Sieren's China: Rapprochement with Russia
December 9, 2019
A 3,000-kilometer-long gas pipeline between Russia and China was inaugurated last week. Russian President Vladimir Putin said the development of the "Power of Siberia" was a "historical event." Apparently not important enough for him and Chinese counterpart Xi Jinping to travel to eastern Siberia, however. The two followed the event via video link instead. Putin said that the project would take energy cooperation between the two countries to a whole new level.
This is not an exaggeration. The pipeline, which will connect Siberian gas fields to Shanghai, is the biggest energy project in Russia since the collapse of the Soviet Union and at $55 billion (€49.7 billion) it is the most expensive Russian pipeline. The first part of the pipeline — the 2,157 kilometers which lead to the border with China – is now in operation. The rest is due to be in operation by 2022. The plan is for 38 billion cubic meters of gas to flow from Russia to China every year for three decades, starting in 2025 — 9.5% of China's current needs.
China to be Russia's biggest customer
At the moment, only Germany buys more gas from Russia, but for how long? Moscow and Beijing are already discussing another pipeline that will deliver up to 30 billion cubic meters of gas per year from western Siberia to China via the Altai region.
Putin's strategy is clear: He is making Russia less dependent on the Europeans, who imposed sanctions in the wake of Russia's annexation of Crimea in 2014.
Beijing is the lucky beneficiary of this situation, speaking here — as so often — of a "win-win situation."
Today, China is the world's largest energy user. So Russia's supplies come at a good time — not only of gas, but also of oil and other fossil fuels. The two countries have also started cooperating more closely in other areas. Putin recently announced that they plan to increase bilateral trade to the equivalent of €182 billion by 2024. In 2018, it rose to over $100 billion for the first time.
This situation is not likely to change so long as Russia suffers from the West's sanctions and China from the tariffs imposed by the US. Both countries know that they have to become less dependent on the West, and it is bringing them together despite their many differences.
Huawei to develop Russia's 5G network
Russia and China recently signed a telecoms deal on the sidelines of a meeting between the two presidents. Chinese telecoms giant Huawei will help develop Russia's 5G network. The symbolism of the signing will not have been lost on anybody in the West — just like that of the pipeline inauguration. Russia is both audacious enough politically and strong enough militarily to challenge both the US and the EU on the world stage — for example in Syria, alongside troublesome NATO member Turkey, whose president also currently feels emboldened enough to challenge both Brussels and Washington, thanks to Putin's backing.
Read more: BRICS summit: China, Russia slam 'protectionist bullying'
China, for its part, has been forming alliances with one unhappy EU member after the next with its One Belt, One Road investment project.
A closer look reveals that Beijing and Moscow seem to be doing just as much independently of each other as together. With good reason.
Mutual distrust and reservations
Some Russians fear that China, which is bigger and more efficient, will overrun their country. Anti-Chinese sentiment sometimes rises to the surface. Recently, there were protests against the construction of a Chinese water bottling plant near Lake Baikal, which activists say will harm the unique ecosystem. Some Chinese investors, for their part, are worried that their projects will disappear into the mire of corruption and inefficiency.
China currently has the upper hand. Its ranks number one in the world when countries are ranked by their gross domestic product based on purchasing power parity. Russia ranks six. Moscow needs the income from the gas sales more than Beijing needs the gas.
Before a deal was made in 2014, Beijing had negotiated with Russian's giant Gazprom for years. The fact that a deal came the same year Crimea was annexed was not a coincidence. China hit hard even though Russia had expected and feared the West's sanctions more. Now, 20% of Russian imports come from China. In Germany, only 12% of imports are from China.
EU in a bind
Brussels is in a bind when it comes to its relations with both China and Russia. The EU suffered economically from the sanctions imposed on Russia without any political gain. The West is mistaken if it thinks it can bring a country such as Russia to reason with sanctions. Especially if a powerful player such as China is there to plug the gap.
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The EU should look at reality head on: Russia is important. French President Emmanuel Macron has acknowledged this, calling for compromise with Moscow and a rethink of the EU-Russia relationship.
"Europe will continue to be the theater of a strategic battle between the United States and Russia," he said in a speech at the end of August. He could also have said a battle between China, which is becoming more powerful, and the US, which is increasingly less reliable.
In short, to maintain a balance, the Europeans have to prevent further rapprochement between Russia and China. Of course, they could speak much more openly if Putin did not feel excluded by the EU family.