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Russia's Best Defense Against America's Pressure Strategy May Be China

June 7, 2019 Topic: Security Region: Eurasia Tags: Xi JinpingChinaRussiaVladimir PutinEconomy

Russia's Best Defense Against America's Pressure Strategy May Be China

The growing economic ties between Moscow and Beijing could prompt the Kremlin to harden its stance towards Washington.

While the trade war between Washington and Beijing continues to flare up, Chinese president Xi Jinping traveled to Russia this week for three days to attend the St. Petersburg International Economic Forum and meet with Russian president Vladimir Putin. For Moscow, this visit could not have come at a better time.

In his public remarks while in Moscow on Wednesday, the Chinese leader spoke of the growing ties between Russia and China, while also offering thinly veiled criticism of the United States. Xi lauded Putin as “one of my closest friends and a great colleague.” He also stressed the importance of Sino-Russian solidarity at a time when “protectionism and unilateral approaches are on the rise, and a policy of force and hegemonism is increasingly taking hold.”

Xi arrived at the St.Petersburg International Economic Forum on Thursday, an annual event aimed at attracting foreign investors to Russia, with a delegation of one thousand people. The United States was noticeably absent at the forum after announcing that it was boycotting the event over the controversial imprisonment of American investor Michael Calvey by Russian authorities.

Beyond symbolic gestures of unity, the two countries signed a number of high-profile deals. Huawei and Russian telecom company MTS reached an agreement to develop a 5G network in Russia. The Russian Direct Investment Fund and the China Investment Corporation established a $1 billion fund to support research and technology innovation. Russian and Chinese state energy companies also set up a joint venture to sell Russian liquefied natural gas in China. According to the South China Morning Post, the value of the deals signed during Xi’s visit was $20 billion.

While a Sino-Russian convergence has been taking place since at least the 1990s, it gained significant momentum after 2014. Faced with mounting Western sanctions over its annexation of Crimea and support for Eastern Ukrainian separatists, the Kremlin made pivoting to China a top foreign-policy priority. Russian political elites hoped that drawing closer to China would provide their country with an alternative source of trade and investment, as well as send a message to Washington and Brussels that Moscow did not stand alone.

Five years later, the record of this effort is mixed. On the one hand, trade between the two countries undoubtedly increased. China is now Russia’s largest trading partner, and Russia is China’s largest oil supplier. According to the Kremlin, the trade between Russia and China is now valued at $108 billion—a benchmark long pursued by both governments.

At the same time, Chinese investment continues to lag. Even Kremlin Press Secretary Dmitry Peskov admitted to RT on the eve of Xi’s visit to Russia, “It cannot be said that China is investing a lot in the Russian economy.” Many Chinese commercial banks are reluctant to do business in Russia out of a fear of ending up on Western sanctions lists. Other deterrents to greater Chinese investment include Russia’s complex legal system and a lack of appropriate supporting infrastructure.

Furthermore, although Russia is increasingly economically dependent on China, that is not the case the other way around. Whereas China is Russia’s top trading partner, Russia is only China’s tenth largest trading partner. Recent pessimistic forecasts for the Russian economy suggest that this unequal dynamic is unlikely to change soon.

However, many in Moscow saw the emerging trade war between the United States and China as an opportunity to become an indispensable partner to Beijing. Andranik Migranyan, an informal adviser to the Russian presidential administration and professor at the Moscow Institute of International Relations, told the National Interest that Trump’s moves on trade will push China to align itself closer with Russia.

 

“If the Chinese previously staid on the sidelines, now they will probably more actively support Russia in opposing the United States because China now finds itself under very serious pressure,” he said. “There is an understanding that if [Russia and China] will not resist the United States together and simultaneously, then the United States will destroy them separately.”

Migranyan hopes that a China increasingly aware of Russia’s importance will facilitate greater access to the Chinese financial system, increased Chinese importing of Russian energy, more Chinese investment in the Russian economy, and a continued deepening of military-technical ties between the two countries.

 

Moscow also hopes to use the opening created by the U.S.-China trade war to increase its economic opportunities inside of China. Vasily Kashin, a senior research fellow at the Higher School of Economics Center for Comprehensive European and International Studies predicted that Russia will gain more access to the Chinese market as its direct competitors, the United States and its allies, exit.

“Although the Sino-American trade war is as a whole bad for the global economy and could negatively affect Russia through falling oil price, it could also open new opportunities for increasing Russians exports to China.”

Should economic ties between Russia and China continue to grow, then they will likely embolden the Kremlin to harden its stance towards the United States. Migranyan proclaimed that a closer relationship with China “makes Russia more resilient in resisting the United States.” He stated that if Russia felt that China firmly had its back, then it would feel less compelled to offer concessions on possible areas of compromises such as Syria or Iran.

When Xi Jinping left Russia on Friday, his rhetoric and the deals signed during his visit provided Moscow with optimism that the Sino-Russian relationship was entering a new stage on more equal footing. All the same, Russia still faces a steep uphill climb in increasing Chinese investments or its exports to China.

Nevertheless, Migranyan contends that Washington’s growing tensions not just with Beijing, but also with Iran and Europe will ultimately benefit Russia. He told the National Interest, “The American policy of war against everyone at the same time very much plays into Russia’s hands, and for that a big thanks to Trump and his administration.”

Dimitri Alexander Simes is a contributor to the National Interest.

Image: Reuters