Sino-Russian Relations
Big Miss for Kremlin on Trade with China

As Russian President Vladimir Putin heads to Beijing to mark the 70th anniversary of the end of World War II, all his brave talk of far-reaching economic cooperation with China is ringing increasingly hollow. At first, when Gazprom inked a $400 billion contract to supply cheap natural gas to a hungry Chinese economy, it looked like Russia might be having some success in boosting trade with the country. But trade between the countries was down in the first half of 2015, pushing Russia out of the list of China’s top 15 trading partners, as Bloomberg reports:

Russia, in pivoting toward China, is portraying closer relations as the emergence of a counterweight to the U.S. and Europe’s dominance. “Russian-Chinese ties have reached probably their highest level in history and continue to develop,” Putin said in a pre-visit interview with Tass and Xinhua released Sept. 1.

Economic data tell a different story. Trade between the two nations fell 29 percent in the first half of this year to $30.6 billion. Russian government officials now say that there’s virtually no chance they will hit their target of $100 billion in trade turnover this year, a goal Putin publicly embraced as recently as October. Putin in his interview didn’t mention the drop in trade this year.

This news comes a month after reports that Chinese direct investment in Russia shrank by 25 percent. As we observed at the time, China isn’t avoiding doing business with Russia for some complicated strategic reason. Russia just isn’t a very attractive place to invest these days.

But, in addition, China and Russia really aren’t natural partners, as TAI columnist Lilia Shevtsova pointed out in July. During the Cold War, the two great communist powers weren’t on particularly good terms. Today, aside from their opposition to American hegemony, the countries share few common interests. Russia, a net supplier of oil, likes it when oil prices are high; China, a net consumer, likes it when they are low. The nations share a border, and each seeks to carve out a sphere of influence in Central Asia. They may in a sense be more natural rivals with each other than they are with the United States. This is particularly true, ironically, when Washington isn’t being very assertive. We may be seeing some of that dynamic playing out in these numbers.

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