As Xi and his Russian counterpart meet, both are facing calls to do more to ease tension in the Middle East, amid fresh scrutiny of a relationship that looks increasingly one-sided.
(Bloomberg) — The last time Vladimir Putin set foot on Chinese soil he went home with the promise of a “no limits” partnership from President Xi Jinping. Less than a month later he launched the invasion of Ukraine. He returned to Beijing on Tuesday in a diminished state, needing the economic support of China and a route out of his self-inflicted political isolation.
The meeting between the two presidents will inevitably be overshadowed by Israel’s conflict with the Gaza-based militant group Hamas, designated a terrorist organization by the US and the European Union. US Secretary of State Antony Blinken urged China at the weekend to use its friendly ties with Iran — which supports Hamas — and broader influence in the Middle East to prevent the conflict from escalating. The pressure on Xi, and indirectly Putin, who is also close to Tehran, to act over the crisis is likely to intensify.
For now, the two leaders are expected to focus on their growing relationship. Russia’s reliance on China has reached into every facet of its economy in the 20 months since the invasion of Ukraine. With the West severing trade ties, China’s exports to Russia have jumped 57% so far this year. The yuan accounted for almost half of the value of all foreign exchange trading in Moscow in September — up from just 0.4% in January 2022, according to data compiled by Bloomberg Economics. China is now the largest importer of fossil fuels from Russia, with coal shipments more than doubling since 2020.
The Russian leader’s attendance at Xi’s Belt and Road Initiative Forum, which opened on Tuesday, comes on his first trip abroad — aside from visiting former Soviet states — since the International Criminal Court issued an arrest warrant against him in March for alleged war crimes in Ukraine. The visit will allow Russia to cement this critical economic support and apply pressure on Beijing to sign agreements on a new gas pipeline.
For his part, Xi is seeking a reliable Russia to be a powerful partner in building his vision of an alternative world order. One based on an age-old mutual distrust of the West — especially the US and its military allies — and a desire to reinforce its own position on the island of Taiwan, which it views as a breakaway province, but which Washington has committed to support.
Putin is a key part of that. Indeed, if China were to invade Taiwan — a prospect that is unlikely anytime soon — Russia could prove crucial in ensuring supplies of food and fuel and potentially providing political cover at the United Nations Security Council.
But there is disquiet among some experts and academics in Beijing who think China is getting little from the relationship beyond a new market for some of its cars, televisions and smartphones and knock-down prices for Russian oil and gas. This has led to questions over whether Beijing has gambled too much on the Russian leader.
“I think Putin is not an ideal partner for Xi Jinping — he hoped for much more,” said Jakub Jakobowski, deputy director at the Centre for Eastern Studies in Warsaw. “He’s increasingly a burden for Xi internally for those parts of the Chinese elite that don’t want to subscribe to this big affair that Russia has started.”
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Xi is looking to strike a balance, which has become more difficult the longer the conflict has dragged on. He hasn’t provided any major military aid to Russia that would provoke US sanctions against China, and he’s warned against both the use of nuclear weapons and attacks on civilians. Unlike Putin, who is treated as a pariah by the West, Xi wants a stable relationship with the US and appears likely to meet President Joe Biden in November. But his refusal to explicitly condemn the invasion has undermined Beijing’s claim to neutrality and reinforced skepticism among some Group of Seven countries of its 12-point peace proposal to resolve the Ukraine crisis.
The Chinese leader’s peace push did win him some credibility among emerging economies like Brazil. Indeed, he spent the early part of the year trying to act as a global peacemaker helping long-time rivals Saudi Arabia and Iran reach a diplomatic truce. He later proposed an Israel-Palestine peace conference, which is why he is now being urged to take a role in calming the conflict with Hamas. Beijing has called for a cease-fire, but beyond that its influence is unclear. For Putin, the conflict could be useful if it means Western powers and public attention are distracted away from the fighting in Ukraine.
Xi has more immediate worries at home. An economic slowdown raises the potential for more social unrest. Both the foreign and defense ministers appear to have been ousted in recent months, and there has been an overhaul of the generals responsible for China’s Rocket Force, which manages the nation’s nuclear arsenal.
The US is tightening export curbs on advanced technology, the EU is probing China’s electric vehicle subsidies and some Asian neighbors have ramped up military spending amid a rise in tensions over Taiwan. The EU’s chief trade negotiator, Valdis Dombrovskis, has warned that China’s stance on Ukraine is hurting the appetite of businesses to invest in the world’s second-biggest economy.
Beijing is “wary that as long as people continue to put China and Russia in the same category, they will actually burn the bridge to Europe, the US and others,” said Ngeow Chow Bing, director of the Institute of China Studies at the University of Malaya, who has written extensively on Chinese politics. “China wants to present itself as someone that both sides can rely on.”
Putin was the first foreign leader that Xi visited after he became China’s president in 2013. And over the past decade the two have often been described as having a close relationship, despite not sharing a common language. In 2019 they celebrated Xi’s birthday together in Tajikistan: Putin gave the Chinese leader a gift of a box of ice cream popsicles. The two presidents — who have both changed their country’s rules to allow them the opportunity to extend their time in power — last met in Moscow in March, just days after the ICC issued its arrest warrant against Putin. In an interview broadcast on Russian TV on Monday, Putin said of his relationship with Xi: “If we agree on something, we can be sure that both sides will keep their end of the bargain.”
Yet, there also exists, said a Europe-based diplomat, an element of sibling rivalry in the dynamic between the two leaders, a nod to a time when the Soviet Union was regarded as the “big brother” in the relationship. That is no longer the case.
Relations between the countries have often been strained — sometimes openly hostile. In 1969 border clashes prompted the Soviet Union to threaten the use of atomic weapons against China. That “nuclear blackmail” is one reason Beijing will oppose any similar Russian threats in Ukraine, according to Wang Yiwei, a former Chinese diplomat to the EU.
Another “red line” for Beijing, he added, is the principle of territorial sovereignty enshrined in the UN charter. That’s something China regularly uses to bolster its claim to Taiwan. And although Xi appears to share Putin’s concerns about the expansion of NATO, that doesn’t signal all-out support for Russia.
Those backing Moscow, said Wang, are not “supporting Russia’s territorial seizure” but rather celebrating “Russians with their behavior against Western hegemony.” Wang, now an influential academic and director of Renmin University’s Institute of International Affairs added: “Many people hate Russia and criticize Russia.”
One area of tension has been China’s Belt and Road initiative — Xi’s landmark foreign policy program to expand Beijing’s influence through projects now valued at $1 trillion — which has made inroads into Central Asia, Russia’s backyard.
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For now, Russia can do little about the imbalance in relations. “Moscow badly needs Beijing’s co-operation to keep its economy afloat,” said Alexander Isakov, an economist who covers Russia at Bloomberg Economics. “Moscow will have to shoulder most of the costs.”
The growth in bilateral trade with Russia is a rare bright spot for China, as policymakers try to kickstart growth in the sluggish economy. Increased exports to Russia are partly attributable to Chinese consumer goods companies filling the gap vacated by western brands who fled the country after sanctions were imposed. Shipments of made-in-China vehicles, parts and accessories jumped to about $14 billion in the first eight months of this year, a more than five-fold increase from the same period in 2021, according to data from China’s General Administration of Customs.
Longer-term, Moscow needs Beijing to invest in domestic manufacturing. Sectors like the automobile industry need help to fill the gap left by Western companies. Just eight out of Russia’s 14 passenger-car plants are operational. Smaller Chinese car manufacturers already produce in Russia, but to return output to pre-invasion levels of about 1.4 million cars, from 451,000 in 2022, another two or three major companies would need to set up assembly lines in Russia, according to Bloomberg Economics analysis.
“For Russia, closer integration with China is a necessity — it needs to find a replacement for technology, capital that has previously been provided from the EU and other G-7 countries,” said Isakov. “For China, the risk is that capital invested in Russia may lose value when and if sanctions on Moscow are relaxed or lifted and its producers will have to compete for the market share with G-7 car manufacturers again.”
Beijing is providing respite for Moscow’s most pressing financial worries. It has become the main buyer of cheap Russian oil and gas in the absence of European customers. China bought about $37.5 billion of crude oil from Russia in the first eight months of 2023 according to Chinese trade data. At the end of 2022, coal shipments had risen to over 64 million tons, an annual record that’s set to be shattered this year after imports topped 70 million tons between January and August.
At the same time as providing this financial lifeline, Beijing is holding out for a more favorable deal from Moscow over the proposed natural gas pipeline, Power of Siberia 2. Moscow frequently talks up the prospects of an imminent agreement, but Beijing has been far more reticent and no contracts have been signed. Analysts expect Russia to push for more deals and cooperation agreements this week.
The internationalization of the yuan, which makes up just 3% of the world’s foreign exchange reserves, is viewed by Beijing as another front in its efforts to challenge US dominance of the global financial system. Russia’s use of the yuan in export payments surged to 29% in August from zero prior to the invasion, while it made up 38% of imports versus 4% over the same period, the data show.
But Beijing can’t press its advantage too hard, according to Yun Sun, senior fellow and co-director of the East Asia program at the Stimson Center think-tank. “Russia’s current strategic quagmire will not last forever,” she said. “For Beijing, the focus is not necessarily how much Russia is ready to give, but what costs China has to carry.”
–With assistance from Clara Ferreira Marques, Sarah Chen, Jason Rogers, James Mayger, Linda Lew, Lucille Liu, Jill Elaine Disis, Tom Orlik, Chang Shu, Jennifer Welch, Fran Wang, Xiao Zibang and Alex Isakov.
(Updates with fresh detail on Putin’s arrival in Beijing.)
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