On the growing economic cooperation between China and Russia

Chairperson, International League of Peoples’ Struggle

The International League of Peoples’ Struggle notes with interest the fast-expanding economic cooperation between the Russian Federation and the People’s Republic of China. The recent historic gas deal between the two major powers consolidates their partnership, in contradiction with the US-EU-Japan combine, as well as their role as the core in such formations as the Shanghai Cooperation Organization and the BRICS economic bloc which seek to veer away from US hegemonism.

In the wake of the full restoration of capitalism in both Russia and China in the years of 1989 to 1991, the US and the rest of imperialist partners sought to engage and bind them, with Russia being made the eighth member in the G-8 and being offered partnership with the NATO; and both Russia and China being drawn into the G-20 and being made complicit in the UN Security Council decisions to allow US wars of aggression, as in Iraq and Afghanistan.

But since then, the trend towards multipolarity has become more evident in opposition to the US obsession to remain the sole superpower. Inter-imperialist contradictions have cropped up as a result of the entry of Russia and China in the cramped circle of big capitalist powers, the accelerated recurrence and worsening of economic and financial crisis, and the growing tendency of the US to engage in the subversion of other countries, promote state terrorism, and wage wars of aggression.

On the Russia-China gas deal

On 21 May 2014, during Vladimir Putin’s state visit to Shanghai, Russia’s OAO Gazprom and the China National Petroleum Corp. (CNPC) signed a US$ 400-billion agreement after ten years of negotiations. Under the agreement, Gazprom’s biggest contract thus far, energy-rich Russia promises to supply energy-hungry China with 38 billion cubic meters of natural gas per year for the next 30 years.

The gas will be delivered via the “Power of Siberia” pipeline to northeast China and later through another route being planned to reach western China. The pipeline component of the deal requires both Russia and China to build pipelines on their respective sides of the long Sino-Russian border, with an eventual capacity to deliver 68 billion m3 of gas annually.

The huge gas deal – tagged as the biggest single trade agreement in history – is just the latest evidence of Russia’s own unfolding strategic economic and military pivot to Asia, which counters that of the US both in scale and in Russia’s astute move of aligning with China. The deal occurs in the immediate context of the US pivot to Asia and the US-NATO manipulation of factors and events in the Ukraine.

The continuing standoff in and around Ukraine have rankled the US and the EU’s foreign policy and security circles. Their imperious-sounding sanctions and threats about suspending or cutting energy transactions with Russia have so far failed to isolate or intimidate the Eurasian military power, which boasts of the world’s largest reserve of natural gas and has used its energy sources as a strategic leverage in geopolitics.

Russia’s largest energy market remains Europe, but Moscow has been crafty enough to avoid being hostaged in its rivalries with the US and EU by diversifying its clientele, including the burgeoning energy markets in the Asia Pacific region.

The related pipeline project also allows Russia to deliver energy to its own provinces in the Far East, which dovetails with its own pivot to Asia.

On the part of China, the gas deal helps solve its practical problem of supplying its expanding energy needs (with its annual natural gas consumption expected to rise from 170 billion m3 in 2013 to 420 billion m3 by 2020) while reducing its dependency on highly pollutant coal. Although the deal only fills up 10% of China’s demand by 2020, Russia’s energy pivot can increase volume as Russo-Chinese ties further warm up. Also, as part of the agreement, Russia has committed to double its oil exports to China to one million barrels daily.

At the same time, China gains extra benefits in the gas deal by supplying energy to its less-industrialized western regions such as Xinjiang and to its northeast (Heilongjiang and Jilin), in the same manner that Russia wants to use the pipeline project to fast-track the development of its Far East provinces. In fact, a top Chinese official recently offered to unify Sino-Russian plans for a common economic zone in the northeast.

From a more strategic view, a steady pipeline source over secure borders with Russia also allows China to preempt any adversary from totally blockading its oil supply by sea routes – an option being contemplated by the US and its allies with strong naval presence in the South China Sea, Strait of Malacca, and Indian Ocean, should hostilities escalate. This approach complements China’s “String of Pearls” maritime strategy for protecting its interests in the Asia-Pacific and Indian Ocean regions.

Broader areas of Sino-Russian cooperation

A day before the historic gas deal, the Bank of China and VTB, Russia’s second biggest financial institution, signed an Agreement on Cooperation that committed both sides to bypass the US dollar and pay each other in domestic currencies. Although largely symbolic, the deal supports the continuing attempts among the BRICS countries (where Russia and China are building strong ties with India, Brazil and South Africa) to diminish their dependence on the US dollar by using other currencies in their trade transactions with each other and with Third World countries whenever feasible.

Other bilateral agreements were also signed by China and Russia, including the joint production of commercial aircraft and heavy helicopters, and joint development projects in the petrochemical industry.

The results of Putin’s visit to China thus signals a higher level of increased collaboration between the two capitalist powers bridging Europe and Asia – formerly socialist allies in the 1950s before turning antagonistic over the issue of modern revisionism and fundamental policy differences in the late 1950s, throughout the 1960s, until the late 1970s.

Now that both have turned openly capitalist, Russia and China have been redefining and restrengthening their ties on the basis of their separate but converging monopoly capitalist interests as well as the current in-fighting and realignments among the imperialist powers. Since 2001, through the Shanghai Cooperation Organization, the two have been developing political, economic, and military ties together with four other member-countries (former Soviet republics Uzbekistan, Kazakhstan, Kyrgyzstan and Tajikistan) and five other observer-countries (India, Mongolia, Iran, Afghanistan and Pakistan).

Using its economic and geopolitical leverage, Russia has been laying down the groundwork for its own diplomatic offensives and expansion of ties with Japan and the two Koreas. Russia will also probably use the Eurasian Economic Union, which will come into effect in January 2015, as a magnet for attracting more client states among the former Soviet-bloc countries, and as a bargaining chip in its strategy to gain the most from SCO, expanded Sino-Russian cooperation, and its own pivot to Asia.

The growing Sino-Russian cooperation is a capitalist marriage of mutual interests. It lays bare the alignments and realignments among the imperialist powers and their client states towards a new East-West divide reminiscent of the Cold War. The peoples and mass movements fighting imperialism in both developed and underdeveloped countries must closely monitor this trend, because this has certain implications and consequences in the struggle for democracy and socialism.


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