18 BriefingRussia and China The EconomistJuly 27th 2019
2 for 14% of its total reserves, even though
the yuan is not fully convertible. That is ten
times more than at any other central bank,
according to Mr Gabuev.
Russia is growing dependent on China
in technology, too. Huawei, a company
deeply distrusted by America, is rolling out
its 5gtelecoms equipment in Russia. Ali-
baba, a Chinese e-commerce giant, has en-
tered into a joint venture with Mail.ru, the
owner of Russia’s largest social-media net-
works. Russia’s draconian law on the
“sovereignty of the internet”, currently be-
fore parliament, is copied from China, and
it is hoping to use Chinese technology to
implement it. Dahua Technology is helping
Russia with face recognition. Hikvision
cameras are watching Moscow residents.
Grigory Yavlinsky, a liberal politician, ar-
gues in a recent article on these deals that
turning Russia into “China’s satellite...for
the sake of sticking it to the usais an unfor-
givable shortsightedness.”
Leonid Kovachich, a journalist who
monitors Russia’s use of Chinese tech, says
Russian officials are aware of security risks
associated with China’s penetration and
are trying to use Russian-made software
and algorithms. But they cannot get away
from the Chinese hardware. Mr Putin once
said that the countries and companies
which dominate artificial intelligence will
rule the world. Russia’s aiis highly likely to
come almost entirely from China.
The asymmetries and contradictions in
the relationship are most obvious in Cen-
tral Asia. Take the Shanghai Co-operation
Organisation (sco), which was created in
the late 1990s. China saw it as a way of ex-
tending its economic and political influ-
ence in Central Asia; it is at an scoinstitute
in Shanghai that Tajik and other Central
Asian officers are trained. Russia saw it as a
way of checking such expansion. That is
why, two years ago, it insisted that India
and Pakistan be allowed to join. Russia also
tried to push back against China’s attempt
to create a free-trade zone within the scoby
setting up a Eurasian Union alongside the
Collective Security Treaty Organisation.
The purpose, one Indian diplomat says,
was to protect Russia’s own market from
the flood of Chinese goods.
For their part, the Central Asian coun-
tries see the scoas a security guarantee not
so much against China as against Russia,
particularly after the annexation of Crimea
and the war in Ukraine. The fears are partic-
ularly palpable in Kazakhstan, the richest
of the Central Asian countries and the one
with the longest border with Russia. Like
Ukraine, in 1994 Kazakhstan gave up the
Soviet nuclear weapons it had inherited in
return for a commitment that America,
Britain and Russia would protect its terri-
torial integrity and sovereignty.
Two decades later Russia’s annexation
of Crimea revealed the true value of that“Budapest memorandum”. Within weeks
Nursultan Nazarbayev, Kazakhstan’s first
president, was asking Mr Xi for assurances
on his country’s security. To placate Mos-
cow, Kazakhstan also joined Russia’s Eur-
asian Union, albeit a slimmed down ver-
sion. “Russia wanted it to be a political and
economic union, with a single currency
and a single parliament. We managed to
water it down,” one of Kazakhstan’s negoti-
ators says.Little dragons
The difference between the approaches
Russia and China take to Central Asia is
striking. Russia brandishes sticks, China
offers carrots. It is using every tool in its
sometimes rather seedy soft-power tool-
box to win over the governing elites in Cen-
tral Asia and offset public resentment of
China that has been strengthened by Chi-
na’s increasing abuse of Muslims—Ka-
zakhs as well as Uighurs—in Xinjiang on
internal-security grounds. Playing the gen-
erous neighbour seems to work. When
America sounded out governments in the
area to see if they might criticise China’s re-
pression in Xinjiang at the unor the Orga-
nisation of Islamic States it got no takers.
Kazakhstan has locked up activists trying
to talk about their experiences in Xinjiang’s
re-education camps.
“Russia still sees us as part of the empire
and does not think it needs to earn our
trust,” says a senior government official in
Kazakhstan. “It always talks about alli-
ances, which implies a confrontation with
a third party, whereas China talks of
‘friends’.” This friendship matters a lot to
the countries’ elites, for reasons rich in his-
torical irony. In the 19th century Central
Asia wanted to stay as it was, but Russia
wanted to Westernise it by force. Today
Russia wants to keep things as they were,
but Central Asian elites want to Wester-nise. And, compass be damned, they see
Chinese friendship as the way to achieve
that goal.
Though most Central Asian govern-
ments recoil from Russia’s Eurasian Union
and its Collective Security Treaty Organisa-
tion, they embrace China’s bri—which was
formally announced in Kazakhstan in
2013—as both an economic opportunity
and a security guarantee. It was Mr Nazar-
bayev who first proposed the revival of the
old silk route through the landlocked Kaz-
akhstan. “We are in the middle of a conti-
nent,” he once observed. “We don’t have ac-
cess to the sea. But as one [Chinese]
businessman said: ‘China is our ocean’.”
Unlike Russia, China puts its money
where its mouth is. Two years ago, China
Ocean Shipping Company became a 49%
owner of the “dry port” of Khorgos—a vast
road-and-rail terminal on the Khazak-Chi-
nese border seen as central to the bri.
Within a few months, a city with shopping
centres, a Ferris wheel, high-rise housing
and Uighur restaurants sprang up on the
Chinese side of the border.
“China sees Central Asia first and fore-
most as a way of stabilising Xinjiang. But it
is also a testing ground for China’s foreign
policy and the country’s ability to push into
Russia’s normative space,” says Raffaello
Pantucci of the Royal United Services Insti-
tute, a think-tank in London. Over the past
20 years China has broken Russia’s monop-
oly over energy pipelines in Central Asia.
Transneft, a Russian pipeline operator,
used to control the flow of Kazakh oil. Now
Kazakhstan exports its oil to China through
a new pipeline built in 2009. “China is re-
wiring the whole region. All roads used to
lead to Moscow. Now all roads lead to Beij-
ing,” says Mr Pantucci.
Russia still has a cultural, linguistic and
political hold on Central Asia. It employs
millions of its migrant workers, controls
the media and information space, and be-
lieves that it can make or break govern-
ments there. Perhaps it can. But that does
not bother China much. “It does not matter
who the tenant is if you own the building,”
as another Western diplomat says.
The shift in balance is obvious on the
central avenue in the city of Osh, in Kyrgyz-
stan. Near the vast statue of Lenin, arm out-
stretched, which dominates the main
square is a new landmark: Shanghai City,
the largest hotel in town. Azizbek Kara-
baev, its 31-year-old manager, worked in
Russia in the early 2000s, but in 2012 start-
ed to learn Chinese and went to China to
study the hotel business. Shanghai City
also provides language practice for stu-
dents learning Chinese. “There is a huge
demand for Chinese interpreters,” Mr Kara-
baev says. His six-year-old son, Adilkhan,
barely understands Russian, but speaks
fluent Mandarin. He has a Chinese name,
too: Wang Xiao Long, or “Little Dragon”. 7