For Russia, an “unbalanced” economic marriage with China

Largely cut off from Europe since its offensive against Ukraine, Russia has largely turned its economy to China at the risk of finding itself in an “imbalanced” relationship with Beijing and a position of weakness.

Three weeks before the start of the Kremlin’s intervention in Ukraine, Vladimir Putin and Xi Jinping branded a “boundless” partnership between Russia and China. The Message: Appearing as an antidote to the West.

Since then, business has exploded despite international sanctions and the departure of many foreign companies from Russia. According to Chinese customs, last year bilateral trade reached $190 billion, a record.

The yuan’s share of currencies used for Russian foreign trade has also increased, rising from 0.5% to 16% in a year, and in the process significantly undercutting the euro and dollar in Russian exports. (48% now).

On energy, their main source of trade, Moscow and Beijing have also stepped up their rapprochement.

“China and India replace EU as main export markets” for Russian oil, “in the fourth quarter (2022), with Turkey representing two-thirds of total Russian crude exports”, Major explain the economists of the Association of the World Bank and Financial Institutions (IIF).

“It is absolutely important for Russia to be closer to China, because it no longer has many economic partners”, says one of them, Elena Rybakova, questioned by AFP.

– “no other choice” –

According to Sergei Tsyplakov, an expert on Russian-Chinese economic relations at the Higher School of Economics in Moscow, in a year, “the Chinese have taken over the Russian market, especially in the automobile industry freed by Western companies.”

“It was necessary to find alternative sources of imports for Russia, especially for electronic equipment”, explains Anna Kireeva of the prestigious Moscow School of International Relations MGIMO.

But, she told AFP, “In reality, large Chinese companies that are well integrated into Western markets and the global financial system, such as Huawei or ZTE, have preferred to curtail their activities in Russia to avoid possible US sanctions.” “.

So, marriage of convenience or lasting economic alliance?

“Putin wants a balanced relationship with China like the twins, but it doesn’t,” said Timothy Ash, an analyst at Bluebay.

“Russia has no choice but to turn to China,” he told AFP.

“The stability of the Russian economy now depends on China, giving Beijing a new means to directly influence Russia”, analyzes for Temor Oumarov, an expert on Sino-Russian relations at the Carnegie Endowment for International Peace.

However, an observation disputed by the Kremlin. “In these relations, there is no leader, no follower,” Vladimir Putin’s diplomatic adviser, Yuri Ushakov, assured on Friday, “two partners who trust each other and share broadly the same objectives.” “.

– “Competitor” –

However, several logistical problems remain in developing this partnership further.

Railway lines in the Russian Far East “are already saturated”, explained Ms Kireeva to AFP. “And their modernization will take time.”

Ditto for area infrastructure targeted for hydrocarbons, such as the Russian oil port of Kozmino on the coast of the Sea of ​​Japan.

Not to mention that Moscow must currently offer significant discounts on its oil, which is aimed at defying an embargo from last December and the capping of its selling price by the West.

The consequences on the Russian budget are already being felt: According to the International Energy Agency (IEA), Moscow’s oil revenue fell 42% year on year in February, while Russia is marketing more or less the same volume.

What makes Russia more vulnerable than Beijing?

Timothy Ashe recalls, “the two powers are competitors far from being allies”. “Beijing prefers to see Russia weak to be able to exploit it”.

“We are only at the beginning of the process of economic dependence of Moscow compared to China”, resumes for Temor Oumarov’s part. “But over many years or decades, this economic lever could turn into an even more powerful political lever”.