Saturday, September 23, 2023

"Russia's Dependence On China Is Deep And Wide — It May Also Be Irreversible"

From WorldCrunch, September 18:


Russian President Vladimir Putin has scored a "huge own goal" with the war in Ukraine, according to CIA Director William Burns.

He was referring to Russia's losses at the front, international sanctions, the expansion of NATO and Russia's growing dependence on China — something that has escalated in recent years and may well become one of the enduring challenges Putin's government has created for Russia.

The risks associated with this final point, the deepening dependence on China, are substantial — and breaking free from it will prove to be a formidable task.

Russia's evolving relationship with China has become a focal point in international geopolitics and economics. This transformation has been catalyzed by a combination of factors, including Western sanctions, Russia's annexation of Crimea in 2014, its full-scale invasion of Ukraine in 2022 and China's meteoric rise in the global economy since the early 2000s.

The shift in Russia's economic alignment toward China began in earnest in the aftermath of the Ukraine conflict and the resulting Western sanctions. Prior to this, Russia had maintained strong trade ties with Europe, particularly in energy exports. But as sanctions took hold, Russia turned to China as an alternative trading partner and a source of investment.

These hopes for increased commerce between the two countries come as Moscow seeks continued support for its war on Ukraine. China's top diplomat Wang Yi is currently visiting Russia for security talks, which Russian media say could pave the way for Vladimir Putin visiting Beijing soon.

Yet despite attempts to gain diplomatic punch from such a visit, Putin would arrive in the Chinese capital weaker and more beholden to China than ever.

Trade dependency
One of the most notable aspects of Russia's pivot to the East is its growing trade dependence on China. Chinese imports to Russia increased after 2008, culminating in China surpassing Germany as Russia's leading supplier of goods.

In 2006, China's share of Russian imports was a mere 9.4%, but by 2021, it had surged to a substantial 24.8%. Likewise, China's share of Russian exports nearly tripled during the same period, making China Russia's largest export destination by 2017.

Since the 2022 invasion, Russia has stopped publishing detailed customs statistics. Consequently, we must rely on various sources, including occasional reports from Russian officials, data from other countries and expert assessments. According to Iikki Korhonen, who leads the Institute for Transition Economies at the Bank of Finland, China's portion of Russian imports “likely exceeded one-third and may have reached as high as 40% by the end of 2022."

Russia is now, if not the most dependent country on China, then second only to North Korea.

The level of dependence in foreign trade that Russia currently exhibits is typically associated with colonial or former colonial relationships, as well as "center-periphery" systems. In these systems, the central entity's share of foreign trade with peripheral countries is akin to China's role in Russia's foreign economic activities.

Throughout recorded history, no partner of Russia — except for China post-2008 — has accounted for more than 16% of Russian imports. Similarly, in terms of Russian exports, no partner, except China since 2018, has surpassed a 15% share. "In terms of imports,” Iikki Korhonen argues, “Russia is now, if not the most dependent country on China, then second only to North Korea."

Worth noting, just as North Korean leader Kim Jong-un wraps up a rare six-day trip to Russia that underscored how Moscow and Pyongyang's interests, military and commercial in particular, are aligning

Hydrocarbons and goods dependence
Recognizing the risks associated with such concentration, countries are taking steps to mitigate it. Germany's recent "China Strategy" is a prime example, aimed at reducing foreign economic reliance on China.

This strategy underscores China's efforts to reduce its own dependence on other nations while simultaneously establishing dominance in global production chains. In contrast, Russia has taken a different path, with Europe successfully decreasing its reliance on Russian oil and gas in just a year.

But Russia now finds itself critically reliant on China — both as a purchaser of hydrocarbons and a supplier of goods, including its own products and transit items from other countries. For instance, the majority of semiconductors and microcircuits crucial for military production are sourced through China, subject to the strictest sanctions....


Diagram of the six possible types of symbiotic relationship, from mutual benefit to mutual harm.

 File:Symbiotic relationships diagram.svg