The Russian-Chinese relationship is crucial in the evolution of the global order as the great power competition among the United States, Russia and China heats up. Assessing the relationship's path in the coming year involves analyzing its many facets: economic, political and military.
For the past year, Stratfor has been following the great power competition among the United States, Russia and China, and has written about the emerging coalition between Russia and China in its 2018 Annual Forecast. This bilateral relationship, which is crucial to the great power competition, continues to deepen as we enter 2019.
Russia doubled down on its pivot to Asia in the wake of its military intervention in Ukraine in 2014 and the resultant U.S. and European sanctions. Its goals were to greatly increase bilateral trade and attract investment. With China, the pivot's greatest payoffs have been in the energy domain. A growing network of oil and gas pipelines has quickly cemented Russia as China's top energy supplier while China has greatly expanded its investments in Russia's explorative and extractive, or upstream, energy sector. A major natural gas pipeline to China, named Power of Siberia, will be completed by the end of 2019.
Other areas of their economic relationship haven't reached their complementary potential as much as energy has. The Russian economy is far smaller than China's and rests on a narrow base — arms and commodities are Moscow's only major export offerings. Russia has not been particularly successful at attracting Chinese investment in its Far East region. Some transport connectivity projects are moving forward. Chinese firms have also taken stakes in Russian agribusiness (which indicates Russia has prioritized its economic interests over its fears of greater Chinese migration into its Far East). In September, participants in the annual Eastern Economic Forum in Vladivostok signed 175 agreements totaling about $42 billion. Most of the deals came from China, though it is unclear how many of them will actually materialize. Russian terms are often not attractive enough for investors, and Moscow's implementation track record leaves much to be desired from Beijing's perspective.
The misalignment is revealed more in the area of geoeconomics. China's Belt and Road Initiative and Russia's Eurasian Economic Union are their major geoeconomic plays. The two sides have made much of "harmonization" between these two initiatives. Though both projects aim to give their sponsors a strategic advantage, they have fundamentally different approaches to getting there. The Belt and Road Initiative is a vast global connectivity project that can create win-wins for multiple actors; the Eurasian Economic Union aspires to seal off a Russian sphere of influence. Another barrier to integration is that neither initiative is strongly institutionalized.
Central Asia is where Russia's and China's interests substantially overlap. The region is rich in resources, abuts both powers and is a bridge to zones, such as Afghanistan, that are a security concern to Moscow and Beijing.
China and Russia have established a modus vivendi in Central Asia. The arrangement involves a division of labor, with Russia focusing on providing security and China serving as the region's key economic player. The Shanghai Cooperation Organization (a regional organization dominated by Beijing) provides an institutional framework and its recent expansion strengthens the chances of continued Russian-Chinese cooperation in Central Asia in the near term.
Competitive impulses, though, are always present. Both Russia and China sell arms to Central Asian states, for example. While this competition so far has not proved detrimental to the practical compromise Moscow and Beijing have worked out, increased Chinese defense transactions in Central Asia have steadily undercut Russia's traditional dominance in arms sales. The reported plans for a Chinese military base in Afghanistan's Badakhshan province (adjoining Tajikistan) could be the beginning of a clearer Chinese security footprint in the region, which could worry Russia.
This management of areas of potential tension extends to India, a rival of China's but with historically close ties to Russia. Russia was key in pushing China to accept the accession of India to the Shanghai Cooperation Organization, though China ensured Pakistan's inclusion in return. The growing Russian-Pakistani thaw and the ongoing Indo-Chinese reset in relations, however, mean that both Russia and China are in a position to exert influence in South Asia collaboratively rather than as rivals by engendering further competition between arch-adversaries India and Pakistan. Similarly, in Vietnam, Russian defense sales have not fundamentally altered the balance of power in Asia. Vietnam is a case where Moscow and Beijing can simply agree to disagree without altering their strategic dynamic.
In the Arctic, where Russia traditionally claims dominance, Moscow has to deal with growing Chinese interest. Thus far, China's interest in the Arctic has been limited to research missions, digital connectivity and a few energy investments — some, such as the Yamal liquefied natural gas project, in cooperation with Russia. Moscow and Beijing have also stated their intention to cooperate on the "Polar Silk Road," a part of the broader Belt and Road Initiative. Sino-Russian friction over the Arctic will not lead to a security competition between the two in the region, though there is a level of political competition in play. The Arctic is much more in Russia's aspirational sphere of influence than China's, and Beijing will, in any case, be hard-pressed to move significant military assets there considering its more urgent security priorities in Asia.
Camaraderie at the High Table
Russian-Chinese cooperation is at its most advanced in global politics and diplomacy. The two countries have been aligned on most major issues concerning the global order, from casting double vetoes in the U.N. Security Council on U.S. interventions in the Middle East to pursuing greater power in international financial institutions to taking positions strongly critical of the United States in cyber governance and missile defense.
Russian-Chinese cooperation is at its most advanced in global politics and diplomacy.
Normally sovereignty-sensitive China has refrained from criticizing Russia's intervention in Ukraine. And Russia has demonstrated implicit support for China in its maritime disputes by joining it in conducting military exercises in the South China Sea and in the Sea of Japan. Both powers have long had a common position on North Korea, supporting a "double freeze" and opposing U.S. missile defense in the region. But Russia plays second fiddle to China on the Korean Peninsula. Moscow's recent outreach to South Korea and its push to play a major role in inter-Korean infrastructure projects are attempts to increase its influence on the peninsula.
Growing tensions between the United States and Iran — a critical global issue that could come to a head in 2019 — have also been a key factor in bringing Moscow, Beijing and Tehran closer together. Should the United States take military action against targets in Iran — a plausible scenario — expect Moscow and Beijing to attempt to build a coalition with the European Union to isolate the United States diplomatically and in the arena of global public opinion.
Russia has emerged as Iran's biggest ally in the Middle East. The two countries have conducted sustained joint operations in Syria to guarantee the survival of President Bashar al Assad's government. This cooperation opens up the possibility of a more active Russian military role in defending Iran — for example, in air defense. If the Iranian leadership survives a military crisis, Moscow could also forge formal security ties with Tehran in the aftermath of any such conflict. China has more complex stakes in the Middle East — ensuring the free flow of oil is a key one. But Russia and China likely see Iran as an issue of preserving the global order more than pursuing their individual national interests.
Russia and China are also strongly opposed to the current model of global cyber governance favored by the United States and the European Union. Both have floated "cyber sovereignty" proposals that would enshrine principles at odds with an open internet, including in-country data storage, facilitation of surveillance and much greater state control over online content and hardware. The core principles of their proposals are gaining traction in Asia and Africa, and this trend is likely to continue in the coming year.
Vostok as Bellwether
Hard security is where developing Russian and Chinese ties have the greatest consequences for the great power competition. Russia recently wrapped up its largest military exercise since the end of the Cold War. Named Vostok 2018, the exercise involved 300,000 troops, 36,000 tanks, more than 1,000 aircraft and components from two naval fleets. (Outside observers have said the exercise involved about half these numbers.)
More than 3,000 Chinese troops participated in Vostok 2018 — the first time a country that is not a treaty ally of Moscow joined a military exercise in significant numbers on Russian soil. (Mongolia also sent a small contingent.) It was also China's largest overseas military exercise to date. The simulated combat was not against terrorist groups or organized crime (well-established areas of Russian-Chinese security collaboration) but against the conventional forces of an unnamed state actor. Chinese participation turned Vostok's objectives on its head: What traditionally had been a Russian military exercise aimed at Beijing became this year an exercise in which Beijing was an integral partner.
On other fronts, arms sales to China of big-ticket Russian offerings such as the S-400 air defense system and the Su-35 fighter jet have been completed. Multiple naval exercises have been held as far ashore as the Baltic and the Mediterranean seas. Joint cyberdefense drills have been conducted, though the scope and extent of these drills is unclear. Several space-cooperation agreements have been signed. Joint research and production are ongoing for a heavy-lift helicopter project.
But there is much greater potential for cooperation here. China is steadily catching up to Russia in defense technology. So, it makes sense for Russia to enter partnership agreements in this area sooner rather than later, when its value as a partner will diminish significantly. Russia and China could also deepen military interoperability, including in cyberdefense, aimed at specific common foes, if they decide to do so.
Military cooperation — especially in deepening interoperability against conventional state threats — is of great importance in strategic affairs. Vostok and other exercises have major strategic significance, and they are likely bellwethers of an emerging Russian-Chinese entente.
Axes of Asymmetry
The competition that involves the world's three great powers is anything but symmetric along its three axes of interstate relationships. Most fundamentally, it pits the United states against two Eurasian challengers. China is a rising potential peer competitor, while Russia has reasserted itself in the global arena. Even as the United States turns steadily more hostile toward Russia by imposing secondary sanctions through the Countering America's Adversaries Through Sanctions Act (CAATSA) (and by the intended withdrawal from the Intermediate-Range Nuclear Forces Treaty), the Trump administration's trade war with China threatens to turn the complex U.S.-Chinese relationship into an outright rivalry.
Russia and China have their own interests, and ordinarily those separate interests would cause as many frictions as alignments. But in a highly asymmetric great power competition, their differences turn out to be much smaller than their differences with the United States. It is hardly surprising that every step Washington takes to increase the squeeze on Russia and China ratchets up strategic cooperation between Beijing and Moscow. Thus, the Sino-Russian embrace will continue to deepen in most arenas, most crucially in the security sphere, at least throughout the coming year.