China and Russia: Friends Where It Benefits

For two large nations, it is only natural for there to be some areas of disagreement – so Chinese officials routinely say when discussing the U.S.-China relationship. Curiously, though, such statements are generally absent when describing China’s relationship with another major power: Russia.

Instead, Chinese and Russian officials alike tout their close relationship. Chinese Foreign Minister Wang Yi made headlines in April when, during a visit to Moscow, he proclaimed that “China-Russia relations are in the best period of history.” Russian President Vladimir Putin, in his meeting with Wang, added that China and Russia had “become comprehensive strategic partners of coordination, which is not an act of expediency but each other’s deliberate decision.”

Such rhetoric downplays the fact that real divergences do exist in the China-Russia relationship – though both government are determined not to let this threaten overall ties. In mid-May, two nearly simultaneous developments provide a case study for how Chinese and Russian interests can both spur cooperation and breed uncertainty.

First, on May 15 the Russian energy giant Rosneft announced that it had begun drilling in the “Red Orchid” offshore gas field, under a contract awarded by Vietnam. The problem: the block in question, located roughly 230 miles southeast of Vietnam, is within China’s “nine-dash line” claim to the South China Sea. While China has stopped short of declaring sovereignty over the nine-dash line area (and would have no basis to do so under international law, which holds that only maritime features can bestow sovereignty), Beijing had repeatedly demonstrated that it believes it has exclusive rights to the resources (whether fish or oil and gas) in those waters.

When asked about Rosneft’s operations in the South China Sea, Chinese Foreign Ministry spokesperson Lu Kang replied that “no country, organization, company or individual can, without the permission of the Chinese government, carry out oil and gas exploration and exploitation activities in waters under Chinese jurisdiction.”

“We urge relevant parties to earnestly respect China's sovereign and jurisdictional rights and not do anything that could impact bilateral relations and regional peace and stability,” he added.

Rosneft had apparently been expecting (and dreading) that sort of reaction, as revealed in a report from Reuters’ James Pearson. Earlier this year, Vietnam suspended a similar drilling operation by Spanish firm Repsol after reportedly being threatened by China.

But rather than back down, Rosneft issued a statement saying, “Offshore license areas of Rosneft on the South China Sea are situated within the territorial waters of Vietnam.” That would seem to deny the Chinese claim, and is unlikely to make China happy.

Vietnam has been a close Russian partner since the Cold War, while China and Vietnam have seen tensions in their relationship skyrocket over overlapping claims in the South China Sea. As a result, the China-Russia-Vietnam triangle is a thorny one. Russia would be loath to jeopardize its closest partnership in the Southeast Asia region by siding with China, but is also unwilling to lose its strategic partnership with China over a third party’s territorial dispute. Moscow has tried to solve this conundrum by mostly staying silent on the South China Sea issue, in an attempt to avoid upsetting either Vietnam or China.

Energy interests, however, threaten to knock Russia off its tightrope. Rosneft as well as Russian gas firm Gazprom have energy contracts with Vietnam in the South China Sea, in areas that potentially overlap with China’s “nine-dash line” (China has never formally delineated the boundaries, so others are left to make their best guesses as to where the edges really are).

Ian Storey of Singapore’s ISEAS-Yusof Ishak Institute said that so far China has avoided confronting Russian companies over their bids in the South China Sea due to its partnership with the Russian government. “It would be a serious blow to the burgeoning Sino-Russian entente if Beijing asked Moscow to end its energy projects in Vietnam,” Storey told Reuters.

On the other side of that coin, it’s unclear how willing Moscow would be to poke at Beijing’s South China Sea neuralgia for the sake of oil and gas revenue. A Kremlin spokesperson told Reuters Rosneft had not communicated with the Russian government before beginning to drill in the area, but reiterated the company’s line that it was following relevant (Vietnamese) government regulations.

At the same time as the South China Sea exposed a potential rift, however, China and Russia’s relationship took a big step forward with the inking of a trade and economic cooperation agreement between China and the Eurasian Economic Union (EAEU). The EAEU is a Russian-led project to expand its economic influence over former Soviet republics; it counts Armenia, Belarus, Kazakhstan, Kyrgyzstan, and Russia as members, and Moscow has been pressuring Tajikistan to join as well. The new trade agreement with China should make it more enticing for new members to join up, to Russia’s delight.

The agreement is not a free trade agreement (despite some headlines claiming just that). According to TASS, it “does not imply cancellation of duties or automatic reduction of non-tariff barriers.” It will, however, simplify trade procedures and thus give EAEU member states easier access to the tantalizing Chinese market. In Xinhua’s words, “China and the EAEU agreed to further simplify procedures of customs clearance and cut costs of trade in goods by strengthening cooperation and exchange of information between each other.”

Central Asia is often positioned by analysts as a potential area for competition between China and Russia. Moscow sees the Central Asian republics, formerly part of the USSR, as its strategic backyard, while Beijing is increasing its own influence in the region through its Belt and Road Initiative. However, Russia and China attempted to head off potential competition early on by linking their economic schemes. The new trade agreement is the first major step in implementing the BRI and EAEU linkage, something Xinhua pointed out in its report.

The fact that a Russian company was defying China’s “nine-dash line” even as Beijing and the Moscow-led EAEU cemented a trade partnership speaks to the complexity of the China-Russia relationship. They are not a monolith, despite their closely aligned desires to wrest global leadership away from the United States. However, that does not mean their partnership is destined to fall apart, as many Western analysts have predicted (and which sounds an awful lot like wishful thinking). To date, China and Russia have been able to navigate the areas of tensions that do exist in their relationship, and keep overall ties moving forward.

But as the famous saying goes, there are no permanent allies, only permanent interests. It’s worth keeping an eye on where China and Russia’s interests diverge, and where they align, in order to better understand how this relationship is developing beyond the platitudes of official statements.