China Looks West-But in A Different Direction

Increasing commercial ties between Russia and China demonstrate that the unquestioned U.S. dominance of the global economic system is coming to an end.

It is a truism in U.S. foreign policy circles that China would never risk its profitable economic ties with the United States by working more closely with Russia to actively frustrate American initiatives around the world.

But the recovery of the Russian economy has led to reinvigorated commercial ties between Moscow and Beijing. In 2006, China became Russia's fourth largest trading partner, while Russia moved up to become China's eighth largest partner. Chinese Vice-Premier Wu Yi and Russian Deputy Prime Minister Alexander Zhukov have called for bilateral trade between the two states to reach $60 billion by 2010. Yes, this will still only amount to one-fifth of the value of Sino-American trade at current levels. But China is clearly going to diversify its trading options so as to reduce its dependency on U.S. markets. (On a separate note, the EU has surpassed the United States as China's leading trading partner.)

And Beijing wants to build on the foundation of improved political ties between both states as a way to deepen commercial ties. Speaking recently in Moscow, Wu said that the "Chinese government attaches importance of such relations with Russia and has strived to create a sound platform for cooperation between companies from the two countries."

Many American analysts take comfort in the scenario of growing conflict between a de-populating Russia (especially in its Far Eastern regions) and a China "bursting at the seams" disrupting any rapprochement between Beijing and Moscow. China's former foreign minister (and current state councilor), Tang Jiaxuan, sees increased economic ties between Russia's regions and China's provinces along the common border as the way to forestall conflict-in particular by linking the revitalization of China's "red rust belt" of its northeastern provinces, which have participated less in China's prosperity, with Russia's Far Eastern regions in a type of common economic space.

Further developing China's northern and western regions, away from the booming southern coast, is also driving China's renewed efforts to take the framework of the Shanghai Cooperation Organization (SCO) and to push for stronger economic ties among its member-states. Alongside the St. Petersburg International Economic Forum earlier this month a SCO Business Forum was convened. Wu laid out a Chinese vision for a new round of regional infrastructure projects that would link roads, railways, telecommunication networks and power grids in order to "promote the common prosperity of all countries in the region." And while the overall numbers may still be small potatoes, China's trade with other SCO states tripled over the last six years to reach $45.2 billion.

One proposal advanced last week by the Experts' Forum of the SCO that met in Almaty, Kazakhstan, was for an Asian energy grouping-combining producers like Russia and Kazakhstan with consumers like China and SCO observers like India and Pakistan. One benefit would be that under such a system hydrocarbons would not have to be exported through non-SCO countries, in essence creating a closed and secure system. Unmentioned in that conclusion was the realization that a Eurasian land network would reduce China's vulnerability to disruption of its energy supplies-which the United States currently transports by sea-in the event of any clash.

No one should be going into hysterics anytime soon-no new Warsaw Pact is in the making and we are not returning to having two distinct world blocs. But we should also realize that the days of unquestioned U.S.-or even Western-dominance of the global economic system is coming to an end-and adjust accordingly.

Nikolas K. Gvosdev is editor of The National Interest.