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Russian President Vladimir Putin and Chinese President Xi Jinping during an informal meeting in Beijing. Photo: EPA-EFE

Economy Global Economy

Global impact | ‘No limits’ partnership or ‘priority partners’: China, Russia seek to define relationship as Western pressure mounts

Global Impact is a weekly curated newsletter featuring a news topic originating in China with a significant macro impact for our newsreaders around the world
In this week’s issue, we look at the state of play of the “no limits” partnership between China and Russia

China-Russia relations

Orange Wangin Beijing

Published: 2:00pm, 27 May 2024

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When Chinese President Xi Jinping hugged his “old friend” Vladimir Putin as he escorted his visiting Russian counterpart out of the Zhongnanhai leadership compound in Beijing last week, it again laid bare the closeness between the two countries.

However, despite the solidarity showcased during the Russian president’s second trip to China in just seven months, a question mark remains over how far the “no limits” friendship between the world’s two biggest non-Western powers can go.

Observers foresee increasing tests for the alignment, and they expect Beijing to seek a “delicate balance” in its diplomacy with the Kremlin and the West.

The view comes as the United States and the European Union have raised the tone of their warnings about China’s alleged support for Russia’s defence industrial base amid the war in Ukraine, while Beijing has ramped up efforts – notably Xi’s recent European tour – to put its relations with Washington and Brussels on better footing.

Putin concluded his two-day trip to China with a stop in Harbin, a northeastern Chinese city known for its Russian legacy and its role as an important gateway between the two countries.

03:07

Xi welcomes ‘old friend’ Putin to Beijing, affirms strength of China-Russia bond

It marked the Russian leader’s first trip abroad since starting his fifth term in office earlier this month. Xi had likewise chosen Moscow as the destination of his first overseas trip in March last year after beginning a norm-breaking third term as China’s president.

Such reciprocity has shed light on the symbolic value of Putin’s latest visit, which extended his personal bond with Xi.

The pair have met 43 times since 2013, and they are expected to meet again in Kazakhstan in July.

In Harbin, the capital of Heilongjiang – the northernmost Chinese province sharing a 3,045km (1,892-mile) border with Russia – Putin called for stronger bilateral trade and increased Chinese investment in Russia’s far east, a key region in his “pivot to the East” strategy to counter economic pressure from the West.

In sharp contrast to itineraries of other foreign dignitaries, the Russian leader also visited the Harbin Institute of Technology, one of China’s top defence-research universities, which has a deep link to the Chinese military, in a sign of expanding security ties between the two nuclear powers.

Just one day earlier, Beijing and Moscow said in a statement issued after talks between Xi and Putin that the two sides would expand their joint drills; conduct regular joint maritime and air patrols; and work together on space programmes.

I made it clear that if China does not address this problem, we will

Antony Blinken

In the wide-ranging document – of which the official Chinese version had more than 12,000 characters, or more than a third longer than one issued during Xi’s visit to Russia last year – the leaders reaffirmed that each country was the other’s “priority partner”.

They once again lashed out at Washington, blaming the US for sticking to a cold war mentality and trying to undermine regional stability to maintain its “absolute military superiority”.

On the same day, a top Pentagon official expressed “serious concern” to a counterpart in Beijing about the country’s increasing military cooperation with Moscow, during a video call.

That followed sanctions on 20 Hong Kong and mainland Chinese companies, imposed by the US government earlier this month for their alleged roles in the development of Russian energy production and advanced manufacturing.

Before that, US Secretary of State Antony Blinken had labelled China “the top supplier” of dual-use items that Moscow is utilising to fuel its ongoing invasion of Ukraine, and he warned of “additional measures” on Chinese entities when visiting the country last month.

“I made it clear that if China does not address this problem, we will,” Blinken said in Beijing after a meeting with Xi.

02:20

Russia’s Vladimir Putin visits China’s ‘little Moscow’ Harbin as part of state visit

Still, Chinese authorities have repeatedly pushed back against American criticism and said it would “resolutely defend” its “inviolable” rights to have “normal economic and trade exchanges” with Russia.

In the joint statement last week to deepen their strategic partnership that coincided with the 75th anniversary of diplomatic relations, Beijing and Moscow vowed to build even closer cooperation in their energy and finance sectors.

Russia grew to become China’s fourth-largest trading partner in 2023, overtaking Germany and Australia, while China had been Russia’s largest trading partner for 14 consecutive years.

A top US intelligence official said in March that Russia was increasingly dependent on China, North Korea and Iran as the war in Ukraine strains resources.

Xi had renewed China’s call for a “political settlement” to the war in Ukraine as he rolled out the red carpet for Putin last week.

Putin characterised his talks with Xi as “very substantive” and said they spent “virtually the entire day” together.

03:58

Emmanuel Macron thanks Xi Jinping for ‘commitment’ not to sell arms to Russia

His recent trip to China came as Russian forces were advancing around Kharkiv, Ukraine’s second-largest city, and shortly after Putin had reshuffled his cabinet – including naming a civilian economist as his surprise new defence minister – ahead of an expected summer offensive in Ukraine.

Ukrainian President Volodymyr Zelensky had warned last week that Russia could intensify its offensive and urged China to attend a June peace summit in Switzerland.

Beijing’s ties with Moscow had also been in sharp focus when Xi travelled to France, Serbia and Hungary – his first trip to Europe in more than five years.

Kyiv and several Western capitals had called on China to use its “influence on Russia” to help stop the war.

A quasi-alliance with Russia might become a countervailing force against Washington and its allies, but it could also stand in the way of China easing tensions with two of its largest trading partners as the world’s second-largest economy is trying to restore foreign investors’ sentiment.

Facing the dilemma, Beijing has been expected to strike a balance between maintaining its strategic ties with Moscow and avoiding confrontation with the West amid threats of fresh US sanctions.

Neither the joint statement in March last year nor the one this month used the phrase “no limits” to describe the relationship between China and Russia.

A report released two weeks ago by a Beijing-based think tank suggested that about 80 per cent of payment settlements between China and Russia had been suspended as of March because of sanctions from the West.

China’s banks are also applying more scrutiny to transactions traceable to Moscow, or not processing them at all, amid growing pressure to distance themselves from Russia.

China’s exports to Russia fell by nearly 14 per cent from a year earlier in April, down for the second straight month.

Some Chinese scholars have also cautioned about risks posed by Moscow – rather than Western pressure – including potential moves to “muddy water” in Northeast Asia with deeper interactions with Pyongyang.

60-Second Catch-up

Chinese President Xi Jinping and Russia’s Vladimir Putin to meet again in July to build on Beijing visit: Lavrov.

‘Priority partners’: Xi Jinping and Vladimir Putin hit out at US in China-Russia show of solidarity.

Video: Xi welcomes ‘old friend’ Putin to Beijing, affirms strength of China-Russia bond.

Xi Jinping and Vladimir Putin pledge to develop even closer China-Russia ties in energy and finance.

Vladimir Putin, Xi Jinping agree to expand Russia-China military coordination.

Opinion: Putin’s China visit confirms West’s worst fears about emerging Beijing-Moscow axis.

Vladimir Putin in push for stronger trade ties during visit to China’s northeast.

Video: Russia’s Vladimir Putin visits China’s ‘little Moscow’ Harbin as part of state visit.

Deep dives

A visit of unusual significance? Why Putin’s trip may define China-Russia ties

Trip expected to be a show of the growing geostrategic alignment and ‘deep friendship’ between leaders
But it could also reveal limits as Beijing tries to keep Moscow close while avoiding sanctions over Ukraine

China’s expanding relations with Russia will be put to the test when Vladimir Putin makes an official visit this week, as Beijing tries to keep Moscow close while avoiding Western sanctions over the Ukraine war.

The Russian president will arrive in Beijing on Thursday for a two-day trip that is expected to be a show of the neighbours’ growing geostrategic alignment and the “deep friendship” of Putin and Chinese leader Xi Jinping. But analysts say it could also reveal the limits of China-Russia ties.

Putin to push for pipeline progress on China visit – under watchful eye of West

Russian President Vladimir Putin is expected to bring up the signature Power of Siberia 2 pipeline on a coming China visit
Progress has been slow, with China’s Russia ties coming under heavy scrutiny from US and EU; analysts say delays show China putting own interests first

During his state visit to China – set for later this month – Russian President Vladimir Putin is expected to broach an important subject with his counterpart, Xi Jinping: the Power of Siberia 2 natural gas pipeline, a project that appears to have stalled.

The natural gas pipeline, designed to connect Russia and China via Mongolia, is a signature project symbolising the “no-limits” strategic partnership between Beijing and Moscow. If completed, it would divert 50 billion cubic metres (1.8 trillion cubic feet) of natural gas per year to north China, redirecting a supply that once went to Europe.

China, Russia could bypass barriers as Western sanctions bite, researchers say

Finance deals made through smaller Chinese banks would help ‘resolve the threat of secondary sanctions’, according to institute findings at Renmin University
And there are potential gains to be made in some non-finance partnerships, including near the North Korean border

China and Russia should explore using their own platforms – and could tap obscure banks – to settle payments while strengthening ties in the Russian far east, if the neighbours want to get around Western economic sanctions over Moscow’s war in Ukraine, a Chinese research organisation says.

Smaller Chinese banks could be “promoted” for trade with Russia, while setting up new financial institutions could help “circumvent Western sanctions”, according to a May 11 report by the Chongyang Institute for Financial Studies at the Beijing-based Renmin University.

US working with EU to counter China on Russia support, overcapacity

America’s top diplomat describes Beijing as seeking ‘better relations with Europe’ while fuelling its ‘greatest security threat’ since the Cold War
Meanwhile, US treasury chief says Washington and Brussels ‘need to stay coordinated’ to shield their economies from ‘China’s industrial policy’

Two senior members of US President Joe Biden’s administration discussed on Tuesday cooperation with the European Union on countering Beijing, using additional sanctions to stymie Russia’s war against Ukraine and tariffs to deal with Chinese overcapacity.

US Secretary of State Antony Blinken said the administration would work with the EU to sanction Chinese companies supplying Russia with microelectronics and hi-tech products that support Moscow’s defence industry.

Pentagon warns Beijing about its military ties to Russia, as Xi and Putin meet

Ely Ratner, US Defence Department’s chief for Indo-Pacific security, expresses “serious concern” in video link with Major General Li Bin of China’s Central Military Commission
Ratner also presses Li over escalating tension between China and the Philippines in the South China Sea as well as Moscow’s developing ties to North Korea.

A top Pentagon official warned a counterpart in Beijing on Thursday about its increasing cooperation with Moscow, even as Chinese President Xi Jinping and Russian President Vladimir Putin were pledging closer economic and military ties.

The US Defence Department said that Ely Ratner, its assistant secretary for Indo-Pacific security, had expressed “serious concern” over the ties during a video link with Major General Li Bin, the director of China’s Central Military Commission office for International Military Cooperation.

China renews call for political end to Ukraine war as Xi welcomes Putin to Beijing

Any settlement must respect security and sovereignty of all parties, Chinese president says after talks
Sino-Russian relationship has withstood international ‘storms and changes’ and sets a model for mutual respect and cooperation, he says

China renewed its call for a “political settlement” to the war in Ukraine on Thursday as Beijing pulled out all the stops to welcome Russian President Vladimir Putin on the first international trip of his new term.

“Both sides agree that a political settlement of the Ukraine crisis is the correct direction,” Chinese President Xi Jinping said after talks with Putin at the Great Hall of the People.

Global Impact is a weekly curated newsletter featuring a news topic originating in China with a significant macro impact for our newsreaders around the world.