Over the past decade the center of gravity of the global economy has moved to Asia, and shifts in the strategic balance of power are sure to follow. One of the biggest unknowns in the emerging global system is the Russia-China relationship.

Alarmists in the West warn of the birth of a new anti-American bloc, forged out of shared authoritarian values and antipathy to America’s global leadership role. Sceptics argue that deep differences between Russia and China will prevent them from ever forging a genuine alliance, pointing to factors such as cultural distance, historical rivalry, and divergent economic interests.2 And even if such an alliance does emerge, Russia would likely be forced into the role of a junior partner.3

The truth lies somewhere between these two poles. The Sino-Russian relationship is complex, opaque and in flux. The debate over whether a Russia-China alliance is for real has been going on since the two countries restored relations in the 1990s, and is unlikely to be resolved anytime soon.

Drawing together

After decades of distrust, Russia and China established a close working relationship in the 1990s. The 2000s saw increased bilateral trade, with the opening of a new oil export pipeline in 2009. Cooperation reached a new level in the wake of the 2008 global financial crisis, which exposed the inadequacy of the Western-led system of global governance. The APEC summit which Vladimir Putin hosted in Vladivostok in 2012 is widely seen as marking a “pivot to Asia” (though Putin himself has never uttered that phrase).

Putin met President Xi 10 times in 2013-14.4 During Xi’s visit to Moscow in May 2014 Putin said that relations “at their highest level ever,” and signed a $400 billion deal to build a natural gas export pipeline to China.

A crucial factor behind Putin’s “turn to the east” was his frustration with Russia’s political isolation in Europe, and fear of Western promotion of regime change, as manifested in the “color revolutions” in Georgia, Kyrgyzstan and Ukraine in 2003-5 and the Arab Spring in 2011.

Russia and China closed diplomatic ranks in opposition to US military adventurism in the Middle East. They jointly vetoed four U.N. resolutions condemning the Assad regime in Syria (and two more, on Burma and Zimbabwe).

And then came Ukraine. Russia’s annexation of Crimea in March 2014 and sponsorship of separatist uprisings in East Ukraine triggered Western sanctions – and then Russian counter-sanctions (a ban on food imports). Combined with a 70% fall in the price of oil, the sanctions caused a recession in Russia, threatening to undo the boost to Putin’s legitimacy that resulted from the Crimean gambit.

China is usually a resolute critic of secessionism, but in this case it seems to have accepted Moscow’s argument that Crimea rightfully belonged to Russia, and that the West was trying to pull Ukraine into its sphere of influence.5 China abstained in the U.N. vote which condemned Russia’s annexation of Crimea (though it did vote for a later IMF loan to Ukraine, over Russian objections).

China is widely seen as the main strategic winner of the Ukraine crisis, which has weakened and distracted both Russia and the West.6

Meanwhile, China itself was stepping up its campaign to assert sovereignty over islands in the South China and East China seas. Russia has stayed on the sidelines of these brewing disputes, not least because of its desire to maintain good relations with its ally Vietnam, and improve relations with Japan. China has also inserted itself into the race to develop the Arctic as a transport route and source of oil and gas supplies, joining the Arctic Council as an observer in 2013.

There is modest public support for the alliance in both countries. China is one of just three countries where the 2015 Pew survey found a majority of respondents with a positive view of Russia (the others were Vietnam and Ghana). However, China’s support was just 51% in 2015, down from 64% in 2014 – while Russians’ approval of China rose from 66% to 79%.7

Points of difference

While there are clearly areas of common interest, there are also some structural differences which will keep the two partners at arm’s length.8

The two countries are united in wanting to counter what they see as U.S. domination of global economic and political institutions, and U.S. military hegemony (including a possible global anti-missile shield). They both resist American efforts to spread democracy through the promotion of regime change. They both face the threat of Islamist terrorism and secessionist movements; and have a shared interest in stability in Central Asia.

Also, they both stand to gain from economic cooperation, with Russia’s massive reserves of natural resources poised to meet China’s demand as her own supplies of oil, arable land and water decrease. China has long been an important customer for Russian arms, and China needs Russia’s fifth-generation fighters and air-defense systems if they are to challenge U.S. military dominance beyond their shores.

However, the two countries have had a contentious past, and face divergent futures, which makes for an unstable present.

Regarding the past: despite the fact that the common border was demarcated to each side’s official satisfaction in 2005, many Chinese are still animated by the “unequal treaties” forced on them by European powers in the 19th century – such as the 1858 Aigun Treaty which granted 600,000 km of Chinese territory north of the Amur River to Russia. The fact that there are only 6.4 million Russians inhabiting those territories (down 20% since 1990) adds to the sense of vulnerability.

Regarding the future: the two countries now find themselves on very different trajectories: China is rising, and Russia is falling. Moscow refuses to accept this, and insists on seeing the relationship with China as a partnership of equals. However, China is acutely cognizant of the Soviet collapse and subsequent economic decline. Russia is trying to use military threats to restore a great-power status which its demography and level of economic development do not merit. China’s economy is five times that of Russia, and is moving ahead not just in low-cost manufacturing but also high-tech sectors.

Economics

Russian Sinologist Andrei Ostrovky argues that relations with Beijing are “hot in politics but cold in economics.”9 Despite a decade of ambitious summits with dozens of projects signed, as of 2014 Russia only accounted for 2.2% of China’s trade, while China represented 11% of Russia’s trade.10 The reason is simple – geography. The vast distances and harsh terrain of Siberia make it prohibitively expensive to extract resources and transport them to China. The 2014 gas export deal, which linked the gas price to the world oil price, looks unsustainable given the subsequent slump in oil prices.11

The situation has deteriorated sharply over the past year due to the slowdown in China’s growth and the recession in Russia. Chinese exports to Russia fell 34% percent in 2015 to $33 billion, while Russia’s exports to China declined 19% to $31 billion. 12

China has been eager and willing to invest its vast capital holdings in Russian projects. In 2009 China lent $25 billion to Rosneft and Transneft to ensure the development of Siberian oil supplies. Another $25 billion loan package was announced in May 2015. But for many years Russia was reluctant to allow China equity access in oil and minerals projects. 13 In 2013 that started to change. China’s sovereign wealth fund bought a 12.5% stake in the potash giant Uralkali and CNPC bought 20% of Novatek’s Yamal LNG project.14 In 2015 Sinopec got permission to buy 20% of oil producer Sibur. Chinese firms are also keen to lease farmland. But this is very sensitive politically sensitive inside Russia, and those deals which have gone through are hedged by restrictions such as limits on the number of Chinese workers.

Deepening military ties

In the 1990s China was a major customer for Russian arms, helping to keep Russian defense plants afloat. However, Russia was worried that China was copying weapons and mass producing them for themselves or for third countries (as they did with the BTR personnel carrier and T-90 tank). There is also the lingering concern that China may be a military adversary in the future.

In 2007 Russia denounced China for reverse engineering the SU27 fighter, which it had been assembling under license since 1995. Russia sold China 280 SU27s, and China made 160 J-11 copies. There followed a six year hiatus in arms sales. However, China was unable to manufacture the engines for the next generation of aircraft and ships. In March 2013 Moscow relented and agreed to sell China 24 Sukhoi Su-35 fighters (worth $2 billion) and four Amur-class submarines. In April 2015 Russia sold them 36 S400 missile defense systems for $3 billion, a substantial boost to China’s area denial capabilities.

One complicating factor is that some of the engines which Russia and China need are manufactured in Ukraine. Russia is scrambling to replace that capacity given the halt in deliveries from Ukraine. China has been buying engines directly from Ukraine, and will start manufacturing ship turbines under license at Harbin.

The past few years have seen both countries step up their military cooperation. They have run joint Peace Mission military exercises since 2009 and naval drills since 2012, extending into the Mediterranean in 2014.

However, it is important to remember that Asia cannot be reduced to China. Russia has long-standing ties with other players such as Vietnam, North Korea and India, and is keen to develop better relations with Japan and Indonesia.15 So Russian national interests may not be served if they find themselves “falling into line” behind a rising China.

Central Asia

Despite talk of a “great game” type rivalry between Russia and China in Central Asia, the two countries seem to have achieved a stable division of labor in the region, with China taking the lead in economics and Russia handling security issues.16

China overtook Russia as the region’s largest trading partner in 2009. Trade between China and Central Asia rose from $1.8 billion in 2000 to to $41 billion in 2013, while Russian trade went from $5 billion to $28 billion.17

In May 2015 the Eurasian Economic Union, Putin’s plan for a single market in the post-soviet space, signed an agreement to cooperate with China’s “One Belt-One Road” infrastructure investment program. This effectively signaled that Russia was ceding economic leadership to Beijing.

Conclusion

What does all this mean for the United States? It was argued above that because of deep differences in cultural background, economic interests, and security concerns, the Russia-China relationship is unlikely to develop into a deep and dynamic alliance. Nevertheless, for the time being it looks as if the partnership is making each side more confident, and more willing to challenge the U.S. in Europe, Asia and the Middle East.

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1I would like to thank Kyle Wilson of the Australian National University Center for European Studies for his insights on this topic.

2Bobo Lo, Axis of Convenience: Moscow, Beijing, and the New Geopolitics. Washington, D.C.: Brookings Institution, 2008.

3Alexandr Gabuev, “A soft alliance? Russia-China relations after the Ukraine crisis,” European Council on Foreign Relations, 10 February 2015.

4Jeffrey Mankoff, “Russia’s Asia Pivot: Confrontation or Cooperation?,” Asia Policy, 19, January 2015.

5Lyle Goldstein, “What Does China Really Think about the Ukraine Crisis?” The National Interest, 23 September 2014.

6Stephen Blank, “Why China is winning the war in Ukraine,” The World Today, 71 (6), December 2015.

7Stokes, Bruce. 2015. “Russia, Putin held in low regard around the world.” Pew, 5 August.

8Aleksandr Zadorozhnyi, “Kak provalilsya ‘povorot na vostok’” [How the “turn to the east” failed], znak.com, 19 January 2016.

9Andrei Ostrovsky, “Russia-China cooperation. Problems and Prospects,” Valdai Club, 15 September 2015.

10Press release on Russian Ministry of Economic Development website: "In the first half of 2015, the volume of accumulated Chinese direct investment in the Russian economy exceeded $8 billion"

11Jack Farchy, “Gazprom’s China contract offers no protection against low prices,” Financial Times, 10 August 2015.

12“Russia China trade plummets,” Moscow Times, 13 January 2016.

13Aleksandr Andreev, “Povorot na vostok,” RIA 21 May 2014.

14“Kak Putin sdal Rossiiu kitaitsam—InoSMI” [How Putin Has Handed over Russia to the Chinese], Izvestia, 15 October 2014.

15Gilbert Rozman, “The Russian Pivot to Asia,” The Asian Forum 2 (6), November 2014.

16Marcin Kaczmarski, Russia-China Relations in the Post-Crisis International Order. New York: Routledge 2013.

17Jack Farchy, “China’s great game in Russia’s backyard,” Financial Times, 14 October 2015.