The Limits of Partnership Between China and Russia

May 5, 2014

Host: Woodrow Wilson Center

Event: Russia in East Asia


Dr. Matthew Ouimet, Office of Analysis for Russia and Eurasia, U.S. Department of State

Dr. Alyssa Park, Assistant Professor of Modern Korean History, University of Iowa

Russia is a big country – both in terms of its geographical size and in its political clout throughout the world. However, over the course of the country’s long history, its political and economic outlook has changed drastically. Although a predominately Western leaning country for much of the 20th century, Russia under Vladimir Putin has quickly shifted its focus eastward towards China, Japan, the Koreas, and other Asian countries – marked most noticeably by the country’s hosting of the 2012 APEC Summit. Seemingly serving as a counterbalance to the growing strength of NATO, Russia and China have supported one another on the UN Security Council, vetoing Western attempts to intervene in Syria’s civil war, and also share increasingly strong economic ties; trade between the two countries has grown more than 300% over the past decade. Although relations are undeniably growing stronger between the two powers, it is also apparent that the power dynamics are changing and it is now China that is leading this relationship, rather than the other way around.

Following Russia’s economic downturn in the 1990’s and the Global Financial Crisis in 2009, the country has become increasingly reliant on China for economic support. Described by Dr. Ouimet as Russia’s “lender of last resort,” China has at times gone out on a limb to support Russian initiatives; in 2005 China lent Russia $6 billion to purchase shares of the oil company Yukos after its owner, Mikhail Khodorkovsky, was controversially imprisoned, and also made a large loan of $25 billion so that Russia could construct a new branch of the East Sibera-Pacific Ocean (ESPO) pipeline. Although done in the name of Russian interests, these deals have resulted in Russia being forced to make bad energy deals and also ceding influence to China – allowing it to make investments in upstream energy production. Without incentives, China remains silent on key issues; it refused to acknowledge and legitimize Russian gains made in the 2008 Georgian War and has remained similarly silent on the current unrest seen throughout Crimea and Eastern Ukraine. Whether Russia will again resort to energy incentives in order to secure Chinese support on these issues remains to be seen.

Russia’s seeming inability to restructure its economy, make long lasting energy deals, and redevelop its Southeastern border regions, have lead both speakers to doubt the longevity and future development of Russia’s relationship with East Asia. Although many policymakers both in and outside of the Kremlin have stressed the importance of tapping in to East Asian markets, few concrete steps have been taken. Although the country spent billions of dollars in hosting the 2012 APEC Summit, focus has since shifted to the winter Olympics and now towards Crimea and Ukraine. Along a similar line, Russian policymakers have failed to remain focused on integrating itself in with the East Asian countries. Despite hosting the APEC summit, Russia has taken very few steps to further open up its markets and adjust its trade/tariff policies – all while working to minimalize barriers on its own energy exports. Further, its export heavy economy is not designed to mesh with the manufacturing and consumer goods that are driving East Asian growth. Without making these long-term commitments, Russia will continue to be only an important partner to China and other regional powers. In order to become a key player and control influence in the region, Russia needs to rethink its economic and policy approaches.

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05. May 2014 by Will Houstoun
Categories: East Asia, Economics, Energy | Comments Off on The Limits of Partnership Between China and Russia