Cables From The Diplomatic Frontlines

Russia and China summit: Partnership of “No limits”?

• Just when the US was doing everything to isolate and increase pressure on Russia (thereby attempting to affect Putin’s calculus on Ukraine), the Russia-China summit provided a much-needed relief for the Kremlin.

• We have briefly touched upon this summit in the previous cable - but this was/is a significant event, and therefore needs further unpacking.

• Here, we shall look at the immediate impact of the summit, what it has really achieved (beyond the efforts of both the intentional propaganda, and unwitting embellishment by the Western media), whether it truly amounts to an alliance (as many DC/Brussels strategists like to claim), and finally, the risks and downsides for China - both short-term on Ukraine, and longer-term threats and challenges arising from this move.

• 1) What did Putin really gain?

• Certainly avoidance of complete isolation, and added leverage against the US/EU: Go ahead, sanction us. We already had enough reserves and leverage over you to weather this storm, and now we have additional oil & gas deals amounting to $117.5bn.

• The Gas deal between Gazprom and CNPC is significant: annually, 10bcm of Russian gas from the Sakhalin 3 fields, will be supplied to China by connecting Russia’s domestic Sakhalin-Vladivostok pipeline to the main Power of Siberia Trunkline.

• Together with the annual 38bcm of gas expected (via Power of Siberia pipeline) from the 2014 deal, by 2025, Russia could be supplying China with 48 bcm of gas per annum - that would amount to approximately 30% of the gas supplied each year to the EU.

• A significant effort at diversification - yet still highlighting the reality of the EU remaining as the primary market for Gazprom’s exports (that is, unless Russia doubles down on LNG exports).

• With the cumulative effect of these deals, Russia is soon going to become China’s main supplier of gas - overtaking Australia and Qatar.

• This is a good scenario for Beijing, since both Australia and Qatar are close US allies, and are thus not ideal suppliers in the long-term - this is especially the case after the AUKUS deal, and Qatar being declared as a Major Non-NATO Ally.

• Additionally, one overlooked yet very important aspect of the deal benefits both Russia and China in equal measure: the Russian gas will be traded in Euros - shielding it from the US sanctions

• (side note: and a further boost to Euro (and thus the EU) for its standing as a global reserve currency)

• But moving on from the immediate commercial and strategic benefits of the summit, Putin did furthermore secure more urgent diplomatic backing and alignment of rhetoric with Beijing.

• Here is the most crucial part of the joint Russia-China statement on the matter:

• “The sides oppose further enlargement of NATO and call on the North Atlantic Alliance to abandon its ideologized cold war approaches, to respect the sovereignty, security and interests of other countries, the diversity of their civilizational, cultural and historical backgrounds, and to exercise a fair and objective attitude towards the peaceful development of other States[emphasis added]”.

• But how significant is this really? Is it actually (as claimed by Putin) an ‘‘unprecedented’’ phase of relations between the two countries?

• Is it really (as claimed by many Western analysts and media pundits) a new ‘‘multipolar moment’’ where China and Russia will unite to topple a US-led rule-based global order?

• The answer to the first question is a qualified yes - it is true to that Russia -China relations have never been this close. But (as discussed further below), it does not amount to a new historic moment.

• And the answer to the second question, is that both countries have been trying to put a dent into a US-led order for some time now - nothing new here.

• Perhaps there will be a temporary increase in intensity - but a tectonic geopolitical shift this is not.

• Moreover, taking a closer look at the joint-statement, reveals that China’s rhetorical support may not have been worth all that initial hype.

• Since, what exactly did China actually cosign?

• Of course China would oppose a further enlargement of NATO - why wouldn’t it?

• Did anyone expect anything else here? Why wouldn’t China oppose further expansion of NATO?

• And even though the timing of this (when Russia is cornered) express verbal support is indeed significant, that is not the main question.

• The most important question here is: to what extent?

• How was this a radical new development?

• After all, note also, how the joint-statement didn’t mention Ukraine even once.

• Even though China did express its opposition to further NATO expansion, it didn’t define its stance - where exactly is China opposing this alleged expansion?

• It is one thing to vaguely state opposition to a concept, but to define it in concrete practical terms is something entirely different (and would have been justifiably monumental).

• And China did not do the latter - it did not state that it opposes a further NATO expansion in Ukraine (or in Finland/Sweden).

• Now if China did that, if China (by defining its precise opposition to NATO expansion) was indeed going to engage in a diplomatic conflict (with a potential to spiral into the realm of economic relations) with specific countries on behalf of Russia, then that truly would have been a historic event.

• Saving such willingness to expend geopolitical capital (by confronting specific countries), China’s mere rhetorical support costs much less.

• Having said all this, perhaps the most immediate advantage for Putin, is the added credibility to his threat display capabilities.

• This is because, (not worrying about guarding the border with China) Russia has already been deploying its Eastern Military District (EMD) battalion tactical groups (BTGs) to Ukraine - the recent public announcement of a closer partnership will allow Putin to add credibility to his threat displays on Russia’s Western borders - he could theoretically deploy virtually all his EMD Battalions to the Ukrainian/Baltic states border.

• In other words, NATO strategists would not be able to dismiss Russia’s overall military capability threat by pointing out to Russia’s need to guard the border with China.

• This undoubtedly strengthens Putin’s hand in the standoff.

• Essentially, the ever closer partnership with China can be described as a functional partnership of non-aggression.

• The benefit of not having to worry about guarding multiple borders, that was hitherto exclusive to NATO only (at least in this specific context), is now also available to Russia - and this (to date) de facto advantage is now becoming almost a formal benefit of a closer relations with China.

• It is important to note also, that Moscow needed some sort of an official signal of closer relations with Beijing to justify its decision to maintain less than adequate troops in its border region with China.

• Otherwise, Russia would have been displaying too much trust for too little in return - thus lowering the value (and therefore the price), of Russia’s displays of trust.

• Of course, Russia had to return the favor with its own rhetoric on Taiwan:

• ‘‘The Russian side reaffirms its support for the One-China principle, confirms that Taiwan is an inalienable part of China, and opposes any forms of independence of Taiwan”.

• There was also the joint declaration that both sides are ‘‘seriously concerned” about AUKUS.

• But in both instances, Russia had way less to lose than China - when supporting Moscow on the issue of NATO expansion (the reality of these disproportionate costs was surely not lost on Putin - it is thus unlikely that he was too disappointed with Beijing’s lack of specificity in its diplomatic backing).

• At this point, it is also worth mentioning the excellent diplomatic framing from Taiwan (when responding to the joint-statement).

• Taiwanese officials labeled the Russia - China ‘‘no limits partnership’’ as a summit ‘‘to engage in the expansion of authoritarianism’’.

• Reframing the Taiwan issue as a the global struggle of liberty against authoritarianism, (elevating its status from a mere territorial dispute, and thus appealing for more global public support) was indeed a shrewd move.

• 2) A true alliance?

• It most definitely is not.

• Neither side would participate in each other’s wars - Russia would not confront the US, Japan and Australia for Taiwan, and China would most certainly stay away from Russia’s military conflicts in the far away Europe.

• And beyond this too, neither side is even likely to engage in retaliatory sanctions on behalf of another.

• Would Beijing sanction the US and the EU for their sanctions on Russia?

• Almost certainly not.

• What just happened in Beijing was nothing more than a declaration of a closer partnership - and contrary to their claims, it is far from ‘‘no limits’’.

• b) Both sides are aware

• Not only are these two nowhere near real allies, in fact, they actively engage in adversarial conduct in relation to each other.

• China is investing substantial resources into Ukraine’s defense industry - supporting their advanced weapons manufacturing capabilities.

• China furthermore, actively conducts espionage operations and theft of top secret data in Russia, and to this day, refuses to recognize Crimea as a Russian territory.

• Russia in turn, actively arms China’s adversaries - from Vietnam to India.

• In fact, only recently (this past December), Putin signed a substantial defense contract with PM Modi.

• c) Why is a closer alliance unlikely to happen anytime soon?

• Because a closer unity is decidedly not in strategic interests of either side, since:

• 1) There are still too many areas of strategic conflicts of geopolitical interests - especially for example, in Central Asia - where both parties offer different services to expand their influence.

• Russia frames itself as the muscle and enforcer of the region, and China presents itself as a development financier (more like a loan shark - given its track record to date).

• (side note: We have delved into the details of this geostrategic competition on a number of occasions. Here are the latest cables on the subject - covering the fascinating struggle for leverage after the recent Kazakhstan uprising.)

• and;

• 2) There is a mismatch in relationship goals: Russia wants to be treated as an equal, and China wants an extreme power differential - almost a relationship of a master and a vassal.

• An actual alliance (in classical terms) can therefore only happen when both: 1) there is a reduction in conflicts of strategic interest (either in scope or intensity - or both) and, 2) There is an update in power differentials so that either:

• a) Beijing attains overwhelming leverage, and Russia goes forward with the path of conflict and escalation (with the US/NATO/EU), becomes too weak and battered by the West, and therefore agrees to ‘‘temporarily’’ enter an alliance under China’s terms, or;

• b) China weakens, and/or stagnates, gets increasingly isolated by the US coalition, and accepts the reality that it needs to treat Russia as an equal.

• In other words: neither one of these is likely to happen any time soon.

• Likelihood of the first scenario happening is extremely low, since:

• a) It will always be in Putin’s interest to not burn the bridges with the West completely - and if he does that, he can ensure survival of Russia, independent of Chinese help and;

• b) Because paradoxically, China wouldn’t wait until Russia is that weak - there is a fine line between power differential being big enough for a relationship on Beijing’s terms, and Russia becoming so weak that it becomes entirely ineffectual, and thus useless for China.

• It is too soon to make estimations about the second scenario - that China would stagnate sufficiently to be persuaded into an alliance of equals with Russia (and if anything, China confidently moves in the opposite direction, and is in fact on the cusp of becoming a high-income country).

• Until any of these happen, neither side is going to press for a deeper “alliance”.

• Putin of course is well aware of China’s ideal format for the relationship.

• Even though in both 2014, and now 2022, China came to Russia’s rescue precisely when the Kremlin needed a helping hand the most, in both cases still, Beijing ruthlessly exploited its leverage over Moscow.

• Indeed, Putin’s comment from 2014 highlights this reality: ‘‘Our Chinese friends are tough, hard negotiators”.

• And the same pattern repeats once again: in the most recent deal, China refused to agree to terms on the much larger Soyuz-Yamal pipeline (freezing it at a research phase).

• This (approximately 50bcm) project would have enabled Russia to redirect the Yamal gas that is currently supplied to the EU, towards China.

• But that would mean more leverage for Putin - an ability to play both sides against each other, and thus drive up the price (and gain more strategic leverage by avoiding commitment to either side for too long).

• In addition to more direct commercial interests (China already competes with the EU on the LNG market - an additional arena of competition is decidedly not in its interests), Beijing furthermore does not want Russia with more leverage - the current configuration suits its interests just fine.

• As things stand therefore, the EU remains the exclusive customer of Yamal’s pipeline exports.

• Putin was thus denied the biggest prize - and one that would cause the most worry the EU.

• All this is to say that the fears (advanced by the common punditry and media class) of a true and solid alliance between China and Russia are significantly overblown.

• In addition, as a smart operator, sooner or later Putin would need to find a more accommodating position with the West - out of his own interest - for he knows that this accommodation would be preferable to stronger dependence on China.

• It is also in Russia’s interests to maintain its leverage and play the role of a powerbroker in the US vs China confrontation - instead of aligning itself definitively with China.

• China in the meantime, isn’t rushing for a closer alliance either.

• The costs and risks of propping up Russia are still high - and until Russia doesn’t start playing by China’s rules, a deeper relationship isn’t in Beijing’s medium-term interests.

• 3) Risks & downsides of getting too cozy with Moscow