Caspian Report - Issue: 08 - Fall 2014

From this perspective, Putin said,
“Establishing closer ties with the
People’s Republic of China – our
trusted friend – is Russia’s unconditional
foreign policy priority.” He
added that, “As Russia sees a new
economic partner in China, Beijing
has found an investment in the future
of its neighbour.” China will pay
significantly less for Russia’s natural
gas than Russian negotiators sought
or what Gazprom charges European
customers. Russia is heavily dependdow
of opportunity to overcome
their legacy of mistrust. To summarise
briefly, the rapprochement between
the Soviet Union and China
began with the Perestroika initiatives
presented in Gorbachev’s Vladivostok
speech in July 1986, and his
Krasnoyarsk speech in September
1988. 7 After the Cold War redefined
bilateral relations, Russia and China
become important to each other in
terms of developing economic integration.
With the increase in trade,
which reached almost US$90 billion
last year, the level of Chinese investment
in Russia at the beginning of
2013 was only US$3.5 billion. Their
economic cooperation is based on
a ‘semi-colonial’ model of simple
trade exchange, under which Russia
sells China almost exclusively raw
materials (oil, coal, metals, and timber
– 84% of exports in 2013), and
imports mainly industrial products
from China (especially machinery
and equipment – about 38% of imports
in 2013). 8 From perspective
of the balance of power theory, Russian
foreign policy aims to generate
a reliable counter balance against
pressure from the US and EU. The
Kremlin wanted to open new markets
following the increasingly hostile
relations with the West over the
Ukraine crisis. “We have powerful
enemies but we don’t have powerful
friends, that is why we need the support
of such a giant as China,” said
Ruslan Pukhov, Director of the Centre
for the Analysis of Strategies and
Technologies in Moscow. 9 But while
Russia turns to China, China itself is
quietly moving to displace Russia in
parts of its traditional territory. The
agreement allows Russia to diversify
its gas exports at a time when the crisis
in Ukraine has accelerated calls in
Europe to reduce its dependence energy
supplies from Russia. 10 On the
positive side for Russia, the accords
with China may improve its chances
of boosting bilateral trade to $100
billion (623.5 billion Yuan) annually
by 2015, a goal first set in 2011. 11 For
Russia, the deal could be the key to
the opening up the trapped reserves
in eastern Siberia. (See Figure II)
7.
The former speech became famous for its new proposal for resolving the three problems that China
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stated as: the withdrawal of the Soviet Army from Chinese border areas, the peaceful settlement of
the Cambodian war, and the withdrawal of the Soviet Army from the Afghanistan. Although Russia is
officially “democratic” and China “socialist” (that is, they have different ideologies), both sides share
the common doctrine of a “market economy.” When Russian President Yeltsin visited Beijing on 25
April 1996, the two governments declared Russo-Chinese relations to be in a new stage of “strategic
partnership.”
8.
Witold Rodkiewicz: “Putin in Shanghai: a strategic partnership on Chinese terms Analyses”,
21 May, 2104, http://www.osw.waw.pl/en/publikacje/analyses/2014-05-21/
putin-shanghai-a-strategic-partnership-chinese-terms
9.
Alec Luhn and Terry Macalister: “Russia signs 30-year deal worth $400 bn to deliver gas
to China”, The Guardian 21 May 2014, http://www.theguardian.com/world/2014/may/21/
russia-30-year-400bn-gas-deal-china.
10.
William Wan and Abigail Hauslohner: “China, Russia sign $400 billion gas deal”, The Washington Post,
21 May, 2014.
11.
Michael Lelyveld: “High Costs Cloud Russia-China Gas Deal – Analysis”, Eurasia review, http://www.
eurasiareview.com/26052014-high-costs-cloud-russia-china-gas-deal-analysis/.