The Eternal Courtship of the
Bear and the Dragon
-Energy as a shaping factor in Sino-Russian Relations
Michiel van Gerven
Under the supervision of Prof. Dr. J.H. de Wilde
University of Groningen
Table of Contents
Table of Contents...2
1. Introduction...3
2. Theoretical Framework...5
2.1. Complex Interdependence...6
2.2. Multi-level Governance...9
2.3. Integrating Complex Interdependence and Multi-level Governance...11
3. History in Perspective...14
3.1. Sino-Russian relations in historic perspective...15
3.2. Analysis...23
a) Military/Security Relations...23
b) Economic Relations...26
c) Ideology...28
3.3. Conclusion...30
4. The energy sector...30
4.1. Demand & supply...31
a) Russian energy sector...31
b) Chinese energy sector...33
c) Conclusion...38
4.2. Actors...39
a) Actors in the Russian energy sector...39
b) Actors in the Chinese energy Sector...45
c) Conclusion...49
4.3. Energy policies...50
a) Russian Energy Policy...50
b) Chinese Energy Policy...54
4.4. Public-private interaction...56
a) Corporate power in Chinese energy Policy...56
b) Governmental interference on the Russian energy market...58
c) Conclusion...59
4.5. Joint energy projects...59
4.6. Conclusion...66
5. Perspectives and scenarios ...67
6. Conclusion...75
Bibliography...82
1.Introduction
This thesis will consider Sino-Russian energy relations. Although an interesting subject by itself it is especially interesting for a citizen of the European Union. One of the main ways in which the EU countries seek to diversify the sources from which they derive their energy imports is to take part in the development of the Russian oil and gas fields in Eastern Siberia. The EU however, is not the only potential customer. While the EU countries are still one of the most important export markets for Russian energy exports, China’s and other East Asian countries’ demand is rising. Geographically the eastern Siberian gas fields are located much closer to China than to Europe. Moreover, pipelines to China would be far less vulnerable to outside interference since such pipelines would not have to travel through transit countries. China, therefore, seems a much safer bet than the European Union. This may have strong repercussions for Russian-European energy relations. These will not be the object of study in this thesis but the to better understand their own position on the energy market EU energy policymakers would do well to study Chinese-Russian relations.
Over the past decade the People’s Republic of China has shown the world a virtually unprecedented level of economic growth. With a growth rate of approximately 8-9 percent per annum the Chinese economy has become one of the largest economic powerhouses today. The result of this spectacular economic growth has been an equally astounding growth in Chinese energy demand.1
China is seeking ways to absorb this demand growth. The construction of several new coal-fired power stations is a primary attempt to curb the problem of energy shortages. These power plants have a major downside, however. The result of increased burning of coal has been an increase in already substantial pollution levels. The northern Chinese cities especially increasingly have to deal with thick layers of smog and the resulting deteriorating health of the population.2
Enormous air cleanup projects such as seen prior and during the 2008 Beijing Olympic Summer Games may be only a glimpse of what is in store for the future if China continues on the current path. Luckily, alternatives are available. Compared to coal other fuels are more efficient and a lot more environmentally friendly. Natural gas, especially, is one of the cleanest fuels currently available. Even shifting to energy production from oil-fired stations would already be a
1 David Zweig, “China's Global Hunt for Energy,” Foreign Affairs, no. 5 (2005): 25-26. 2 Spencer Reiss, “Smog and Mirrors: China's plan for a green olympics,” July 24, 2007,
considerable improvement over the current coal-fired plants.3
Different fuels, however, present different problems. While coal is in abundant supply in the People’s Republic natural gas and oil are not as readily available. Oil is not available within China in large enough quantities to supply all of China and while natural gas is found both on its own as well as associated with oil4 in China these supplies will not be sufficient to meet China’s growing energy demand. That leaves only one alternative, the international energy market.
One of the global primary oil and natural gas suppliers is the Russian Federation. With some of the largest natural gas fields as well as oil reserves in the world and located adjacent to China this country would seem to be in an ideal position to supply China with all the energy it requires. Several projects to integrate the Russian and Chinese gas sectors were started. Among these projects are a number of pipeline projects.
What has, however, come to pass? What became of these projects? Has a connection been created between the Russian and Chinese energy sectors? And what effects has this had on Sino-Russian relations overall?
In order to analyse these effects this paper thesis will use the theory of Complex Interdependence as developed by Keohane and Nye in ‘Power and Interdependence’ and the theory of Multi-level Governance as developed by Liesbeth Hooge and Gary Marks.
Complex Interdependence as an analytical concept refers to 'situations characterised by reciprocal effects among countries or among actors in different countries’. Importantly, interdependence can be differentiated from mere interconnectedness by virtue of ‘reciprocal costly effects of transactions’; absence of such affects translates into simple interconnectedness. Complex Interdependence is characterised by three main characteristics. First of all, multiple channels connect societies. Secondly, the agenda of interstate relationships consists of multiple issues that are not arranged in a clear or consistent hierarchy. Finally, military force is not used by governments toward other governments within the region or on the issues, when Complex Interdependence prevails.5 Multi-level Governance, on the other hand will be used to analyse how different actors interact and who ultimately controls what in Chinese and Russian energy policy.
Ultimately both theories will be used to answer the question in what direction
Sino-3 Adam Stein, “Natural gas to the rescue?,” TerraPass, June 5, 2009, http://www.terrapass.com/blog/posts/natural-gas-to-the-rescue.
4 Associated gas refers to gas that is found in conjunction with oil. Bringing oil to the surface from such a field automatically also bring the associated gas to the surface where it may be either flared or capured for sale.
5 Robert O. Keohane and Joseph S. Nye, “Realism and Complex Interdependence,” in International
Russian relations are likely to move in the future. In order to do so the final chapter will consider a number of scenarios that represent different directions the Sino-Russian relationship might take. By placing the past, the current situation, and the developments that have led there within the framework of these scenarios it will be assessed which of these scenarios is the most likely. Special focus will be on the energy sector. The ultimate question to be answered in this thesis is therefore: In what way is the Sino-Russian relationship most likely to develop as a result of
developments in the energy sector?
In order to be able to answer this question using the scenarios in chapter 5 chapters 1 through 4 will first need to consider what Sino-Russian relations have come to and how the current state of affairs has come about. These will therefore first consider how the Sino-Russian relationship has developed in the military field, the economic field, and the field of ideology as perceived through the theoretical framework of Complex Interdependence and Multi-level Governance.
This thesis will seek to answer both questions by first considering the Theoretical Framework in chapter two. The chapter will first set out the basic concepts of Multi-level governance and Complex Interdependence. After this it will be explained how both theories fit together and may be used to answer the main question. Chapter 3 will discuss Sino-Russian relations from 1949 onwards. It will not only provide the reader with a basic insight into the People’s Republic and Russia’s common history but also place this within the theoretical framework set out in chapter 2. Chapter 4 will delve deeper into Sino-Russian relations by focusing on the energy sector. The chapter will first consider the Russian and Chinese energy situation after which the actors and their influence will be discussed. Finally the interaction between the different players will be considered on a national level before ultimately Sino-Russian interaction in the energy field is discussed. The penultimate chapter will bring the previous together and, moreover, considers the direction in which relations between the Russian Federation and the People’s Republic are developing. This is done by providing a number of scenarios and placing these within the theoretical framework devised in chapter 2. Chapter 6 will bring all previous chapters together in a main conclusion answering the thesis’ main question and offer some reflections.
2.Theoretical Framework
Gary Marks and Liesbeth Hooghe.
This chapter will first discuss the theory of Complex Interdependence and will provide the reader with an insight into multi-level governance in the second part. Finally, the concluding remarks to this chapter will serve as a synthesis of the two concepts.
Throughout this thesis both theories will serve distinct purposes. Complex Interdependence will be used to provide the reader with a mainly factual insight into relations between the Russian Federation and the People’s Republic of China. This may involve issues such as trade flows and negotiating processes. Multi-level governance on the other hand will consider the position of different levels of governance relative to one another, in other words which part of government is active in what sector and has authority over whom. Most importantly, it will also consider how relations are perceived. The objective is to provide a full picture of the effects of the developing energy market in China for Chinese Russian relations, integration (or lack thereof) as such as well as the effects on mutual perception.
While Complex Interdependence and Multi-level governance are different theories, they are related. Both Complex Interdependence and multi-level governance offer insights into a world where state power may no longer be the dominant factor in international relations. In other words both theories consider the transformation of the decision-making process and the changing position that the state and other actors take up.6 How this makes both theories fit together will be discussed in section 2.3.
2.1. Complex Interdependence
Complex Interdependence was developed by Robert Keohane and Joseph Nye as a contrast to the realist perspective on international relations. Keohane and Nye state that as a reaction to a growing interdependence in economics, communications and human aspirations old international patterns are crumbling. They see the world as no longer defined by solely power of nations. International relations, according to their theory, are defined by a wider political agenda.7
Interdependence is often the result of international transactions: the flow of money, goods, people, and information across countries. The result is a situation of mutual dependence. Mutual dependence is characterised by reciprocal effects among countries or actors in different countries. For interdependence to exist it is unnecessary for these effects to be symmetrical, reciprocal costly effects of transactions are enough to signal interdependence. Absence of such
6 Simona Piattoni, The theory of multi-level governance : conceptual, empirical, and normative
challenges (Oxford: Oxford University Press, 2010), 3.
costs on the other hand results in simple interconnectedness.8
By not limiting the concept of interdependence to situations of mutual benefit Keohane and Nye strive to increase its analytical usefulness. Inclusion of situations of asymmetrical costly effects allows the consideration of issues such as the relations between developing countries and the industrialised nations as well as asymmetrical security relations. Furthermore the inclusion of such issues avoids having to make subjective judgements on whether or not a relation is characterised by mutually beneficial effects.9
Keohane and Nye stress explicitly that even if a relationship is characterised by Complex Interdependence such a relation may still experience distributional conflict i.e. conflict concerning the share of the gains resulting from transactions. It was never the intention to construct Complex Interdependence as a theory of peaceful cooperation. The fact that a relation may still be conflictual at times can therefore not be construed as an argument that it is not characterised by Complex Interdependence.10
The asymmetries in relations characterised by Complex Interdependence provide the actors with influence and bargaining power. An independent position provides the actor with a strong bargaining position whilst a highly dependent position seriously weakens an actor’s power to reach his objectives.11
Three main characteristics define Complex Interdependence. First of all, ‘multiple channels connect multiple societies’. Secondly, ‘the agenda of interstate relationships consists of multiple issues that are not arranged in a clear consistent hierarchy’. Finally, ‘military force is not used by governments toward other governments within the region, or on the issues, when Complex Interdependence prevails’.12 The first characteristic signifies that interstate relations are not the only significant relations in International Relations. Other (more informal) connections may be formed between for instance governmental and non-governmental elites as well as through multinational or transnational organisations. These relations may be characterised as transgovernmental or transnational. The second characteristic, the absence of hierarchy among issues refers to the fact that military security is not dominant on the political agenda. Domestic policy issues translate into international policy. This is reinforced by the fact that actors are not unitary. Within a state different coalitions form on several levels on different issues, often involving the same sub-state actors. The third characteristic: military force is not used by
8 Ibid., 308-309. 9 Ibid., 309.
10 Judith F. Kornberg and John R. Faust, China in world politics. Policies, processes, prospects, second edition. (London: Lynne Rienner Publishers, 2005), 309.
governments towards other governments in the region, or on the issues, when Complex Interdependence prevails should be taken to mean that military force will not be used to settle disputes concerning economic issues among friendly nations. This does not mean, however, that military force cannot be important in relation to other states. In this case (the relation to the third state) Complex Interdependence does not prevail.13 These characteristics have far-reaching consequences for political processes. They allow for the increased importance of issue linkage, agenda setting and an increased role for multinational and transnational actors.14
Several different state goals are pursued at the same time without a clear hierarchy and not necessarily without any relation to one another. In fact, contrary goals may be stated by different agencies and transnational actors. In such a complex world issue linkage is one of the means to achieve one’s goals. Issue linkage refers tot the process of ‘linking’ unrelated issues in order to create ‘package deals’. Under Complex Interdependence issue linkage is a way for weaker states to exercise power over stronger states. Especially when both economic and political issues are on the agenda, which have stronger trade-off effects in stronger states, will weaker states have a considerably stronger influence over outcomes.
From the lack of hierarchy among issues Keohane and Nye derive the expectation that agenda setting will become more important. The more traditional realist orientation focuses mainly on military and security affairs, agenda setting is paid little attention. Under Complex Interdependence the agenda is affected by domestic as well as international issues of various kinds, shifting the focus of politics away from security towards for instance economic issues. Interest groups striving to politicise issues can become significant actors in a situation of Complex Interdependence, both on the domestic as well as the international level.
Another consequence of the three characteristics described above is the increased importance of transnational and transgovernmental relations. This allows for coalition forming across boundaries such as national borders thus blurring the distinction between national and international politics. Transnational actors such as multinational corporations become of increasing importance and may exert greater power on policy. The existence of transnational actors also allows for the penetration of one state by the other by forming transnational coalitions or influencing these actors. The existence of Complex Interdependence therefore may limit the power of a government.
In this thesis Complex Interdependence will serve to provide the ‘material’ part of the analysis. Exactly how this will be done and how the theory will be combined with the theory of
Multi-level Governance will be discussed in section 2.3.
2.2. Multi-level Governance
Complex Interdependence is closely related to the concept of level Governance. Multi-level Governance is a system of organisation of public and private power divided into two or more layers of government, where each power retains autonomous decision making power vis-à-vis the others.15 Analyses using this model are especially prevalent in studies concerning the
European Union (EU). While the EU is quite clearly structured and can therefore be quite easily analysed in terms of multiple levels of autonomous decision-making, such a structure is less clear in Russian and Chinese energy market.
Multi-level Governance is a theory of decentralised authority. It strives to offer a new way of thinking that seeks to go beyond concentrating in formal policy making processes and institutions.16 Multi-level governance raises questions about the relevance of the classic authorities. Is power still vested in the central state? What level of analysis is the most relevant and should scholars focus on alternate actors and sources of authority?17
The theory of Multi-level governance was developed by Liesbet Hooghe and Gary Marks. They observed that ‘Centralised authority has given way to new forms of governing.18 Formal authority has been dispersed from central states both up to supranational institutions and down to regional and local governments’19
Hooghe and Marks distinguish two types of Multi-level Governance. The first type of Multi-level Governance (Type I) shares many characteristics with federalism on which it is based. Federalism is based on the relations between the central (state level) government and authorities on the sub national level. These levels are built one upon the other and, most importantly, do not intersect or overlap. Each government is the sole authority on its respective level. The result is several levels of government quite similar to one another, differentiated quite simply by the level on which they exercise their authority. Hooghe and Marks refer to this as a bundling of functions on each level.20
Multi level governance builds on the basics provided by Federalism. It is distinguished
15 Nick Bernard, 3.
16 Ian Bache and Matthew Flinders, eds., Multi-level governance (Oxford: Oxford University Press, 2004), v.
17 Ibid., v-vii.
18 Hooghe and Marks define Governance as: ’Binding decision making in the public sphere.’ In: Gary Marks and Liesbet Hooghe, “Contrasting visions of multi-level governance,” in Multi-level governance (Oxford: Oxford University Press, 2004), 15.
by four characteristics; General-purpose jurisdictions, non-intersecting memberships, limited number of jurisdictional levels and system-wide, durable architecture. General-purpose jurisdictions refers to the fact that governments exercise a wide array of functions, especially on the local level. Several different fields are subject to the same government in a form of bundled authority.21 Non-intersecting membership means that governments are mutually exclusionary. This may be based on territory but can also be communal, but most importantly jurisdictions at different levels of government do not intersect. The third characteristic of limited number of jurisdictional levels implies that jurisdiction is organised at just a few levels, for example the formal levels of government found in most modern republics. The final characteristic, system-wide durable architecture is illustrative for Type I Multi-level Governance. In systems characterised by this type of governance the same structure is usually reflected throughout all tiers of governance. An example is the trias politica structure evident in all levels of government in most modern democracies.22 This is not to say that the structure at some levels may not differ in complexity but the basic structure is similar. Governmental systems characterised by type I multi level governance tend to be durable. This is the result of high costs resulting from adjusting jurisdictions as well as of institutionalisation.23
Type II Multi-level Governance is similar to type I to the extent that it deals with multiple levels of governance. As its cousin, it is based on federalism. Situations characterised by type II Multi-level Governance may be considerably more complex than those characterised by type I Multi-level Governance. Type II jurisdiction is characterised by task specific jurisdiction, intersecting membership, many jurisdictional levels and flexible design. Task specific jurisdiction refers to the fact that jurisdictions fulfil distinct functions rather than being general purpose. Under a jurisdiction characterised by type II Multi-level Governance a citizen would be presented with a myriad of government institutions each providing a different specialised service. This task specificity results in intersecting membership. Jurisdictions concerning different issues may overlap where this is more convenient. Also, smaller jurisdictions may not necessarily fit nicely into larger ones as opposed to the situation under type I Multi-level Governance, which is characterised by a more federal structure. The borders of a jurisdiction are not determined by overarching jurisdictions but rather by efficiency and practicality.24 Consequently type II Multi-level Governance is also characterised by many jurisdictional Multi-levels. Since type II jurisdictions are meant to provide a specialised service their design is also more flexible than that of their
counterparts in type I.
For the purpose of this thesis the distinction between Type I and II Multi-level Governance will be abolished. Rather, the analytical concept in general will be used. The concept that actors on several levels of government and the private sector interact and negotiate with one another across state borders will be combined with the theory of Complex Interdependence to come to a workable framework.
2.3. Integrating Complex Interdependence and Multi-level
Governance
Multi-level Governance and Complex Interdependence offer frameworks for decision-making in an increasingly interconnected world. This thesis will combine both theories to consider Sino-Russian energy relations from both a material and a normative perspective. Complex Interdependence will serve to consider material and formal connections between both states – at different levels – such as the flow of goods between states as well as formal treaties and agreements. Multi-level Governance, on the other hand, will focus on how different actors interact. In other words how different actors perceive, and react to, one another. While the subject of the latter may be of a subjective nature – as perception inherently is - concrete statements about behaviour may be made by putting decisions into context and discerning patterns.
Crucially, I Multi-level Governance will be used as this allows for more flexibility. On top of this the relation between China and the Russian Federation cannot be characterised by a formal hierarchy.
Considering how developments in the energy sector, or possibly integration in the energy sector, affect the Sino-Russian relationship is to study the effect of actions in one sector by a limited number of actors on a larger framework with a larger number of actors. In other words, it is to study the spillover effect interaction s in the Russian energy sector have on wider Sino-Russian relations.
In Chapter 7 of level Governance Stephen George discusses the ancestry of Multi-level Governance. He sets out to explain that Multi-Multi-level Governance originated as a mix of intergovernmental and supranational (neofunctionalist) theories of integration. A central concept in neofunctionalist theories is the concept of functional spilllover. The idea that once national governments take an initial step towards integration the process will take on a life of its own, moving integration much further along than had originally been planned.25 Modern economies,
neofunctionalists argue, are made up of interconnected parts, making it impossible to separate one sector from another. Consequently, if states integrate one sector of their economy, the connection between that sector and other sectors ensures that other sectors of the economy also become more integrated.26
Multi-level Governance theorists have, for the most part, abandoned the neofunctionalist spillover argument. However, for the purpose of this thesis it retains its usefulness as it allows us to gauge the influence of a particular sector, energy, on a relationship. The concept of spillover will be used to assess how and to what extent the Russian Federation and the People’s Republic of China have integrated in the areas of ideology, security and economy and what part the energy sector plays and has played in this integration (or lack thereof). These three elements are an extrapolation and operationalisation of the characteristics of Complex Interdependence named previously in this chapter.
The multiple channels connecting societies mentioned previously may exist in varying sectors within the relationship, both on a normative as well as on a material level. Security relations, for instance, have a material aspect, i.e. who has more tanks, and an ideological aspect; to what extent does one entity feel threatened by another. The ideological aspect can explain why, for instance, smaller NATO members do not feel threatened by the United States’ military power. As they both adhere to the same ideology, i.e. share the same values with regard to for instance liberal democracy and open markets; military power will not be used to enforce the stronger actor’s point of view. The same is true for economic relationships; can I profit from economic relations and do I trust the trading partner? Needless to say, sometimes the division into ideology security and economy can be hard to make or should not be made at all. An issue may encompass more than one or even all of these aspects and these may, moreover, reinforce rather than exclude one another.
The second characteristic of Complex Interdependence, issues are not arranged in a clear and consistent hierarchy, refers to the prevalence of military issues in a relationship, trade issues may be just as important. Once again this issue is covered by, and divided over, the three issues of ideology, security, and economy. Military security issues may have an economic component, such as in arms trade, or an ideological one, consider the communist Warsaw pact, on top of the existing military (im)balance. Economic issues may be affected by differences in ideology or security concerns, consider for instance the Western trade embargo against Iran. The third characteristic, the lack of use of military force in the relationship is divided mainly over the components of security and ideology, although there may also be an economic aspect. The use of
military force towards one another precludes Complex Interdependence and this issue should therefore be seen as a limiting factor. Like the two previous characteristics it involves ideological, economic, and of course security aspects. When the above is integrated into an organisational chart we get the figure below.
Figure 1 Operationalisational Chart
Multi-level Governance and Complex Interdependence both challenge the authority of the state. In the case of this thesis actors such as National Oil Companies and specific groups in government may be of influence on national energy policy. The importance of these actors necessitates using a theory that devotes more attention to sub state (and supranational) actors By joining the two theories to consider the ideological, security and economic dimension of he Sino-Russian relationship in more detail than if a theory of a more state-centred theory had been chosen. Realism for instance, with its accent on the state and the issue of military security would not have been useful to consider the complex sub-state interplay of actors in the energy sectors of both countries that this thesis will present.
Furthermore it is necessary to use both theories to consider Sino-Russian relations because without doing so important factors of the relationship would be ignored. Complex Interdependence focuses primarily on relatively tangible issues such as trade and investment or military interaction and cooperation. Multi-level Governance on the other hand allows us to also consider intangible factors such as interplay between actors and the ideological aspect of a relationship. In other words it allows us to consider whether two actors trust one another.
to consider highly developed and institutionalised relationships such as those that exist in the European Union. Considering whether a relationship such as the Sino-Russian relationship that is, in all probability, not as developed might seem strange. However, by using a theory that considers highly advanced relationships one can gain a picture of to what extent a relationship that is not as highly developed is lacking certain features and to what extent. By not deciding not to consider these features a priori the subject can be considered in more detail.
3.History in Perspective
This chapter will consider the history of Russian-Chinese relations from the end of the Second World War onward. The first part of the chapter will be of a descriptive nature. Marking developments and changes in the relationship. The second part of the chapter will be used to put history into theoretical perspective. The three pronged approach developed in the previous chapter will be used to place the events in the first part of this chapter into the proper perspective. Ultimately, this will present the reader of an analysis of Chinese-Russian military, economic and ideological relations. By doing so this chapter seeks to answer the question what the current status of Chinese-Russian relations is in order to be able to build on this analysis in specifically energy focused later chapters.
The historic overview presented in this chapter is necessarily based on authors that have their own vision on the development of Sino-Russian relations. The prime source for this chapter, Jeanne L. Wilson, Professor of Political Science at Wheaton College, Norton, in the United States is no exception. The title of her book, Strategic partners: Russian-Chinese relations in the
post-Soviet era, is a clear expression of this. The title reflects a belief that Russia and China are
moving closer together and that their relationship has even become a strategic partnership, an opinion that the author of this thesis does not share. Other authors take a more reserved approach to the development of the Sino-Russian relations. Information in this chapter is influenced by their respective points of view. Where differences of opinion exist these are discussed
The second section of this chapter, hopes to avoid the issue of biased information by basing much of the analysis on fact and figures provided by various organisations and branches of government. It should be noted, however, that all of these have mandates and interests. Organisations such as the American Central Intelligence Agency, but also newspapers, may reflect opinions and interests of their respective owners and governments even if the subject is theoretically merely factual, e.g. trade figures. All data presented in this chapter and indeed throughout this thesis, is therefore inherently biased.
the ‘bias’ of the book influence the description of the events presented below. Facts have been checked against other authors and where a dissenting voice is necessary the reader will be cautioned.
3.1. Sino-Russian relations in historic perspective
How did the current status of Sino-Russian relations come about? This will be the focal point of this section. The objective is to provide the analysis later in this chapter with both a historical background as well as a frame of reference.
The relationship between the Soviet Union and the People’s Republic was fraught with difficulties. While Mao Zedong announced in 1949 that China would follow the Soviet path by “leaning to one side” the relationship between the two largest communist republics remained problematic. The first few years of the new relationship saw the establishment of The Treaty of Friendship, Alliance and Mutual Assistance Between the USSR and The People’s Republic of China (signed February 1950). It committed the two states to assisting one another in the event of Japanese aggression. The treaty also provided in the withdrawal of Soviet troops from Port Arthur and it was agreed that control of the Manchurian railway would be returned to China by 1952. On top of this the Soviets would provide China with technical expertise and knowledge in order to upgrade the Chinese industrial sector. To facilitate this the USSR provided the Chinese with 300 million dollars in credits and thousands of soviet technicians. 27
This partnership would not last long, by the mid fifties it was beginning to deteriorate. One of the first signs was the Chinese move away from the Soviet model. While they had at first sought to implement communism along the same lines as the Soviet Union the Chinese leadership had altered its course to build a communist state based on agricultural communes. The relationship was further damaged when the Soviets revoked the agreement to provide China with nuclear technology. In turn the Chinese criticised the Soviet leadership by stating Kruchev was slavishly obeying the West.28
The falling out achieved a new momentum when the Chinese openly criticised Kruchev in an article written in the Chinese Communist Party theoretical journal. Supposedly written in honour of Lenin’s 90th birthday the article, titled Long live Leninism, sparked an ideological battle between the two Communist giants. At the same time the Soviet Union withdrew it experts form China. In doing so it dealt a further blow to a country already seriously weakened by the failing of the “Great leap forward”. The falling out culminated in a border skirmish in 1969 in the
27 Jeanne L. Wilson, Strategic partners : Russian-Chinese relations in the post-Soviet era, 2004, 17-19. 28 Bobo Lo, Axis of convenience. Moscow, Beijing and the new geopolitics. (London: Chatham House,
Ussuri river border area after both states had moved significant amounts of military forces into the border area. Nowadays, many western scholars see this event as one of the driving forces behind the Chinese willingness to improve diplomatic relations with the United States.29
Reconciliation took a long time. Part of the reason for this may be found in the troubles associated with leadership succession, which troubled both countries throughout the seventies. An attempt at resuming talks was made in 1979 but only when China ceased to label the Soviet Union as a revisionist state -a result of China’s own economic reforms-30 was the door once again opened for an improvement in relations. The year was 1980. Formal negotiations were resumed in 1982. For the Chinese three fundamental issues remained on the table. The build-up of Soviet troops along the border, the Soviet presence in Afghanistan and Vietnamese troops in Cambodia. While these issues where not resolved until years later it signalled the intensification of bilateral relations between the two states. The rise of Michael Gorbachev to power in the Soviet Union heralded a significant improvement in relations. One of Gorbachev’s main foreign policy objectives was to improve the ties with the People’s Republic. In order to do so he announced the withdrawal of Soviet troops from Afghanistan and stated his readiness to discuss troops reductions along the Chinese border. When the Vietnamese announced that they would withdraw their troops from Cambodia the stage was set for Gorbachev’s historical visit to Beijing in May 1989. Despite the less than ideal circumstances - Beijing was still in turmoil as a result of the Tiananmen crisis – the parties managed to come to a joint communiqué. Both states agreed to refrain from the use of (the threat of) force in their relations. It was further agreed that the amount off military personnel in border regions would be reduced. Besides this, it was noted that the normalisation of relations was not directed against any third state.31 While reconciliation was of great importance to both the Russian Federation and the People’s Republic it was soon to be overshadowed by domestic events in the Soviet Union.32
The fall of the Soviet Union was a watershed in Sino-Russian relations. After years of focusing on fellow Marxist countries the new Russian leadership decided it was time to turn the country’s face to the west. Under the leadership of Boris Yeltsin the Russian Federation sought to renew its ties with the West. In doing so it also automatically severed a lot of the ties with its former communist friends and allies. Therefore while the fall of the Soviet Union is perceived as the start of increasingly friendly relations with Russia in the West, the Chinese perceived it as an estrangement. Clearly relations between the new Russian Federation and the People’s Republic
29 Ibid., 27.
30 Wilson, Strategic partners, 19. 31 Ibid., 17.
were of to a rocky start. Throughout the 1990s, however, the Sino-Russian relationship developed into what Wilson refers to a strategic partnership.33 Bobo Lo, in ‘Axis of Convenience’, however, feels that this is grossly overstating the fact. He argues that not only was cooperation between both states often tenuous at best, a level of tension always remained beneath the surface. According to Lo pragmatism, rather than partnership, was the name of the game.34
For the Chinese the fall of the Soviet Union was more than just that. It was also a fundamental challenge to the communist ideology.35 The collapse of the Soviet Union triggered the rise of separatist movements throughout Eastern Europe and was accompanied by economic collapse. For the Chinese Communist Party, still recovering from the Tiananmen crisis these events were most unwelcome and put a damper on reconciliation between Russia and the Chinese Communist Party. Not only had the fall of the Soviet Union challenged the legitimacy of Communism, the Chinese leadership also held the Russian leader Michael Gorbachev directly responsible for the disappearance of socialism in Eastern Europe. Jiang Zemin in February 1990 openly called him a traitor to communism.36 The Chinese Communist Party even went so far as to censor publications dealing with him. They were labelled politically too explosive.37
In the meantime Gorbachev himself took a very different approach to the Tiananmen crisis. The Congress of People’s deputies stated that it considered the events in Beijing an internal affair. It further commented on the matter by noting that ‘any attempts at pressure from outsiders would be inappropriate’. Gorbachev himself expressed his regret at the situation but refrained from commenting further, thus taking a low key approach to the situation.38
In early 1991 the Chinese leadership remained deeply disturbed by the Soviet communist party’s fall from grace but despite this decided not to go ahead with a planned campaign of mass criticism of the Soviet Union. While not being the Chinese’ first choice Gorbachev was still highly preferable to the alternative, Boris Yeltsin. In May 1991 both states released a joint communiqué on the occasion of Jiang Zemin’s visit to Moscow reaffirming relations of friendliness, good-neighbourliness, mutual benefit and cooperation.39 The events of August 1991 were quick to cast a shadow over this. When a failed coup by communist hardliners dislodged Gorbachev from power, Boris Yeltsin as President of the new republic rose to the supreme office. Rumours circulated that the Chinese Communist Party had been involved in the attempted coup
33 Ibid.
34 Lo, Axis of convenience, 28-37. 35 Wilson, Strategic partners, 21. 36 Ibid., 22.
but in an official reaction the Chinese leadership merely stated that it the evens to be an internal affair.40
The coup attempt proved to be the final straw for the ailing Soviet Union. By the end of the year it had been replaced by the new Russian Federation and a myriad of former Soviet republics. Despite the disagreements between both states the Soviet Union had always been an example of a socialist state. An example that now lay in ruins. For China nothing remained but to make the best of cooperation with the new federation under Yeltsin’s leadership. The Chinese leaders accordingly opted for pragmatism. In the interest of internal stability and peace it was deemed necessary to maintain normal relations with the new Russian leadership.41
The new federation and the People’s Republic agreed to uphold previous treaties concluded between the Soviet Union and China but for the most part early relations between the two states remained nothing short of frosty. When Jiang Zemin visited Moscow in May 1991 he snubbed Yeltsin by deciding not to meet him. In a further insult to the new Russian President it was not him but the Soviet Communist Party Leader, Ivan Polozkov that was invited to China where he was received by Jiang Zemin after Yeltsin had won the presidential elections. The Russian president responded by refusing to meet the newly appointed Chinese ambassador who had wanted to present his credentials. The Russian turn away from China was further exacerbated by the appointing of Andrei Kozyrev to the position of Minister of Foreign Affairs. Kozyrev followed a distinctly pro-western policy, breaking with the Soviet tradition of trying to maintain a balance between its East and West policy. While he strove to maintain diplomatic ties with China he openly advocated a “significant downgrading of the relationship”42 Relations would soon improve however. When Yeltsin and Li Peng, the Chinese prime minister, met in New York in January 1992 at the United Nations they agreed on a strengthening of relations. While the policies directed from the top to the ministry of foreign affairs had changed, the Russian foreign ministry had remained very much the same after the dissolution of the Soviet Union. The result was that many channels for cooperation were still in place.43 1992 saw the conclusion of contracts for delivery of military hardware as well as a five-year intergovernmental trade and economic agreement. On top of this several visits of high-ranking Russian officials laid the groundwork for Boris Yeltsin’s trip to Beijing in December 1992. While his visit to the Chinese capital can hardly be described as pinnacle of diplomatic excellence it was nevertheless successful. Both Russia and China hailed it as a new stage in the development of Sino-Russian relations. Twenty-four
documents were signed including important memoranda of understanding on the reduction of armed forces as well as military and technical cooperation. The two states further issued a joint declaration that apart from stating that China and Russia were friendly states also included that Russia would not establish “governmental relations and ties with Taiwan”. Thereby affirming that Russia recognised the People’s Republic as the only legitimate representation of the Chinese state.44
The year 1993 was marked by Yeltsin struggle to stay in power after repeatedly coming into conflict with the Russian Duma (parliament). While military cooperation continued to expand the Chinese leadership remained neutral on the issue. It merely expressed its hope for a quick return of stability and reiterated its policy of non-interference. It proved a wise policy choice when Boris Yeltsin emerged victorious as a stronger president.45 With his leadership affirmed the mid nineties were characterised by a flurry of diplomacy. During these years the Russo-Chinese relationship was upgraded to a “constructive partnership”. Key agreements included a declaration that neither state would target its nuclear weapons at the other as well as finalisations of border demarcations. Also both parties increasingly noted that their interests were overlapping or coinciding. One major problem remained. The border agreement negotiated in 1991 was drawing increasing domestic criticism in Russia. While it was for the most part a way for the easternmost Russian provinces to attract attention from Moscow it was nevertheless eyed with suspicion in Beijing. Moscow responded by revising it visa regulations. While effectively lowering the number of Chinese transferring across the Russian border it also lowered Russo-Chinese trade by approximately a third. The one sector of trade that remained promising was the military hardware sector. A prime example was the agreement that licensed China to build Russian designed Su-27 fighter planes.46
Despite tensions on the issue of border demarcations and Chinese immigration the mid-nineties brought Russia and China closer together. Three events specifically, can be named as the catalysts that facilitated this. First the Chinese undertook a series of missile tests off the coasts of Taiwan in an attempt to influence the Taiwanese presidential elections. Second, the planned expansion of the North Atlantic Treaty Organisation (NATO), and finally the conflict in Chechnya. The first two brought both states into conflict with the United States. Increasingly they identified the United States as seeking hegemonic domination. The Russian invasion of Chechnya made the Russians see the Chinese policy of non-intervention in domestic affairs in a new light. Both states subsequently agreed not to criticise one another’s policies regarding Chechnya, Tibet
and Taiwan.47 Following further summit meetings and Yeltsin’s official visit to Beijing in April 1996 the relationship was upgraded to “a strategic partnership of equality, mutual confidence and mutual coordination towards the twenty-first century”. Importantly steps towards regional security were also taken when during another regional summit in Shanghai Jiang Zemin and Boris Yeltsin signed the “Agreement on Strengthening Mutual Military Confidence in the border regions with the leaders of Kazakhstan, Kyrgyzstan and Tajikistan.48 Not only did the agreement improve transparency in military operations it would also provide a stepping stone towards further regional cooperation.
The upgrading of relation between Russian and China also meant that relations became more institutionalised. Both sides showed the intention to increase bilateral trade. Also it was decided that yearly summit meetings would be held as well as biannual meeting between the premiers of both states and regular meetings at a lower diplomatic level. In order to aid economic development numerous committees were established.49 Despite this there was little evidence of growth in trade between both states. The one exception was the military-technical sector. On top of the previously mentioned licence agreement to build SU-27 fighter jets the two countries discussed the sale of SU-30 warplanes and reached agreement on the sale of two Russian destroyers to the People’s Liberation Army Navy. Military relations were further strengthened by the signing of a follow-up agreement between the “Shanghai Five” on the issue of reduction of military strength in border regions.50
During the late 1990s Russo Sino relations had become subject to some routine. Yeltsin’s ailing health and considerable domestic political instability in Russia ensured that few new agreements were drafted during the later Yeltsin years. Despite this the advances made during his administration were considerable. Longstanding border disputes were resolved and while the issue of Chinese immigration into Eastern Siberia remained on the table it had lost its political clout and was thus more subject to central Kremlin authority.51 Economically cooperation remained difficult. The Chinese and Russian economies proved not to be very compatible. There were two exceptions: Russia and China made considerable headway in nuclear cooperation and expanded their joint activities in the aerospace sector. Closely related to this is the military technical sector. Russia had always striven to maintain a balance betweens the sales of material and technology transfer the emphasis moved to the latter.52 Increased military cooperation is also
evident in what can arguably be named as the most important development in Sino-Russian relations during the Yeltsin era: the establishment of the Shanghai Five multinational organisation. Originally conceived as a forum to resolve border demarcation and security issues it rapidly evolved into a regional security organisation.53 The relation can thus be said to have moved from a stage of considerable hostility to one of increasing cooperation.
Further evidence of this situation may be found in the fact that both states interest on the global stage are increasingly converging. Prime minister Primakov even went so far as to suggest a “strategic triangle” made up India China and Russia.54 While the proposal was not well received by the Chinese leadership – on the grounds of China’s strained relation with India – the fact that the suggestion was made is still powerful evidence that Russia and China share foreign policy objectives.
High on both countries’ political agendas was their relation with the United States. Two issues especially, dominated the agenda: first of all the NATO intervention in Kosovo, and secondly the US’ intention to build an anti-ballistic missile shield. With the Chinese and Russian policies of non-intervention in internal affairs the NATO activities in Kosovo in their eyes presented a threat to their own national sovereignty. In reaction both states presented a united front by issuing joint statements stressing the importance of the Anti Ballistic Missile treaty as a force for stability and deploring the circumvention of the United Nations in the case of the intervention in Kosovo and labelling humanitarian intervention as a way of exercising power politics.55
When power in Russia was handed over to Vladimir Putin basic Russian policy remained virtually unchanged. The Chinese Russian relation did however profit significantly from the change in personalities. Not only did Putin have significantly better health, his administration also proved to be more organised than that of his predecessor. For the first time in years Russo-Chinese trade experienced growth, albeit at a modest level. By the year 2000 China had become Russia’s largest arms customer and the military technical relation continued to grow. In 2001 when Putin visited Beijing both states agreed to study the possibility of constructing a major oil pipeline between both countries as well as allowing Gazprom to participate in the construction of a gas pipeline in China.56
One of the most notable developments of the early Putin years was the development of the Sino-Russian Treaty of Good Neighbourly Friendship and Cooperation. The treaty was
essentially a prolongation of the 1950 Sino Soviet Treaty of Friendship Alliance and mutual assistance with a few notable alterations. The 1950 version provided for military support in the event of foreign aggression. In 2001 it merely stated the “need for immediate consultations” in the event of a security threat to either state.57
While both Russia and the Chinese stated that the new treaty was in no way directed against any third party both states nevertheless saw it as a means of exercising influence on the international stage. On top of that, bilateral aspects of the treaty were important. The treaty codified the achievements of the Yeltsin era and provided a legal base for further improvements in relations. For Russia it also provided a measure of security on the issue of the border areas, where Chinese immigration was still a sensitive issue. For the People’s Republic friendly relations were necessitated by the goal of modernisation for which Russia had proven to be a key partner.58
The first real test was the terrorist attacks on the World Trade Centre in New York City and the Pentagon in Washington D.C. on September 11, 2001. The immediate reaction of both China and Russia was to improve their relations with the United States. Although both states provided assurances of their support for actions against terrorism China kept a more independent stance than Russia.59 The attacks presented significant policy problems for both states. China remained suspicious of US intentions suspecting that the US would use the war on terrorism to expand its global influence. Russia on the other hand signed on as a more active participant in the war on terror.60
This support did however not range to all issues. Both China and Russia showed little interest in the US characterisation of Iran Iraq and North Korea as an axis of evil. In response to the US led attack on Iraq of March 2003 Russia was quick to join the French and Germans in the UN security council, even threatening to veto a resolution that would authorise the use of force against Iraq. The issue also caused further collaboration between the People’s Republic and the Russian Federation once again confirming that, at least to a certain extent, they shared similar worldviews. This was evidenced by the issuing of joint communiqués on North Korea and Iraq shortly prior to the American invasion of Iraq as well as in the release of a joint declaration in May 2003 condemning unilateralism and power politics as well as asserting both states’ commitment to the “construction of a multipolar world”.61
Bobo Lo argues that ‘the great game’ in which China and the Russian Federation balance
against a growing influence has become a somewhat obsolete term stemming from a Cold War mindset. In his opinion the chessboard has changed. Especially in Central Asia it is no longer possible to merely speak of spheres of influence. The states in this region have become powerful players in their own right. In further criticism of the balance thesis Lo points out that the Chinese leadership’s primary reaction to the balancing position taken up by the Russian Federation was not a welcoming one. Rather it underlined the fact that the Russian leadership still prioritised its relationship with the United States over their relationship with China.62
3.2. Analysis
What may be inferred from the section above? Can trends in Sino-Russian relations be identified? And how do these trends, should they in fact exist, fit into the tripod (economic, military, ideological) structure devised in the previous chapter. Throughout the previous sections several problems and developments have been noted. These fit into a wider perspective. Both states claim that Sino-Russian relations are flourishing as never before. Although clearly relations are better than they have been, it may be argued that all is not as it seems. Not all aspects of Chinese Russian relations have developed in the same way. In some areas there has been a considerable level of integration, in other fields one can see estrangement.
a)
Military/Security Relations
As mentioned in previous section the Russian Federation and the People’s Republic have had a very turbulent history. In the past there have been numerous military conflicts. Most recently these involved substantial border skirmishes over disputed territory. Since the guns have silenced there has been a remarkable turnaround in military relations between both states. A number of notable factors have contributed to this.
First of all the People’s Republic has become the primary target of weapon exports for the Russian Federation. Several of the most advanced weapon systems Russia has to offer have been sold to China. On top of this China has acquired licences to produce several Russian military products. Most notable among these are the latest generation of Russian warplanes. From the Russian side selling these weapons and licenses may not have been motivated by more than a need for foreign currencies, however selling weapon systems to a powerful neighbouring state with whom there have been conflicts in the past implies a new, high, level of trust in military as well as in other relations.
Secondly the Russian Federal government has been able to silence regional eastern
governments that were undermining relations with China. Russian regional authorities were increasingly concerned with the level of Chinese migration into eastern Russia. Fearing Chinese claims of eastern Russian territory these regional governments increasingly sought the federal governments attention to what they perceived as Chinese aggression. Arguing that China would use these migrants to stake claims over eastern Siberia’s natural resources their voice found a willing ear in the Russian media and the Russian population. While these fears may not have been justified, the Russian federal government nevertheless had to take the issue seriously and address growing concerns. By devoting considerably more attention and funds to the eastern provinces the Russian central government was able to draw the attention away from the Chinese migration issue. On top of this Chinese immigration into eastern Russia would be subject to stricter regulations and border patrols were stepped up. Most importantly the issue had been a means of attracting the people’s and the media’s attention by a region and its government that had felt largely ignored by the Russian central government. As such, the issue was soon dropped after the regional eastern governments had achieved their goals of more attention and funding from the central Russian government.63
Perhaps the best example of the turnaround is the establishing of the Shanghai Cooperation Organisation. Developed as a security organisation its primary goal is to enhance regional security in central Asia it has also become an important framework for cooperation between the central Asians States. As the two largest and most military capable states, China and Russia dominate the organisation. Apart from offering a framework for military cooperation the Shanghai Cooperation Organisation has also enhanced the level of trust between both states. Rather than preparing for a conflict the emphasis of military relation between both states has shifted to issues of joint concern. Both states face considerable problems with large minorities, separatism, and (related) terrorism. By turning military relations into a field of cooperation rather than conflict Russia and China have created a situation were military relations strengthen rather than undermine relations.
This does not mean that China and Russia think alike on all issues military. A prime example is a joint training exercise between the Russian military and the People’s army. Originally China proposed that the exercise should be held in the Chinese province of Fujian, the province closest to the island of Taiwan. The exercise would include joint naval beach landing exercises. The proposal was a clear attempt by the Chinese authorities to send a message to Taiwan and have it supported by a major power. The Russian authorities were unwilling to be caught up in the issue of the status of Taiwan and in the end the exercise was moved to a less
provocative area.64
China has been willing to sacrifice territory for stability in its relation with Russia. In settlements over disputed territory China has invariably ended up with less than half of the territory under discussion. While some of these agreements have been resettled in is nevertheless compelling evidence that the People’s Republic has for a long time sought to maintain a peaceful relationship with the Russian Federation.
Chinese Russian military relations have moved from a state of considerable distrust towards a position of tacit cooperation. While cooperation does not stretch to all issues and is by no means unconditional it is clear evidence that Sino-Russian relations have come a long way. With regard to the field of energy relations have moved away from the position where their was fear of Chinese claims on Russian natural resources to a position of absence of military issues in the field of energy.
One prime example of this is what Bobo Lo refers to as the ‘mongol complex’. This consists of a deep-rooted fear in Russian society of its alien neighbour to the east. As far back as the 13th century the Russians have harboured a hostile attitude towards the empire towards the east. Historically the division between east and west is in Russia considered to be the boundary between the civilised and uncivilised world. However mistaken, Russia has more often been invaded from the west than the east and China is modernising at a more rapid pace than Russia itself the Mongol complex remains firmly rooted in Russian society and is a prime reason for Russian suspicion towards China.65
While the Mongol complex is only one example of the fact that Sino-Russian relations might not be as simple and straightforward as both states suggest it is nevertheless evidence of a larger problem. While both China and Russia praise the current state of relations several fundamental issues are still in need of addressing.66
Overall the greatest level of integration in Chinese Russian relations can be found in the military field. The major reasons for this partially overlapping security policy, may be found in the issue of counterterrorism, and similar problems with minority groups within the national borders. Closely related to this is the subject of arms trade. This implies and increased level of trust. The arms trade is also one of the most important factors in Chinese-Russian economic relations. Technology transfer as well as finished military hardware are products that are in high demand in the People’s Republic.
b)
Economic Relations
Apart from military hardware and technology, trade and investment have historically been limited. For the most part it consists of natural resources, which China imports from the Easternmost Russian provinces, and simple consumer goods, which the Russian Eastern provinces import from China.
Nevertheless, bilateral trade between Russia and the People’s Republic is seen as an important indicator for the state of the bilateral relationships between both states, especially in Russia. In January 2006 President Putin announced his intention to raise annual bilateral trade to a level of $60 billion to $80 billion. In the following years, growth in bilateral trade between both states was well on track. In 2006 bilateral trade grew by more than 15 percent. In the ensuing year trade grew further by nearly forty-five percent to reach just over $48 billion. The economic downturn, from he second half of 2008 onwards, affected trade levels severely. Trade levels in 2009 dropped by more than 30 percent compared to 2008. The result is that current trade levels have dropped below the level of 2007. Leading senior Russian officials to state that bilateral trade would be unlikely to recover to the pre crisis level before 2011 or even 2012.67
Year 2004 2005 2006 2007 2008 2009 Bilateral Trade
(in billion $) 18.24 29 33.4 48.16 56.8 39.51
Change in % compared
to previous year 37 15 44 18 -30
Figure 2: Sino-Russian Trade
Growth in trade between both states has been impressive. Over a period of five years bilateral trade has more than doubled. When the economic downturn is taken into account the figures become even more impressive. Trade levels in 2008 were triple what they were in 2004. What, however, does this entail for Sino-Russian relations? Specifically, what do these figures signify for the level of interdependence between both states? In order to assess the importance of these figures they will be compared to the total trade figures or both states.
In 2009 total Russian bilateral trade van valued at $492.4 billion. $295.6 billion in exports and $196.8 billion in imports.68 By comparison, China's total bilateral trade value was valued at $2.116 trillion with a total exports value of $1,194 billion and total imports value of
67 Sergei Blagov, “Russia moves into trade surplus with China,” Asia Times Online, February 18, 2010, http://www.atimes.com/atimes/Central_Asia/LB18Ag01.html.
$921.5 billion.69 As Russia's third largest trading partner China was responsible for 4.5 percent of Russian exports and 12.9 percent of Russian imports70, or $13.302 billion and $25.387 billion respectively. In the same year these numbers represent 1.44 percent of Chinese imports and 2.13 percent of Chinese exports.
Clearly the relationship is asymmetric. China is the number 3 trading partner for the Russian Federation. While for China, Russia is the 8th greatest trading partner.71 China is thus far more important to Russian total trade than Russia is to Chinese total trade. For a state of Complex Interdependence to exist between two states both states should be mutually dependent on one-another. Importantly, this does not mean that the relation is required to be symmetric.
When taking into account the development of economic relations between both states and the intention voiced by then president Putin to greatly increase between China and Russia it is clear that the importance of economic relations between the Russian Federation and the People’s Republic has greatly increased. To Russia, China has become an important trading partner and would suffer significantly from a loss of trade with China. China, however, is nowhere near as dependent on the Russian Federation. While Russia is still China's number 8 trading partner a loss of trade with Russia would only mean the loss in total trade value (assuming it would not be replaced by other trade partners) of $36.7 billion, or 1.83 percent of total Chinese bilateral trade. This figure pales in insignificance when compared to China's total trade. It may therefore be concluded that while Russia is to some extent dependent on China for bilateral trade, China is certainly not dependent on Russia. A state of Complex Interdependence does therefore not exist in the field of bilateral trade.
Moreover, when considering mutual Foreign Direct Investment (FDI) it becomes abundantly clear that, at least for the moment, the Chinese and Russian economies are lying back-to-back rather than embracing one another. Total Foreign Direct Investment in 2009 totalled no more than $1.8 billion.72 Despite this, or possibly because of this, several programs and conferences aimed at increasing bilateral take place every year. In June 2010 for instance, three major conferences, the Russia China bilateral event73 (Moscow), the Russia China Investment Cooperation Fair74(Moscow), and the China Russia Investment Forum75 (Beijing), were held.
69 Central Intelligence Agency, “China,” in The world factbook, 2010, https://www.cia.gov/library/publications/the-world-factbook/geos/ch.html. 70 Central Intelligence Agency, “Russia.”
71 Blagov, “Russia moves into trade surplus with China.” 72
73 “Russia creates buzz in China bilateral investment,” China Briefing, June 30, 2010, http://www.china-briefing.com/news/2010/06/30/russia-creates-buzz-in-china-bilateral-investment.html.
74 China International Investment Promotion Platform, “China-Russia Investment Cooperation Fair held in Moscow,” CIIP.com, June 11, 2010.
