Washington's Vexation: Russia-China Relations

Secretary of State Anthony Blinken's recent visit to China was expected to almost have one single major topic: China's relations with Russia, which increasingly concern the U.S. as it is widely believed that Beijing has already become Moscow's indispensable ally.[1] The talks were of course not limited to this matter, but it looks like the secretary of state achieved little as he embarked on his return flight.

In his meetings with China's President Xi Jinping and Foreign Minister Wang Yi, Blinken said: "We're looking at the actions that we're fully prepared to take if we don't see a change... we've already imposed sanctions on more than 100 Chinese entities, export controls and we're fully prepared to take additional measures." However, in response, Blinken heard that China believes it has a legitimate right to trade with Russia and thinks it is not a part of the ongoing war – unlike the U.S., which supplies Ukraine with thousands of tons of advanced weaponry.[2] The Chinese leaders also reiterated their support for peace talks between Russia and Ukraine based on their peace plan,[3] which the Kremlin has praised many times.

Secretary of State Blinken wrote on X: "I met with People's Republic of China President Xi Jinping today in Beijing. We had a substantive conversation on regional and global issues and people-to-people ties between our nations. The U.S. will continue to defend our interests and values, even as we seek to deepen cooperation to deliver for people in both our countries."[4]

China Appears To Remain Russia's Strategic Ally

However, at the same time, it should be noted that Russia-China cooperation has encountered some difficulties in recent months,[5] fueling speculations that Chinese businesses are observing many of the U.S. sanctions. In particular, those sanctions proclaimed last winter, when the Treasury Department said it would target the banks and other financial institutions that facilitate the trade deals with Russia,[6] have had a significant effect, since Chinese banks have done their best to avoid sending money to Russia and receiving payments from Russia even if both were made in yuan.

Russian businesses voiced concerns quite actively on this matter, since the start of the year, mentioning that even the largest state-own banks like the Industrial and Commercial Bank of China, China Construction Bank, and Bank of China had almost stopped all transactions with those Russian banks that currently are on European and American sanctions lists.[7] The growing disarray resulted in the slowing of the Russia-China trade, which rose by 5.2 percent in Q1 2024 year over year after jumping by 26.3 percent in 2023.[8]

Nevertheless, China appears to remain Russia's strategic ally and to derive enormous economic benefits from the confrontation between Moscow and the West. After the Russian aggression against Ukraine, China, which did not join the Western sanctions against Russia, emerged as Russia's major trading partner due to the re-orientation (in any possible sense) of the Russian export flows. China now buys 50 percent of crude oil and oil products that Moscow ships abroad and is the largest consumer of Russian natural gas.[9]

Yet, because of the sanctions, Chinese exports to Russia are much more important, since Beijing supplies Moscow with much of the high-tech goods it needs. In fact, after two years of war, more than 80 percent of all new smartphones sold in Russia are Chinese,[10] as well as at least half of personal computers. China has monopolized the market for telecom equipment and is expanding in office equipment of all kinds. Between 2020 and 2023, the share of Chinese passenger cars in the Russian market of new vehicles increased from less than five to almost 62 percent.[11]

Furthermore, and this is also quite important, the Russian government now considers the Chinese yuan to be the only reliable foreign currency and ordered that the official reserves should be accumulated in yuan – thus contributing to slowing the decline of the yuan's share in the global currency reserves.[12]  Beijing formally refrains from supplying Russia with weapons or ammunition and tries not to ship to Russia sanctioned goods, so Moscow smuggles aviation spare parts from Gabon and does not buy them from the huge facility in Tianjin that produces European Airbus jets for the Chinese market.[13] It looks obvious that in at least three spheres the growing China-Russia ties disturb the U.S.

China Provides Russia With Some Intelligence Information

First, there is a growing flow of semiconductors and chips from China to Russia[14] – in fact, almost all Russian industries now rely on China as their major, if not the only, source of these components. According to Ukrainian officials, many unexploded Russian missiles contain China-produced elements,[15] and their share has significantly increased since September 2023. This shift has happened mostly due to U.S. efforts aimed at uncovering and dismantling several sophisticated schemes that allowed the smuggling of the Western-manufactured semiconductors to Russia (many of them involved intermediary and shell companies registered in Hong Kong and Singapore).[16] Most of the current Chinese supply is not directly predestined to be used by the military-industrial facilities in Russia, but they can easily be modified to meet such needs (here one should take into account how now Russia produces mostly tanks and missiles that were designed in the 1980s, so they do not need the most sophisticated chips to be assembled). Hence, considering the supply of chips to Russia, Blinken's visit looks fruitless, since one of the goals was to make changes in Chinese trade policies.[17]

Second, in recent years China significantly increased its exports of industrial equipment and finished industrial goods to Russia.[18] Russian entrepreneurs argue that this came as a result of Western sanctions and are often complaining that Chinese supplies are of lesser quality than the Western ones were – and, what is even more important, they cannot substitute the Western spare parts, so Russians are now forced to order entire blocks of such equipment to substitute those that cannot be now serviced by Western specialists (the issue became even more crucial after the recent Ukrainian attacks on Russian oil-processing facilities,[19] where almost three quarters of equipment consists of either European or American manufacturing imported during the large-scale modernization of the Russian oil industry, which was mainly finished by the early 2020s). Chinese industrial equipment was rarely imported into Russia in huge quantities before the war, and this is now the sphere in which China reports the largest increases in exports. Even the Western partners are unable to stop the Chinese. This looks like the most effective way of undermining the sanctions regime and keeping the Russian industries afloat.

Third, the Chinese authorities seemingly started to provide their Russian colleagues with intelligence: first and foremost with satellite images of the Ukrainian territory, including the locations of the Ukrainian military industry facilities[20] (some of those built five or six months ago were hit quite recently by the Russians, so there are good reasons to believe that the Chinese-provided data might be useful since the Russian orbital grouping is too weak and too outdated to be able to provide the High Command with much needed high-precision data). Besides this, China cooperates closely with the Russian officials responsible for increasing "internet security" and supplies almost everything Russians may need for spying for their citizens on the web and for building what has been called a "sovereign internet" by the Kremlin,[21] allowing to sustain the network capacities even if Russian President Vladimir Putin decides to dissociate it from the world wide web.

China-Russia's Political Dimension

Yet, no one can assess the true value of Russia-China cooperation if the political dimension is not taken into consideration. Economically, China can never become as advantageous a partner for Russia as Western countries once were. The Chinese model of "cooperation" never presupposed any significant foreign direct investment into industrial facilities to be made in the countries to which China is technologically superior. China has bought or tried to buy many industrial companies in Europe and the U.S.[22] but has almost never attempted to set up industrial entities outside China (except for those devoted to first-stage processing of some mineral resources extracted abroad).

From Russia, China imports commodities (their share in Russia's exports to China exceeded their share in Russia's exports to Europe already in 2019),[23] selling back its final industrial goods. This, as I have mentioned several times, allows the Russian economy to grow, but not to develop – Beijing is simply not interested in turning Russia into a modern industrial power that might become its competitor.

Nevertheless, political ties solidly bind the China-Russia alliance, making Russia one of China's most valuable "assets" in the current geopolitical confrontation. Together with Russia, China makes a strong bloc of revisionist nations that call for changing the existing global order created and managed by the West. Russia's value in this case emanates from irresponsible foreign policy that fetches out China's "normality" when it comes to international issues (it was Russia, not China, who attacked Georgia in 2008 and Ukraine in 2014 and 2022, trying to set up its client states and redraw the recognized borders). Even while China remains by far more powerful than Russia, the West now recognizes Moscow as the source of the biggest existing troubles.

Moreover, China is interested in Russia's loyalty as it tries to transform Central Asia, where it long ago became the largest investor,[24] and where it looks forward to completing an enormous infrastructure project, which will allow it to connect China and Europe by land. Beijing and Moscow preside in the so-called Shanghai Cooperation Organization and are the leading force behind BRICS, thus trying to present themselves as consolidated leaders of what is now quite often called "the Global South." All these ties transcend pure economic reasoning and make the dissociation between China and Russia extremely unlikely.

Of course, I would not say Beijing ever supported the Russian aggression against Ukraine – Chairman Xi was not briefed about President Putin's plans as the latter visited China a couple of weeks before the invasion.[25] For Beijing, it was a surprise that the Russian army, which China has emulated for decades, was defeated on the outskirts of Kyiv, and barely avoided a collapse in Donbass in August 2022. The Chinese military leadership kept track of the naval war in the Black Sea, where the demise of the Moskva heavy cruiser was seen as a reason to revise the entire strategy of waging possible war in the Taiwan Strait.[26]

By presenting a de-escalation proposal in February 2023, Wang Yi wished it could become a plan for peace between Russia and Ukraine[27] since Beijing believes that Russia's defeat runs against China's vital interests (in Moscow, analysts assert that the recent article in The Economist,[28] signed by a prominent Chinese political scientist and the long-time member of the Kremlin-sponsored Valdai Discussion club, Feng Yujun,[29] contains Beijing's official warning about a possible Russian defeat that China would be unable to prevent). For China, the current uncertainty is painful, but it has no intention of changing its position even if the perspective is to face U.S. sanctions.

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Conclusion

For decades, U.S. strategists continuously voiced their concerns that alienating Russia would push Moscow into China's embrace. Now, as Russia has already become China's liegeman, a completely different strategy should be put in place. Since Russia and China now form a solid anti-Western alliance, I would suggest looking for its weakest link, that is the country that may have more reasons for keeping effective economic and political ties with the West. That country is of course China, not Russia. The economic connections between the U.S. and Europe, on the one hand, and China, on the other, are much deeper and more solid than those tying the West to Russia. Therefore, I would say, the more reliable strategy might be the one that offers Beijing some perspectives of repairing its relations, both political and economic, with the Western nations if it withdraws its support for the Kremlin, joins the Western sanctions against Russia and forces Moscow to drop its attempt to conquer Ukraine. Considering its current dependence on Beijing, Russia would not be able to sustain itself without the money, goods, and technology it receives now from China.

The task should be changed from not allowing Russia to turn toward China to seducing China to break up with Russia. I might be wrong, but it seems that such a strategy was successfully implemented half a century ago when the U.S. turned to China, further isolating the Soviet Union and causing China's active support for the Afghan mujahideen during the Soviet intervention into Afghanistan.[30] China these days is facing significant economic troubles and this may make its relations with Russia meaningless.

President Putin has successfully reoriented Russian people's aspirations from economic growth and well-being (that they had been associated with in the 2000s) to geopolitical greatness, managing to preside over the country producing virtually no economic growth. However, Chairman Xi still builds his legitimacy over the economic achievements and seemingly has no alternative strategy that may be employed if the financial crisis hits the country.

But even taking all this into account, I would say that the price for such a dramatic change in the West's policies should be very high, most probably including a new rapprochement with China. The latter might be quite a timely undertaking since if China dips into a crisis, it might provoke profound political changes, and the West would be much more effective in influencing them positively if they are considered China's friend and reliable partner rather than a foe and competitor.

To summarize, I would once again suggest taking a fresh look at the current Sino-Russia alliance, on the future possible relations between both Russia and China, and the West, and consider different strategies for containing Russia – even those that these days may look quite weird since I believe that by imposing fierce sanctions on China,[31] the U.S. may not so much crush the link between Beijing and Moscow but instead significantly reinforce it.

*Dr. Vladislav Inozemtsev is the MEMRI Russian Media Studies Project Special Advisor, and Founder and Director of the Moscow-based Center for Post-Industrial Studies.