The Economist UK - 27.07.2019

The EconomistJuly 27th 2019 BriefingRussia and China 17

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tional law. It was...the West that used its

temporary omnipotence to create a world

in which powerful states could seize any-

thing that was there for the taking, destroy

any borders and violate any treaties for the

sake of a ‘good cause’.” Russia’s pivot to-

wards China, by this logic, followed a West-

ern failure to accept Russia, with all its

shortcomings, and assimilate it into the

civilised world.

But that is hardly the full story. In 1994

Yegor Gaidar, the architect of Russia’s mar-

ket reforms, argued that there were two

ways for Russia to turn to the West. It could

try to catch up with the West by mobilising

state resources—the model followed from

Peter the Great to the 1930s, at great human

cost. Or it could try to become truly West-

ern by “taming the state” and developing

the sort of institutions which stimulate en-

trepreneurship and long-term growth.

If Russia followed neither of those

paths, Mr Gaidar said, it would have to look

to the east—an alternative he summed up

in an aphorism of the ancient Chinese

statesman Shang Yang: “When the people

are weak, the state is strong”. That could

serve as Mr Putin’s motto. In his “millenni-

um manifesto” Mr Putin straightforwardly

declared the supremacy of the state over

individual rights and freedoms.

The Asiatic mode of politics

Mr Putin’s satraps in the security services—

siloviki—appropriated private companies.

Their assets were redistributed among Mr

Putin’s associates, many of whom would

also become beneficiaries of Chinese in-

vestments. “The lion’s share of Chinese

money goes to Mr Putin’s friends,” says Mr

Gabuev of the Carnegie centre. Gennady

Timchenko, who amassed an estimated

$13.4bn by selling Russian oil to the West

but has since been forced out of Europe by

American sanctions, is now the chair of Mr

Putin’s Russian-Chinese business council.

Russian rent-seekers and their short-

term interests play a central role in the

Sino-Russian relationship. “Sometimes it

seems that Russia’s policy towards China is

shaped by the lobbying interests of the

Kremlin’s heavyweights,” says Andrei Kor-

tunov, head of the Russian International

Affairs Council, a think-tank. The same is

not true in reverse. Private Chinese firms

are reluctant to invest in Russia. Some fear

American sanctions; others worry about

the lack of property rights and clear rules.

To operate in Russia, you need what Chi-

nese businessmen now call bao hu san—a

protective umbrella provided by siloviki.

For such a small market, why bother? There

is an irony here. Russia’s regime has opted

for the East; but Chinese people and inves-

tors are interested in Russia only to the ex-

tent that it is Western. Investors want rule

of law, not cronyism. Tourists want St Pet-

ersburg, not Tuva.

But if businessmen did not make much

of the fall of the Soviet Union, China’s Com-

munist Party officials saw it as a terrible

threat. The communist superpower had

fallen, not to outside forces, but to discon-

tent within; China’s party was keenly aware

that protesters in Tiananmen Square had

taken quite a shine to Mikhail Gorbachev in

1989. It also meant that China had to deal
      with a new litter of predominantly Muslim
      states on its borders, and brought the pos-
      sibility of a Western-dominated bloc
      stretching from Vancouver to Vladivostok.
      China’s main task thus became ensur-
      ing that a reassured Russia would act as a
      buffer, at best a friendly and at least a neu-
      tral one, between itself and America. It did
      not want a weak neighbour; but nor did it
      want a mighty one. It invested; it smiled; it
      bought oil and weapons (though it was not,
      then, allowed the best). It tended to vote
      with Russia in the unSecurity Council, ex-
      cept when it would cause additional pro-
      blems with America. Thus, for example, it
      did not criticise Russia’s annexation of Cri-
      mea. But it did not recognise it either.
      Instead, it profited from it. The annex-
      ation of Crimea and the invasion of Uk-
      raine eliminated, for the foreseeable fu-
      ture, any risk of an alliance between Russia
      and America. Mr Putin’s actions diverted
      Western attention from China; they also
      made Russia much more dependent on
      China. In May 2014, weeks after the inva-
      sion, Mr Putin and a retinue of business-
      men and officials flew to Shanghai to forge
      a new partnership. The deals reached in-
      cluded a $400bn 30-year gas contract, to be
      enabled by a far-eastern pipeline called
      “The Power of Siberia”. It is due to start op-
      erations by the end of this year. Russia and
      China have also increased their co-opera-
      tion on finding ways to open up the north-
      west passage to shipping, notably that of
      liquefied natural gas (lng). Informal re-
      strictions on the sorts of investment China
      could make in oil companies have been
      lifted; the full range of Russia’s non-nuc-
      lear weaponry is now available to Beijing,
      including the s-400anti-aircraft system.

This dependence should not be mistak-

en for an alliance. Russian propagandists,

at home and in China, have taken advan-

tage of the current trade war to fan the

flames of conflict and offer their nation as a

fellow victim of America’s aggression. But

China is sticking with its professed posi-

tion of avoiding both alliances and enmi-

ties. “The most important relationship for

us is the one with America. We don’t want

to repeat the mistakes of Stalin and Mao,”

says Feng Yujun, the head of the Centre for

Russian and Central Asian Studies at Fudan

University. “Russia is more dependent on

China than China is on Russia.”

A yuan for companionship

If China does not seek alliance, it relishes

that dependency, and wants to ensure its

continuation. Russia may in time try to

turn again westward, either because of a

change in power in the Kremlin—which

tends to cause such reversals, as it did

when Khrushchev succeeded Stalin—or

because the people start to resent Chinese

actions, as some in Siberia already do.

“Russia will push back when China en-

croaches on the psychological definition of

what it means to be a Russian society,” a

Western diplomat says. To keep its inter-

ests safe from such a reversal, China is

working to create a powerful pro-Chinese

lobby inside Russia’s political circles and

to create both structural and hardware de-

pendencies that would survive any politi-

cal change in Russia, says Mr Gabuev.

In the energy sector China has access to

some of Russia’s most valuable assets. Chi-

nese state energy firms own one-fifth of an

Arctic lngproject developed by Novatek,

an energy firm partly owned by Mr Tim-

chenko. Nearly half of all drilling equip-

ment used by Russian oil firms comes from

China. China has helped Rosneft, Russia’s

national oil company, to make acquisi-

tions, and buys ever more of its oil. Mr Pu-

tin and Mr Xi have agreed to increase the

amount of their trade valued in yuan and

roubles, in part to avoid sanctions. Russia’s

central bank’s yuan holdings now account

UZBEKISTAN

Dushanbe

Tashkent

Bishkek

Nur-Sultan

Novosibirsk

Tehran Ashgabat Murghab

Osh

Khorgos

Kiev

Baku

Wakhan Corridor

RUSSIA

KAZAKHSTAN MONGOLIA

Xinjiang

Tibet

Crimea

TURKMENISTAN

IRAN

IRAQ

TURKEY

UKRAINE

GEORGIA

AZER.

ARM.

KYRGYZSTAN

TAJIKISTAN

CHINA

Volgograd

Caspian

Sea

Black

Sea

Yekaterinburg

500 km

BRI Infrastructure

Existing

Gas pipelines

Oil pipelines

Railways

*Or under construction

Source: Mercator Institute

for China Studies

Planned*