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Trends in Russia-China Relations Implications for India NANDAN UNNIKRISHNAN UMA PURUSHOTHAMAN OBSERVER RESEARCH FOUNDATION First published in 2015 ISBN: 81-8681-811-1 by: Observer Research Foundation 20, Rouse Avenue Institutional Area, New Delhi - 110 002, INDIA Ph. : +91-11-43520020, 30220020 Fax : +91-11-43520003, 23210773 E-mail: [email protected] Printed and bound by: Vinset Advertising, Delhi Disclaimer The views expressed in this publication are solely those of the authors. The publication may be reproduced for academic or non-commercial purposes only. Prior permission of the copyright holder should be obtained for reproduction in any form for commercial purposes. © Observer Research Foundation, 2015 All rights reserved Trends in Russia-China Relations Implications for India NANDAN UNNIKRISHNAN UMA PURUSHOTHAMAN OBSERVER RESEARCH FOUNDATION About the Authors Nandan Unnikrishnan is Vice President and Senior Fellow at the Observer Research Foundation, New Delhi. At ORF, he looks after the Eurasia Studies Programme. An alumnus of Jawaharlal Nehru University (JNU), he began his career as a journalist with the Press Trust of India (PTI). From 1985 to 1987, he was deputed by PTI to the Institute for Defence Studies and Analyses (IDSA). In 1995, after 15 years in PTI culminating with a three-year posting to Moscow as the Bureau Chief, he moved to Business India's Television Channel – TVI – as the News Coordinator for International Affairs. He rose to head the channel in 1998. During his tenure at ORF, Nandan has participated in several national and international conferences and lectured in academic and specialised institutions. Dr. Uma Purushothaman is a Research Fellow at the Observer Research Foundation, New Delhi. Previously, she worked as a Research Associate at the United Service Institution of India. She has published numerous works concerning India, the United States, Russia, China, and Iran for a variety of domestic and international academic sources and has presented papers at many conferences, including in China and Belgium. Her current research interest is Great Powers in Asia. She received her Masters and PhD from the Jawaharlal Nehru University, New Delhi. Contents Preface iii I. Introduction 1 II. Russia-China Relations: A Brief History 5 III. Views on Global Governance 9 IV. Sino-Russia Engagement at Multilateral Forums 13 V. Economic and Trade Relations 21 VI. Energy Ties 31 VII. Military Cooperation 49 VIII. Cultural Ties 57 IX. Afghanistan 59 X. Central Asia 61 XI. The Arctic 65 XII. Climate Change 67 XIII. The Russian Far East and China 69 XIV. Russian and Chinese Military Postures 87 XV. The Role of External Players 91 XVI. Conclusion 95 XVII. Implications for India 99 Endnotes 105 Bibliography 117 Acknowledgements This monograph is the culmination of a year-long study conducted in 2012, by the Observer Research Foundation, with support and inputs from many quarters. We would like to thank the many scholars from China and Russia we met during our field trips—Dr. Dmitri Trenin from Carnegie, Moscow; Dr. Alexander Lukin and Dr. Ivan Safranchuk from the Russian Diplomatic Academy; Prof. Yuri Dubinin from Moscow State University; Prof. Su Hao and Dr. Gao Fei from the China Foreign Affairs University; Dr. Yang Cheng from the East China Normal University; and Dr. Natalia Ryzhova from the Far East Institute of the Russian Academy of Sciences. We would also like to thank Mr. Nalin Surie, former Ambassador, and Prof. Rajesh Rajagopalan from JNU, for their valuable inputs. We owe a debt of gratitude to Mr. Ajay Bisaria for the time he spent with us explaining India's policy concerns. We would also like to thank our colleagues at ORF: Mr. Samir Saran, Dr. C Raja Mohan, and Dr. Manoj Joshi, for their comments on earlier drafts. Thanks are also due to Ms. Sadhavi Chauhan for data collection and Ms. Anushya Ramaswamy for her contribution to the section on Sino-Russian cooperation in multilateral fora. We would particularly like to thank the administrative staff at ORF for logistics support for our field trips and conferences. Errors and shortcomings, if any, are entirely ours. Nandan Unnikrishnan Uma Purushothaman ORF | Trends in Russia-China Relations: Implications for India i Preface n a rapidly-changing world where new powers and fresh alliances are emerging, Russia-China relations will form a key component in determining the evolution Iof the balance of power in the world. There is increasing convergence between Russia and China on several global issues. Moscow and Beijing openly coordinate positions on these issues, particularly in the UN Security Council. They are also engaged in multilateral fora such as RIC, SCO, and BRICS, and see such an engagement as one way of strengthening a multipolar world in which they are key players as well as a platform to present an alternative viewpoint to the Western-dominated global discourse. At the same time, the so-called “China threat” plays an important role in Russia's foreign and defence policies. Russia actively develops its Eastern Military District, supplying it with new weapons and troops, and holds military exercises every year to practice the redeployment of troops to the Russian Far East from the European part of Russia. Similarly, the counterpart “Russia threat” plays a role in China's foreign and defence policies: the Chinese military conducts exercises simulating an invasion of Russia with its troops marching 1,000 kilometres to test the army's long-range projection capacity. Russia knows that despite its superiority in terms of nuclear weapons, its conventional forces are no match to China's military. China, on the other hand, fears being encircled and isolated if Russia joins the West. Moscow and Beijing realise that the political systems in both countries are transitional in nature although similar in terms of systems governed by self-perpetuating elites. Therefore, there is always the possibility that both countries may change, thus transforming the nature of a China/Russia threat: from what is currently hypothetical to a real one. This would have terrible potential consequences for both countries. ORF | Trends in Russia-China Relations: Implications for India iii It is to avoid the possibility of such a confrontation that the leaders of both countries are trying to bind their nations together through a web of military, economic, energy, and social ties. Beijing and Moscow have been re-invigorating their military cooperation through arms sales (China acquired $2 billion worth of Russian arms between 2011 and 2012) as well as through regular joint military exercises (bilateral as well as multilateral) and exchange of experts. For example, during Chinese President Xi Jinping's recent visit to Russia, it was widely reported in the Chinese media that Russia had agreed to sell China some 24 Su-35 multirole fighter jets and four Amur-class diesel submarines. This is a higher level of technology than supplied before, indicating a change in Russia's attitude towards transfer of technology to China, given Moscow's fears of it being reverse engineered. Economic relations are portrayed as the “new strategic basis” for Sino-Russian relations. China is Russia's biggest trading partner and the largest Asian investor in Russia. China sees Russia as a powerhouse of raw material and a growing market for its consumer goods. While Russia exports natural resources, China supplies manufactured goods. This imbalance in the structure of trade is beginning to worry Russia. Russia's long-term economic relationship with China also faces an existential conundrum. Russia needs financial resources and technology to restructure and modernise its economy to reduce its dependence on raw materials exports. However, the technologies it requires for this are available not with China, but in the West. Sino-Russian energy relations have fallen short of their potential so far. The most important hurdles to greater energy cooperation in the decade 2000 to 2010, were Russia's fear of a Chinese monopsony (fears of being dependent on one consumer of energy) as well as price disputes. Now the strategic reluctance on Russia's part to sell energy to China is diminishing with the demand for Russian energy in Europe declining and the US likely to become a net exporter of gas and oil to Europe. In the meantime, China has been trying to diversify its energy sources in Central Asia, West Asia and Africa, while also exploring the option of shale gas. Therefore, while iv Preface | www.orfonline.org Russia could become dependent on China as a market, it seems highly unlikely that China will become dependent on Russia for energy. Thus, Russia's fears of a Chinese energy monopsony may yet materialise. Russia and China have similar interests and priorities in Central Asia. Nevertheless, China's increasing inroads into the region make Russia uncomfortable and could become a source of tension. So far, China appears to be sensitive to Russian concerns. In 2010, China and Russia issued a joint statement in which China acknowledged the post-Soviet region as an area of Russia's special interests and expressed support for Russia's endeavours to uphold its national interests and security in Central Asia. Another area of tension could be China's recently espoused interest in the Arctic. However, even here, Beijing and Moscow have begun collaborating with each other. Cooperation in the Russian Far East has the potential to be a game-changer in Sino- Russian relations if they are able to move towards joint development of the region. While Moscow realises the need to develop the Far East and integrate it with the Asia Pacific region, it faces a bigger dilemma: who should its partner/s be in developing the Far East? Should it be Japan? Or South Korea? Perhaps, China? Or all of them together? The answer to this question would point towards whom Russia would lean to, in the years ahead.

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