The colossal Belt and Road Initiative (BRI) is a China-heavily funded economic development strategy that focuses on connectivity among countries primarily between the China and the rest of Eurasia. It consists of the land-based “Silk Road Economic Belt” (SREB) and oceangoing “Maritime Silk Road” (MSR). During the Belt and Road Forum for International Cooperation (BRF) held in Beijing from May 14 to 15, 2017, China-Russia cooperation over BRI in Central Asia was warmly discussed.

The special friendship between Beijing and Moscow is visibly displayed in Xi and Putin’s speeches, when both leaders reiterate their commitment to globalization and free trade. On a rhetorical level, the two countries are united by their stance against the isolationist “America first” foreign policy increasingly expounded by the Untied States administration.

Of long-term significance, China and Russia also announce a range of bilateral arrangements concerning Central Asia at the summit. That includes the signing of trade agreements, the creation of the China-Russia Regional Cooperation Development Investment Fund, and the development plan of connecting BRI with the Russia-led Eurasian Economic Union (EEU).

President Xi Jinping of China speaks during a briefing on the final day of the Belt and Road Forum (Image Credit: REUTERS/Nicolas Asfouri)

It ought to be underlined that the lack of clarity as to the BRI economic scheme is ostensible in Chinese official rhetoric. Whether any forms of Chinese foreign direct investment in Russia or Central Asia can be called a BRI project remains vague. In addition, the summit communiqué announced the ambitious creation of a China-Russia Regional Cooperation Development Investment Fund, which encompasses “a total scale of 100 billion yuan and the initial scale of 10 billion yuan” to smooth cooperation between China’s Northeast and Russia’s Far East. The proposed China-Russia fund is a clear statement of the opportunities that both countries’ leaders saw in the priority areas of cooperation (energy; infrastructure investment; transport). Yet in fact, Beijing started discussions with Moscow about a Russia-China investment fund in September 2015, when the Chinese Vice Premier Wang Yang met with the Deputy Prime Minister Yury Trutnev of Russia. This delay in solidifying the logistics has drawn concerns about the ability and willingness of the two states to fully implement these ambitious financial agreements.

Furthermore, while Russia media outlets glorify the achievements of BRF, Russian analysts critically assess the potentials of these cooperation projects. There is an overall perception that the interaction of the Chinese and Russia delegations at the BRF is defined largely by political showmanship and symbolism. Addressing the lack of substantial agreements between Russia and China on BRI, Vita Spivak at Carnegie Moscow Center comments that the only comparatively concrete economic result of the BRF for Moscow is the establishment of China-Russia Regional Cooperation Development Investment Fund noted earlier. Moreover, the lingering suspicion about China’s hidden geopolitical agenda for BRI is common, as China is growingly entrenched in what had been Russia’s sphere of influence. Optimism on the Chinese side is equally limited. Chinese critics argue that the Russian state has repeatedly failed to instigate the most basic preparatory efforts for signed investment projects, citing the case in which Russia never fulfilled its promise made in 2007 of building its part of the 2.2 km bridge across the Amur River.

Indeed, power differentials, incompatible strategic visions, and the very little mutual understanding between the Chinese and Russian public discourse remain impediments to Sino-Russia cooperation.

Map of Central Asia illustrating Silk Road Economic Belt projects in Central Asia (Image Credit: SIPRI/Christian Dietrich)

First, the current dichotomy of economic strengths between China and Russia casts doubt on the countries’ ability to establish an effective trade alliance over BRI. One significant imbalance is the gradually expanding discrepancy in the countries’ trade relations. At present, China is Russia’s largest trading partner, comprising $88 trillion in combined export and import volume in 2015. Conversely, Russia’s share in China’s foreign trade remains small. From a structural perspective, Russia is also challenged by its growing dependency on China’s resource policy. At present, China imports 550,000 barrels of oil per day from Russia or 27 million tons per year, making Russia the largest crude oil exporter to China. As reported by Forbes, this asymmetry is only set to compound as the Eastern Siberia-Pacific Ocean oil pipeline will be connected to Northeast China and the pipeline connecting Siberia’s Chayandinskoye oil and gas field to China materializes by 2018. This is starkly contrasted by China’s diversified source of funding through maintenance of the Asian Infrastructure Investment Bank (AIIB) and future Shanghai Cooperation Organization (SCO) development banks. Given these facts, just as BRF lays clear that Russia is only a “junior partner” with China in BRI, the bilateral trade relationship is hardly interdependent.

Second, the aggressive posturing of BRI in Central Asia inevitably sparks concerns about its conflicting interests with the Moscow-led Eurasian Economic Union (EEU). Launched in 2011, EEU aims at consolidating Russia’s control over the other former Soviet states and cementing a multinational bloc under the Kremlin’s leadership. Through enhancing the synergy between EEU and OBOR, Russia aims at promoting “Greater Eurasia”, a grand international cooperation idea first announced during the St. Petersburg International Economic Forum. Analyses argue that by preventing Central Asian states from being absorbed into rival regional blocs such as those created by BRI, EEU serves Moscow’s political agenda of preserving its regional dominance in Eurasia. Hilary Clinton famously once called EEU an effort to “re-Sovietize”. On the Chinese counterpart, BRI represents a grand economic vision but not geopolitical strategy – a fact and intention that the Chinese side has repeatedly articulated. For instance, Xi stresses that China welcomes Russian participation only “so as to make them new platforms for the development of the China-Russia comprehensive strategic partnership of coordination”. Although China and Russia have begun talks on EEU-BRI integration since 2015, finding practical means and models harmonizing these two projects remains a challenge.

A third factor is the mutual skepticism seen in the Russian and Chinese public discourse. The 2016 Valdai report highlights the superiority complex that Russia harbors vis-à-vis Asia and China. This mentality is only aggravated by obvious worries about the detrimental consequences of Chinese investment, such as increased Chinese migrants and environmental issues. Although Putin reassures domestic audience that Beijing intends not at usurping the Russian economy, Russia’s strategic “pivot” to the East is very much compromised by uneasiness about China’s rise.

There is no doubt that the partnership between Russia and China has become substantially closer with the instigation of BRI. As Putin comments:

“As for the People’s Republic of China, the level, nature, and confidence of our relations have probably reached an unprecedented level in their entire history”.

That said, the divergent economic interests, competing geopolitical visions, and lack of mutual appeal can potentially jeopardize the progress of Sino-Russia BRI cooperation in Central Asia. The benign management of the two countries’ overlapping interests so far is a result of the strategic nature of their cooperation. Russia desperately needs the Chinese investment to rectify an economy plagued by Western sanctions, lower oil prices, stagnant productivity, and obstacles to diversifying exports; China feels that in order to advance its massive economic diplomacy program, it needs Russia as an ally to maintain international legitimacy. Some experts predict a future “division of labor” in Central Asia: “China would be the bank and Russia would be the gun.” In that sense, the strengthened partnership between Russia and China is simply one out of necessity.

The proposed new rails, roads and pipelines of BRI are sure to stir unease over the close yet tense relations between China and Russia in Central Asia. At this time, a new strategic scenario in Central Asia seems to be emerging. The biggest challenge faced by both sides is to find a compatible structure of comparative advantage in BRI and avoid unnecessary risks and conflicts in the region.

(Featured Image Credit: SPUTNIK NEWS/How Hwee Young)

 

By ABIGAIL CHEN JUNE 7, 2017

ABIGAIL CHEN is a Summer 2017 intern at The Carter Center China Program.