed to reidentify themselves, because – a little explanation, because of the – a lot of changes in nowadays and as we know, Russia and China as the country who are not the dominator role in the national relations, in the international community, and who depends on, who depends much on the European markets or US markets. And when the US and European have the new roles, they have to identify themselves again, to follow the roles of maybe the other way.
Dr Yu Jie
Right, it’s all about establishing new rules and destroy the old rules, okay, fair enough. So, we’re going to facing a more conflictual world after this seminar discussion. Now, I notice the time is up and thank you so much for all the audience and who has stay in front of the computer screen and spare your precious one hour on Monday morning with us. And also, please allow me to thank my three delightful panellists, Professor Bin Ma, Mathieu and Dr Shagina from University of Zurich. And now, this seminar is only the first series of what we do, regarding China and its relations with vast so-called BRIC countries. So, the first of the serie is on China-Russia relations and following by China-Latin American relations and also China’s relations with African countries, as well. So, just stay in tune and hopefully to see you all next time. Thank you so much.
Dr Bin Ma
Thank you.
Dr Mathieu Boulègue
Thank you everyone. Have a great day, bye.
Dr Maria Shagina
Thank you, bye, bye.
Dr Bin Ma
Thank…
