March 27, 2012

Russia-China: Change of course?

22 march 2012

http://eng.globalaffairs.ru/redcol/Russia-China-Change-of-course-15494


The final text of Russia’s Strategy-2020, published last week, contains a small but surprising sentence that has not been given the attention it deserves. From the foreign trade and foreign policy section: “The main risks for Russia, linked with the emergence of new centers of power, are rooted in the growth of China’s economic potential and international status.”

The authors believe that the impending conversion of the yuan into a “world currency for settlements, and later into an investment and reserve currency…may undermine the stability of the international currency system, and limit opportunities for the use of the Russian ruble in international transactions.”

“The highly competitive Chinese processing industry… will continue to squeeze out Russian counterparts from the Russian market and prevent the trade and investment expansion of Russian companies abroad,” the authors conclude. They believe that “the consolidation of China’s positions in Central Asia may undermine the prospects of the latter’s further involvement in Russia’s integration projects.” Finally, the authors warn that China’s more active negotiating and interventionist conduct typical of a “newly rich member of the world leaders’ club, the consolidation of the G2 format (the United States and China) in running global economic processes and China’s growing influence in the IMF and the WTO” will come at the expense of other countries, Russia included.

It should be noted, however, that the authors later acknowledge that the task of modernizing Russia, especially Siberia and the Far East, is not possible “without using the Asia-Pacific Region as a resource of national economic development. China is Russia’s number one partner in this region.”

Strategy-2020 is the result of the work of various experts over a long period of time. During the final stage, which took a year and a half, a large team consisting of two dozen working groups was set up on instructions from Prime Minister Vladimir Putin. It was led by two prominent liberal economists – Rector of the Higher School of Economics Yaroslav Kuzminov and Rector of the National Economy Academy Vladimir Mau. While this document is not exactly a program for the future president and the government, it describes in detail the current situation and what needs to be done.

The authority of the customer who ordered this strategy makes this product even more important. In such cases, the balance between the actual ideas of the authors and the wishes of the customer is always unclear.

In any event, no high-profile policy document in Russia has plainly stated that China’s rise is a threat. In his recent foreign policy article published a week prior to the election, Putin mentioned in passing the existing problems with China, like immigration, but was very positive about China otherwise. The president-elect wrote that Russia should “catch the Chinese wind” in the sails of its economy. Does the tone of Strategy-2020 suggest a change in Russia’s approach?

It would be wise not to make any far-reaching conclusions on the basis of this document alone. Its status is quasi-official, and Russian officials can always distance themselves from it, which is bound to happen when our Chinese comrades begin asking for explanations. Beijing never lets such statements go without comment. You can write anything about NATO and the United States without eliciting a response, but China is a different story.

At the same time, Russia is clearly apprehensive about the rise of China. For the first time in recent history, Russia is weaker than its neighbor, and the gap will continue growing. This should compel Russian policymakers to take a fresh look at the country’s approach to China. How should Russia co-exist with China today and in the next five to 10 years if the current dynamics persist? The search for an answer to this question will be a major item on the agenda of Putin’s presidency. Judging by everything, Putin is more interested in Europe and the West, which he understands, than in China, which is still largely an enigma for the future president.

For all that, it is unclear why it was necessary to voice such concerns in a high-profile document, especially as the authors were discussing the side effects of China’s development rather than a hostile policy towards Moscow adopted by Beijing. Some of these apprehensions have not yet been confirmed – the issue of a G2 was dropped a couple of years ago when it became clear that nothing of the sort was in the offing.

Russia is unable to do anything about this, and counteractions would be simply inappropriate, whereas such an obvious display of lack of confidence will more likely aggravate than alleviate the asymmetrical nature of bilateral relations.

To be fair, the document contains a number of specific proposals on how to achieve balance in Russia’s opportunities in Asia. Its authors write about the need to diversify economic partners to prevent China from remaining Russia’s main and only partner in the Far East, but the general alarmist tone remains.

These apprehensions are understandable, but making them public will not help Russia. Rather, Russia needs an active and positive program of action towards China with numerous proposals for joint development. This program should originate in Moscow and be preventative in nature. If Russia stands on the sideline, the agenda in Russia’s Asian part will be determined by China just for lack of alternatives. Then Russia’s apprehensions will be confirmed, and China will become a real economic threat. But in that case, Russia will have only itself to blame.
| RIA Novosti

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