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Summary

Since the collapse of Russia’s relationship with the West over Ukraine, the Sino-Russian strategic partnership has become more of a reality. Russia and China share a common desire to challenge principles of the Western-dominated international system. But their relationship is complex, with lingering mistrust on both sides. The balance of competition and cooperation is most evident in Central Asia, the Russian Far East, and the Arctic. Engagement in these theaters has tested Russia’s and China’s abilities to manage their differences and translate the rhetoric of partnership into tangible gains.

The Reality of Partnership

• In Central Asia, China is emerging as one of the most influential players, and there is little Russia can do about that. The prospects for Russia’s Eurasian Economic Union look dim against China’s Belt and Road Initiative. The arrangement is fairly stable for now, yet fears of instability from South and Central Asia have forced Beijing to slowly increase its security profile there.
• Russia considers economic development of its eastern territories a strategic imperative, for which Chinese investment is essential. But Chinese investment is not materializing as broadly as Russian business interests would like, while Beijing often uses its economic leverage to extract favorable commercial terms.
• In the Arctic, Russia needs China to realize many of its goals for infrastructure development and resource extraction. China is eager to access the Arctic’s economic potential and enhance its technological prowess by partnering with Russia on key projects. Yet this presents new challenges for Moscow, which tightly guards its sovereignty in the region.

Implications

• China holds the upper hand in the relationship, and this power asymmetry will continue to grow at the expense of Russia. But Russia and China have more to gain from cooperation than outright competition. Barring an unlikely course correction in Russia’s relationship with the West, the partnership will strengthen.
• The Sino-Russian partnership may be tempered by unfulfilled expectations on both sides. As China envisions a more active role in regional and global affairs, its long-term ambitions with respect to Russia are not clear. China’s decisions will set the course for the Sino-Russian relationship, while Russia will remain only in a position to react.
• China’s expanding commercial interests in Central Asia, the Russian Far East, and the Arctic are likely increasing the competitiveness of Chinese firms on a global scale. But the greatest threat to the West of the Sino-Russian partnership emanates from their efforts to adjust the international system to their advantage. As both Russia and China pursue increasingly activist foreign policies, Western policy needs to come to terms with the fact that their partnership is here to stay.

Introduction

Since the collapse of the Soviet Union, Moscow and Beijing have transformed their relationship from being Cold War adversaries to become pragmatic partners with a common goal of pushing back at a Western-dominated international system. Their relationship is tactical and opportunist but marked by increasingly compatible economic, political, and security interests. Sharing a geopolitical worldview of multipolarity, they both have firm desires to contain Western power and seek to accelerate what they see as the weakening of the United States. With a common desire to shift the center of global power from the Euro-Atlantic space to the East, they aim to rewrite at least some of the rules of global governance, suggesting that their partnership is becoming increasingly strategic. Yet the Chinese-Russian relationship is complex, with lingering mistrust on both sides. Despite the grand ambitions for cooperation voiced by the two countries’ leaders, achieving substantive results often eludes them, particularly in the Russian Far East and the Arctic, where realizing the plethora of trade, investment, and infrastructure deals announced since 2014 has been difficult.

Bilateral ties between the two countries have become highly personalized with Vladimir Putin and Xi Jinping directing commissions, officials, and state corporations to develop financial and trade deals.

As a result, bilateral ties between the two countries have become highly personalized with Russian President Vladimir Putin and Chinese President Xi Jinping directing government commissions, sitting officials, and heads of state corporations to develop financial and trade deals—most of which are large-scale, top-down investments of Chinese money into key sectors of the Russian economy. Many areas where Russia and China now cooperate—transportation infrastructure, energy, telecommunications, and high-tech military sales—had been de facto closed off to Russia’s Chinese partners just a few years ago, because Moscow has focused more effort on engaging Europe as its priority economic partner, source of international financing, and provider of cutting-edge technologies. Moscow’s pivot to China, accelerated by the collapse of its relationship with the West over Ukraine, has enabled the Kremlin to keep some of its most important state assets going—Rosneft, Gazprom, and the Yamal liquefied natural gas (LNG) project—despite Western sanctions.

For the West, this shift also has implications for the competitiveness of Western companies as Chinese firms gain market share in Russia. The technological advances Chinese companies may gain by working in Russia could make Chinese manufacturing, weaponry, telecommunications, hydrocarbon exploration, and drilling capacities more innovative and competitive on a global scale. Yet there are clear negative implications for Russia from this shift. Beijing clearly now holds the economic and political power in the bilateral relationship. It is increasingly exercising this power to its advantage, but it frequently defers to Russia symbolically and offers assurances to manage Russian concerns over the imbalance in relations, particularly as Moscow seeks to shore up its position in the Asia Pacific. Beijing, for example, recognizes the need to accommodate Russian interests and sensitivities to ensure that its vision for the Belt and Road Initiative (BRI), which is solidifying China’s economic dominance in Central Asia, will bring benefits to Russia. It offers still undefined pledges to coordinate Russia’s Eurasian Economic Union with the BRI. This deference to Moscow has led Beijing to cede most hard security issues in Eurasia to Moscow, although growing Chinese concerns about instability in Central Asia and Afghanistan have increased Beijing’s interest in becoming a security provider to the region—a move that could stoke friction with Moscow over time.

Thus far, Russia and China have successfully managed their differences in Central Asia, the Russian Far East, and the Arctic, but potentially divergent interests remain over the long term.

In the Russian Far East, China has attempted to alleviate Russian insecurities by promising investments to boost the region’s economic development. Similarly, China’s increasingly prominent role in the Arctic internationally has also led to  pledges to help develop energy, transportation, and telecommunications infrastructure in the Russian far north. However, the implementation of many of these deals remains uncertain. Chinese investors often complain of high corruption and impenetrable bureaucracies, or are hesitant to invest in Russian companies that have been sanctioned by the West. Thus far, Russia and China have successfully managed their differences in Central Asia, the Russian Far East, and the Arctic, but potentially divergent interests remain over the long term. Some Russians now quietly express concern about Beijing’s growing geoeconomic and geopolitical ambitions in the Asia Pacific region.

History

At the end of the Cold War, few would have predicted a robust Russian-Chinese relationship in the twenty-first century. The two countries have had a long, complex, and contentious history dating back to the 1800s, when Russia’s eastward expansion across Siberia and the Russian Far East led to China ceding over 1.5 million square kilometers of territory to imperial Russia. Rocked by war and revolution in the twentieth century, both countries became brief allies after the Communist Party takeover in Beijing in 1949, as Moscow dispatched technical aid, financial assistance, and political advisers to China. At the time, Moscow was firmly the leader of the global socialist movement and saw itself as by far the stronger partner in the Sino-Soviet relationship. However, the two countries split ideologically during the Nikita Khrushchev era, becoming Cold War adversaries by the 1960s with a highly militarized and disputed border that stretched 4,380 kilometers. A series of border clashes in 1969 left scores of mostly Chinese soldiers dead.¹ Along with a heavy dose of anti-Chinese propaganda, this history of Cold War tension along the Soviet-Chinese border helped ingrain Sinophobic stereotypes among the general population of former Soviet Central Asia and the Russian Far East—tendencies that still linger in  popular consciousness today.²

In the Mikhail Gorbachev era, Russia and China started to normalize relations, though the collapse of the USSR in late 1991 put the two countries on different trajectories. Under former president Boris Yeltsin, Russia moved toward the West, seeking advice from the United States and Europe on how to push through democratic reforms—processes that largely failed, as the country descended into early post-Soviet economic, political, and social chaos. Although the North Atlantic Treaty Organization (NATO) initially embraced Moscow as a partner in the early 1990s, it expanded to include former Warsaw Pact countries, conducted operations in the Balkans against Moscow’s wishes, and eventually increased its military footprint across Eurasia to support the Afghan war effort. Russians—the political elite and the population at large—grew resentful of the West’s growing power, NATO’s presence in and near Eurasia, and its perceived lack of deference to Russian interests.

China, however, did not suffer similar disillusion with the West. Isolated after the 1989 Tiananmen Square crackdown, Beijing had no incentive to launch political liberalization programs, partner with the West, or seek European or U.S. assistance. After witnessing the political chaos of the late Soviet Union and early post-Soviet Russia, China chose a different path. Keeping its political system closed, China liberalized markets, attracted foreign investors, and transformed itself into the world’s factory. China’s strategy succeeded and led to large-scale urbanization, infrastructure development, and economic growth, with no dilution of the Communist Party’s centralized rule and political control. China has since grown into the world’s second-largest economy, yet one that is largely dependent on the free flow of trade with key markets in Europe and North America. That dependency has provided a stabilizing ballast to China’s relations with the West, given it a greater stake in the existing international system, and has prevented the sort of turbulence that Russia has seen in its relations with Europe and the United States over the past decade. Still, despite its co-dependency with the West, Beijing is wary of perceived U.S. hegemony in both economic and security spheres.

After the Soviet collapse, China and Russia began working on resolving their border dispute and advancing economic ties. Despite their different development paths, growing Russian disillusion with the West, coupled with China’s rising international ambitions, accelerated the Sino-Russian rapprochement. In 2001, Russia and China signed the Treaty of Good Neighborliness and Friendly Cooperation, which set forth a bilateral relationship based on “mutual respect of sovereignty and territorial integrity,” noninterference in internal affairs, equality, and mutual benefit.³ Years of negotiations on their borders culminated in China receiving almost 340 square kilometers of disputed territory from Russia in return for Beijing dropping all other land claims against Moscow. Today, neither sees major threats emanating from across their common border. Rather, Moscow is much more concerned about insecurity on its western flank, where it faces NATO, or about threats coming to Russia from the Middle East or Afghanistan through the Caucasus or Central Asia. Beijing, too, appears worried about instability coming across the border from Afghanistan and Central Asia, and is intensely focused on shoring up its position amid territorial disputes in the South China Sea and East China Sea.

Cross-border trade and migratory labor between China and its former Soviet neighbors in the 1990s provided an essential lifeline to communities in Central Asia and the Russian Far East.

Economically, cross-border trade and migratory labor between China and its former Soviet neighbors in the 1990s, though technically illegal for bypassing normal customs controls, provided an essential lifeline to communities in Central Asia and the Russian Far East. China, unable to buy military technology from the West in the 1990s, also looked to Russia as a supplier of military industrial technology. Moscow’s exports slowed in the mid-2000s over concerns of Chinese reverse engineering of Russian equipment, although high-technology exchanges recently restarted, with China again a major buyer of Russian arms. Although technology transfer likely will facilitate China’s transformation into a formidable arms competitor, Russia is eager right now to take advantage of China’s appetite for Russia’s most modern armaments while Moscow still enjoys the upper hand in this sector.⁴

On a multilateral basis, China and Russia began coordinating their positions in the United Nations (UN) and other international bodies in the 1990s. In 1997, for example, they presented to the United Nations General Assembly a “Joint Declaration on a Multipolar World and the Establishment of a New World Order,” an early indication of their common resentment of Western dominance in the international system and their desire to reconstruct it to their benefit.⁵ They both promote the United Nations as a key pillar of the international system, because of the authority and leverage that their status as permanent Security Council members provides. They likewise have worked together in the Asia-Pacific Economic Cooperation (APEC) forum, the East Asia Summit, G20 group of prominent economies, and the BRICS group (Brazil, Russia, India, China, and South Africa) to align their interests. In 2003, they both pushed back at the UN against the Iraq war, and they criticized (although neither vetoed) the West’s military intervention in Libya. Today, both frequently highlight the instability that Muammar Qaddafi’s ouster brought to the region.⁶ Neither, however, has acted upon any concrete solutions of their own to stabilize the broader Middle East.

Since then, Beijing and Moscow have worked together to challenge principles of the U.S.-led international system to which they share an aversion. They have worked to defend fellow authoritarian states from human rights criticisms and external efforts to change their political trajectories. They label Western democracy promotion as an example of harmful, destructive, and unacceptable interference by strong powers in the internal affairs of sovereign states. They also look to each other for models for ensuring regime stability and domestic governance. Beijing, for example, has passed legislation similar to Russia to curtail the activities of nongovernmental organizations and limit their ability to accept foreign funding.⁷ Moscow likewise is trying to incorporate aspects of China’s internet firewall to gain greater control over information flows on the Russian-language internet.⁸ Moscow’s new laws banning virtual private networks (VPNs) appear to be following the Chinese model of clamping down on VPNs and other internet proxy services that allow users access to websites that are restricted by the state.⁹ They likewise have cooperated in various international fora to increase the power of states over the internet, challenging the free flow and access of information, and seek to reduce the power of the West over decisions concerning global governance.¹⁰

Beijing and Moscow have worked together to challenge principles of the U.S.-led international system to which they share an aversion.

Advancements in their political, economic, and international ties have led Beijing and Moscow to promote their “strategic partnership,” claims that have only strengthened since Putin’s “pivot to Asia” in 2013 and Russia’s break with the West after the Ukraine crisis the following year. Both countries see the other as a useful counterbalance to U.S. influence. Furthermore, with its traditional sources of capital now restricted due to sanctions, Russia sees China as a provider of funds to support its struggling economy. China, meanwhile, benefits from Moscow’s efforts to thwart Western military and economic power globally, ceding leadership to Russia in opposing Western policies abroad, while benefiting by receiving minimal blame. Yet when Russia and China have come together in Central Asia, the Russian Far East, and the Arctic, their individual interests and realities on the ground have tested their ability to manage differences and sustain this strategic alignment.

Central Asia

Central Asia is witnessing a major rebalancing of power with Russia declining and China emerging as one of the region’s most influential players. China’s rise in Central Asia is due to its broad vision for regional connectivity, appetite for Central Asian energy resources, and ample reserves, which it distributes to Central Asia through commercial investments, loans, the Asian Infrastructure Investment Bank, and several other entities. Unlike the West, China makes no demands for political reform from Central Asian governments. Unlike Russia, Beijing does not use political pressure to keep the region in its general orientation. The lack of an overt political agenda—other than regional stability, which Beijing believes can be guaranteed through economic development—makes China particularly attractive to local governments.

While China’s presence is growing across all of post-Soviet Eurasia, its expanding geopolitical and geoeconomic influence is most striking in Central Asia, which is where China has learned how to manage Russian concerns over its growing regional influence. With the BRI expected to expand Chinese influence throughout Eurasia, including Russia, maintaining positive dynamics with Moscow in Central Asia will remain one of the most important tests of Chinese political and economic diplomacy; so far, Beijing appears up to that test. China is astute in managing Russia, because Beijing engages with Central Asia primarily on economic issues; it has made no overt push into political or military issues. While Beijing’s soft power is growing in Central Asia, it still cannot compete with Russia’s media presence in the region or the fact that Russian universities, particularly those in Siberia, remain more popular than Chinese ones, although the number of Central Asian students studying in Chinese universities—often with hefty stipends from the Chinese government—is on the rise. From 2005 to 2015, the number of Kazakhs studying in China increased from 781 to 13,198, while the Chinese government now offers twenty-three academic scholarships to Kyrgyz citizens wishing to study at Chinese higher education institutions.¹⁷

Beijing has been effective at managing Russia’s concerns about its place in Central Asia in part because there is little Russia can do about China’s influence in the region. Moscow cannot compete economically, and its actions in Ukraine have alienated prominent Central Asian political elites. Yet many of China’s goals in the region—economic development, political stability, and keeping the West at bay—either coincide with Russia’s agenda or at least do not contradict Russia’s short-term interests. China’s first priority for Central Asia is to promote political and social stability through development. Given the chaos that has roiled the Middle East since 2011 and Ukraine since 2014, both China and Russia fear the potential for political instability and popular protest in the region; both seek to preserve the political status quo, as opposed to transforming it. Both countries also remain concerned about extremism moving from Afghanistan or the Middle East—two of the most insecure regions of the world—to Central Asia, which borders both China and Russia. Yet while they enjoy a symmetry of interests over the need to contain radical extremism, their approaches to securing stability in the region differ. Russia generally is focused on hard power in Central Asia—military bases, weapons deals, and counterterrorism cooperation through the Collective Security Treaty Organization (CSTO).

China concentrates its efforts to stabilize Central Asia through economic power, not military or security tools. Unlike Moscow, Beijing is not keen to highlight its geopolitical influence or lay claim to the region.

China, however, concentrates its efforts to stabilize the region through economic power, not military or security tools. Unlike Moscow, China is not keen to highlight its geopolitical influence or lay claim to the region as its part of its “privileged sphere of influence.” Preserving its influence in the South China Sea is far more important to Beijing than showcasing its power in Central Asia. China instead seeks to create a zone of stability around its restless and poorly developed Xinjiang Autonomous Region in western China, home to the Turkic Muslim Uighur population. Beijing sees prosperity on one side of the border as helping to ensure stability and prosperity on the other. This suggests that China’s interests in the region largely derive from its need to keep western China pacified, to develop its economic potential, and to link it more closely with the rest of China and the outside world. Part of this policy obviously also includes gaining leverage in neighboring countries to help Beijing influence their approaches to Xinjiang and the diaspora Uighur minority populations across Central Asia. In fact, regional governments across Eurasia have become loath in recent years to resist Beijing’s requests to monitor local Uighur diaspora communities, to restrict activities of local Uighur civil society groups, and to extradite Uighurs suspected of links to extremist or secessionist groups.¹⁸ This sort of political influence does not damage Russian interests in the region.

A second Chinese goal in Central Asia is to find external markets for Chinese companies active in construction and infrastructure development, as part of China’s Go Out strategy.¹⁹ This helps reduce excess capacity at home in these sectors and creates opportunities for Chinese firms and workers abroad. Although Russian companies are also keen to bid on various infrastructure projects in Central Asia, the sector is already quite crowded with Japanese, South Korean, Turkish, and other entities, many of which are more competitive than their Russian counterparts. This crowded field helps to minimize the potential for direct commercial friction between Russia and China over Beijing’s Go Out program in Central Asia.

Beijing’s third goal—most vividly seen in the BRI—is to build transportation networks that can help support Chinese export flows; China sees this as a long-term project that will help develop China’s western most regions by linking them through a network of raisl and roads with key global markets in the years to come. It has pulled Russia directly into this project, through the China-Russia-Mongolia economic corridor and a plan announced in summer 2017 to include the Arctic in the BRI. These transport networks, if realized, will modernize and expand road and rail lines between the countries. China is also active in other Russian rail projects, suggesting that many of them—again if completed—will become part of the BRI vision.

When it comes to the BRI, China is not concerned about short-term profits and reportedly expects to lose up to 30 percent of its investment in Central Asia.²⁰ Yet it continues to build roads, bridges, tunnels, and high-speed rail lines throughout the region with