Xi and Putin held their customary year-end bilateral phone call on December 31st, as Xi once again emphasized “the fundamental interest of the two countries and their peoples.” The two figures have exchanged year-end phone calls since December 2020.
The more interesting bilateral interaction may have taken place on December 20th, however, when the two sides launched a joint communique. In the document, the Russian government announced it “firmly supports China's measures to safeguard its sovereignty and territorial integrity and achieve national reunification,” in a reference to Taiwan.
This appears to be the first time that Russia has used this formulation of firmly supporting measures by Beijing to achieve national reunification. Importantly, the joint statement appears to leave open the possibility that Russia will support the PRC if Beijing “needs” to employ force against Taiwan in order to achieve national reunification. Putin has previously resisted the use of military force against Taiwan, including in October 2021, when he said that the mainland should instead rely on economic strength to achieve unification. More details are below, in the first section.
Finally, I’ve written a personal opinion piece for The Diplomat, China and Russia Are Trying to Stack the Deck in 2024 Elections.
“Beijing seeks to block the Democratic Progressive Party (DPP) from sweeping Taiwan’s presidential and legislative elections on January 13. Moscow, meanwhile, aims to shore up Donald Trump in the U.S. presidential election on November 5.
…
Putin has continued to use Russia’s oil leverage to influence Western political outcomes, especially in the United States. Russia cut crude oil production ahead of the 2016 U.S. presidential election, raising consumer prices; boosted output in September 2018 before the U.S. midterm elections; and, along with OPEC+, sharply decreased production in October 2022. In each instance, Putin’s oil production choices aligned with Trump’s political interests. Russia and other oil autocracies appear extremely likely to cut production ahead of the 2024 U.S. presidential election, in order to boost Trump’s candidacy.
…
Both Beijing and Moscow are relying on informational and, perhaps more importantly, economic tools to weaken their opponents’ electoral prospects and, in some cases, strengthen their preferred candidates. These authoritarian influence campaigns pose thorny dilemmas for liberal democracies. Should constitutional democracies stand by and simply observe as authoritarian governments interfere in their electoral processes and potentially anoint their preferred candidates? And if they counteract these efforts, how to do so?”
Thank you for reading. More soon.
Joe
Table of Contents:
1) Bilateral Political Ties
2) Bilateral economic ties
3) China and Ukraine
4) Chinese and Russian Tech
5) The war and Russian convicts returning home
6) Energy
7) Central Asia
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The heads of state of China and Russia exchanged New Year’s congratulatory messages; The prime ministers of China and Russia exchanged New Year’s congratulatory messages [December 31, 2023] – People’s Daily [Chinese-language]
Xi Jinping pointed out that he and President Putin jointly announced that the two sides will hold a China-Russia Cultural Year next year. We will also solemnly celebrate the 75th anniversary of the establishment of diplomatic relations between the two countries. The ups and downs of China-Russia relations for three-quarters of a century have shown that the continuous consolidation and development of China-Russia relations with permanent good-neighborly friendship, comprehensive strategic coordination, and mutually beneficial cooperation are in line with the fundamental interests of the two countries and their peoples [bolded by The Report], and in line with the expectations of the international community.
Joint Communique of the 28th Regular Meeting between the Prime Ministers of China and Russia (full text) [Dec 20, 2023] – People’s Daily [Chinese-language]
The two sides reiterated that consolidating and deepening China-Russia relations in the new era is a strategic choice made by both sides based on their respective national conditions. It is in line with the fundamental interests of the two countries and their peoples, [bolded by The Report] is in line with the development trend of the times, and is not aimed at third parties, nor is it subject to external influence and influence. The two sides will fundamentally follow the consensus reached by the two heads of state, push forward bilateral relations, and always deepen and expand cooperation in key areas on the basis of the principle of mutual benefit to ensure the common development and prosperity of China and Russia.
The two sides emphasized that in the context of rapid changes in the international situation and profound adjustments to the international system, China and Russia will continue to firmly support each other in safeguarding their respective core interests and work together to meet challenges. Russia reiterates its adherence to the one-China principle, recognizes Taiwan as an inalienable part of China's territory, opposed any form of "Taiwan independence," and firmly supports China's measures to safeguard its sovereignty and territorial integrity and achieve national reunification. China supports Russia in safeguarding its security, stability, development and prosperity, sovereignty and territorial integrity, [bolded by The Report] and opposes external forces interfering in Russia's internal affairs.
Comment: The “fundamental interests” formulation appears to indicate Beijing’s desire to institutionalize relations with the Russian political elite and hedge against any sudden change to the power vertical. Xi first adopted the line in the wake of the Prigozhin mutiny.
This formulation of Chinese support for Russia [中方支持俄方维护本国安全稳定、发展繁荣、主权和领土完整,反对外部势力干涉俄罗斯内政] is a departure from the two sides’ previous formulations.
More importantly, this appears to be first time Moscow has explicitly announced its “firm support” for the PRC’s national unification or reunification in the context of Taiwan (I believe “unification” and “reunification” are both synonymously translated as 统一). While the two sides “reaffirmed their firm support for each other’s core interests,” in their February 4, 2022, joint statement [more below], which carried several references to Taiwan, Moscow did not go so far as to say it would support Beijing’s unification efforts.
In comments in October 2021, Putin said that mainland China “need not employ force” against Taiwan and could instead rely on economic strength to achieve unification.
Finally, the two sides’ latest statement omits any reference to color revolutions – perhaps because Moscow and especially Beijing believe that their surveillance repression apparatuses have profoundly decreased the threat posed to them by grassroots protest movements.
双方重申,巩固和深化新时代中俄关系是双方基于各自国情作出的战略选择,符合两国和两国人民根本利益,符合时代发展潮流,不针对第三方,也不受外部影响和左右。双方将以两国元首共识为根本遵循,推动双边关系前行,始终在互利原则基础上深化和拓展重点领域合作,保障中俄两国共同发展和繁荣。
双方强调,在国际形势快速变化、国际体系深刻调整背景下,中俄将继续在维护各自核心利益方面互予坚定支持,携手应对挑战。俄方重申恪守一个中国原则,承认台湾是中国领土不可分割的一部分,反对任何形式的“台独”,坚定支持中方维护本国主权和领土完整、实现国家统一的举措。中方支持俄方维护本国安全稳定、发展繁荣、主权和领土完整,反对外部势力干涉俄罗斯内政。
Joint Statement between the People's Republic of China and the Russian Federation on International Relations and Global Sustainable Development in the New Era (full text) – [Feb 4, 2022] Government of China [Chinese-language]
The two sides reaffirmed their firm support for each other's core interests, national sovereignty and territorial integrity, and opposed external forces interfering in the two countries' internal affairs.
Russia reiterated its adherence to the one-China principle, recognized Taiwan as an inalienable part of China's territory, and opposed any form of "Taiwan independence."
China and Russia oppose external forces that undermine the security and stability of the two countries' common peripheral areas, oppose external forces interfering in the internal affairs of sovereign countries under any pretext, and oppose "color revolutions". They will strengthen cooperation in the above fields.
双方重申相互坚定支持彼此核心利益、国家主权和领土完整,反对外部势力干涉两国内政。
俄方重申恪守一个中国原则,承认台湾是中国领土不可分割的一部分,反对任何形式的“台独”。
中俄反对外部势力破坏两国共同周边地区安全和稳定,反对外部势力以任何借口干涉主权国家内政,反对“颜色革命”,将加强在上述领域的协作。
China’s advanced machine tool exports to Russia soar after Ukraine invasion – FT
Chinese suppliers now dominate trade in ‘computer numerical control’ devices vital to Moscow’s military industries
Source: PRC General Administration of Customs, Author’s Calculations
Comment: Russia also sources some of these components indirectly via “cutouts.” Examining Chinese exports of a single computer numerical control (CNC) product (horizontal lathes numeric, HTS Code: 84581100), shows that Belarus is also a significant market – and CNC shipments to Belarus almost certainly aid the Kremlin’s war effort directly or indirectly.
China, Russia hail bilateral ties as strategic choice, stabilizer of intl relations amid Russian PM’s China visit – Global Times
China-Russia economic and trade cooperation made a historic breakthrough in 2023. Trade between China and Russia grew steadily in the first 11 months of 2023, hitting $218 billion, up 26.7 percent year-on-year, and exceeding $200 billion for the first time, according to the latest Chinese customs data. Besides, more than 90 percent of the transactions were made in the two countries' respective national currencies: the ruble and the yuan, according to Russian news agency TASS.
Given the sound growth momentum of China-Russia economic and trade cooperation, bilateral trade is expected to reach around $230 billion for the whole year of 2023, Li Xin, director of the Center for Russian and Central Asia Studies at the Shanghai Institutes for International Studies, told the Global Times.
Comment: Li Xin’s estimate of total bilateral trade totals for 2023 is rather odd but potentially telling. China-Russia direct bilateral trade will very likely finish the year closer to $240 billion, as you can estimate by simply extrapolating the current rate of trade (~$19.8 billion USD/month) for December and adding it to current totals through November. Additionally, Chinese indirect exports to Russia via “cutout countries” likely stand at somewhere between $15 – 25 billion.
Direct bilateral trade will almost certainly finish closer to $240 billion, not $230 billion, as Li suggests – and the true amount of bilateral trade will very likely exceed $250 billion. It’s curious that Chinese state media is, in a very clumsy way, attempting to downplay bilateral trade volumes in an article about the strength of bilateral ties.
Or, alternatively, is Li suggesting that the sabotage of a Russian railroad line (below) will have a dramatic impact on China-to-Russia exports? It seems implausible that the railroad sabotage would cut Chinese exports in half, or more, however.
War in Ukraine Has China Cashing In – NYT
The country’s trade with Russia this year has exceeded $200 billion, and makers of cars and trucks are the big winners.
“And the land border means China can transport cars to Russia by rail, an important factor because China lacks its own fleet of transoceanic carrier ships for vehicle exports.”
Ukraine, Stalled on the Front, Steps Up Sabotage, Targeting Trains – NYT
The saboteurs managed to place four explosives on a Russian freight train carrying diesel and jet fuel, roughly 3,000 miles from the Ukrainian border.
…
The Ukrainians were hoping to compromise a vital conduit for weapons being shipped to Russia from North Korea, at a moment when Ukrainian forces on the front are struggling to stave off relentless Russian assaults.
Comment: The Ukrainian government was wise to say that they were attempting to stop the flow of arms from North Korea to Russia. As the two prior NYT articles note, China-to-Russia trade, especially of vehicles, has proved to be economically and militarily critical for the Kremlin’s war effort.
Russian and Chinese executives discuss Russia-Crimea tunnel project – WaPo
Russian and Chinese business executives with government ties have held secret discussions on plans to build an underwater tunnel connecting Russia to Crimea in hopes of establishing a transportation route that would be protected from attacks by Ukraine, according to communications intercepted by Ukraine’s security services.
Comment: Several thoughts on this potential project, although much is uncertain, as ever.
This concept will very likely never go anywhere – at least not while the conflict continues. The project’s financial costs would prove very high, the technical challenges of constructing the tunnel amid wartime conditions would be significant, and the structure would be extremely vulnerable to sabotage and conventional Ukrainian attacks even after completion.
Moreover, the project would raise all sorts of thorny political questions for Beijing. The rail line would presumably employ large amounts of Chinese personnel in the middle of a war zone, on a structure that is a legitimate military target. Just as important, the use of Chinese personnel on a major infrastructure project connecting Crimea would edge Beijing closer to de facto recognition of Russia’s claims on the peninsula, something the Chinese leadership has shied from to date despite pressure from Moscow beginning in 2014.
So why are Chinese companies, especially the Chinese Railway Construction Corporation (CRCC), eagerly discussing the matter, at least according to the leaked transcripts? According to WaPo reporting, CRCC said it was “ready to ensure the construction of railway and road construction projects of any complexity in the Crimean region.”
CRCC may be inclined to accept the contract out of commercial motivations, but construction of the bridge would trigger Western sanctions and is a very high-risk maneuver.
It seems likely that CRCC – probably with Beijing’s knowledge – is indulging Moscow’s ambitions while expecting it will never actually have to deliver on the project.
It’s possible, however, that Beijing is signaling that it may be willing to be more forward leaning in its support for Russian territorial claims in Ukraine. If Ukrainian forces suffer calamity on the battlefield – something that could happen, especially if Western support dries up – Beijing might be willing, even excited, to help Russia entrench its occupation across Crimea and the Donbas.
Finally, the article states that Ukraine’s security services intercepted communications between Chinese and Russian entities. If the Ukrainians did in fact intercept the emails themselves, it seems likely that they obtained the communications via Georgiy Muradov, the Kremlin’s fixer in Crimea. Why would the Ukrainians release the emails? Did the Russians want these communications to be found by Ukrainian intelligence (and presumably, other Western security service)?
More questions than answers to this story, for now.
Russia-Ukraine and Israel-Hamas Wars Reveal the Importance of Weapons Production - Vasabjit Banerjee of the University of Tennessee and Benjamin Tkach of Mississippi State University for The Diplomat
Current conflicts offer a reminder to China and the U.S.: Arms do not deliver victory only through technological advantage but also through availability.
Chinese Spy Agency Rising to Challenge the C.I.A. – New York Times
The ambitious Ministry of State Security is deploying A.I. and other advanced technology to go toe-to-toe with the United States, even as the two nations try to pilfer each other’s scientific secrets.
China Is Stealing AI Secrets to Turbocharge Spying, U.S. Says – WSJ
U.S. officials are worried about hacking and insider theft of AI secrets, which China has denied
Russia will start deploying 5G networks in major cities in 2026 – TASS
Active deployment of 5G networks at domestic base stations will begin in large Russian cities in 2026, Russian Minister of Digital Development Maksut Shadayev, told reporters.
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In January 2023, Russian telecom operators entered into forward contracts with Russian manufacturers of base stations for communication networks worth more than 100 bln rubles ($1.1 bln). The total volume of supplies until 2030 will be about 75,000 base stations, and from 2028 operators will have to purchase exclusively domestic base stations.
Comment: Barring an unlikely reversal of Western sanctions, Russia’s first tranche of base stations will likely be nearly entirely supplied by Chinese firms Huawei and ZTE. Moreover, it’s not clear if Russia will be able to muster the technical, financial, and manufacturing resources necessary to build its own domestic base station infrastructure. Russia’s dependency on Huawei/ZTE 5G will very likely enable Chinese security services to collect substantial amounts of sensitive information within Russia.
Huawei continues to operate and hire employees in Russia – Forbes Russia [Russian-language, machine translated]
Despite the halt in official sales of user devices and supplies of equipment for telecom operators, as well as a reduction in its own retail, the Chinese IT giant Huawei, according to Forbes, since the pandemic has increased the staff of its Russian Research Institute (RRI) by two more thirds and continues to invest hundreds of millions of dollars a year in partnership programs with Russian universities.
Comment: Take this reporting from inside Russia (from October) with a grain of salt, but it’s a highly plausible story.
Exclusive: Russian hackers were inside Ukraine telecoms giant for months – Reuters
Russian hackers were inside Ukrainian telecoms giant Kyivstar's system from at least May last year in a cyberattack that should serve as a "big warning" to the West, Ukraine's cyber spy chief told Reuters.
Comment: As the article notes, it’s unclear why Russian security services abruptly burned this capability on December 12th.
The Russian murderers sent home as free men after fighting in Ukraine – FT
Victims’ families watch in horror as those convicted of gruesome crimes are pardoned in exchange for military service
Comment: This was one of the most interesting (and horrifying) articles I’ve read in a long time.
U.S. intelligence assesses Ukraine war has cost Russia 315,000 casualties -source – Reuters
A declassified U.S. intelligence report assessed that the Ukraine war has cost Russia 315,000 dead and injured troops, or nearly 90% of the personnel it had when the conflict began, a source familiar with the intelligence said on Tuesday.
Comment: For comparison, the Soviet invasion of Afghanistan led to the deaths of ~15,000 Soviet soldiers, with an additional ~60,000 wounded. Russian casualties in the Chechnya wars “came at the cost of around 11,000 military and security personnel dead and tens of thousands wounded,” according to Professor James Hughes at LSE.
Moreover, the Soviet population was about twice as large as the Russian Federation’s is today. It’s entirely possible that Putin’s invasion of Ukraine produces a massive strategic victory – potentially even the dissolution of NATO and the destruction of constitutional democracy as a viable competitor to Putin’s brand of populist nationalism. Still, the war’s human costs are without precedent in modern Russian history.
Russia behind bars: the peculiarities of the Russian prison system - Jan Strzelecki for OSW [from 2019]
At present, over 467,000 individuals are incarcerated in Russia’s prisons. In terms of the number of prisoners per 100,000 inhabitants, Russia is ranked first in Europe and 17th globally. However, due to the fact that the figures many countries quote regarding the number of their prisoners are often hard to verify, this ratio should be treated as an approximation. The present number of inmates in Russia’s prisons is among the lowest in the country’s history and has been gradually declining over recent years. A decade ago, the number of prisoners in Russia was almost double the present figure (893,000 in 2008).
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As far as the reasons for imprisonment are concerned, the largest group of prisoners are criminal prisoners, most of whom were convicted for murder (27.8% of inmates). A similar proportion of prisoners are serving their sentences for drug dealing (25%).
A Prison at War: The Convicts Sustaining Putin’s Invasion – NYT
The Times obtained the names and details of the 197 initial IK6 recruits, and was able to confirm the fates of 172 of them through 2023.
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At least one in four recruits who left jail with Mr. Mokin in October 2022 was killed. Most who lived appear to have suffered serious injuries, according to interviews with survivors and relatives.
Comment: Many (most?) of the returning convicts are going to be returning with extreme levels of PTSD. But a mass return of PTSD-afflicted convicts and war criminals may not lead to significant political impacts within Russia. As the article notes, Putin has taken great care to shield the politically important urban cores of Moscow and St. Petersburg from the worst impacts of the conflict. Instead, the conflict’s burdens have been and largely will be borne by the regions.
Hot uranium threatens a meltdown for Western energy security – by Jay Newman, Jim Cornell, and Alex Michshenko [three nuclear energy market actors] for the Financial Times
Comment: Russian and PRC influence in nuclear energy supply chains is very concerning, as this article illustrates.
Arctic LNG 2's Investors Get Nervous as American Sanctions Begin to Bite
Novatek's Arctic LNG 2 project is one of the most significant liquefied natural gas export developments in the world, and it promises to be a major source of revenue for the Russian state - but U.S. sanctions appear to be having an effect on its progress. The project is dependent on Western components and foreign investment, and both may be at risk.
Russia’s stunted LNG coup – Seb Kennedy and Zach Simon for EnergyFlux
Russia has delivered the first drop of liquefied natural gas (LNG) from its heavily sanctioned flagship project, Arctic LNG-2. Moscow will hail the achievement as a victory over Western boycotts and proof that its domestic LNG industry is in rude health. In reality, however, the plant is likely to operate at severely reduced capacity and might never achieve its full potential – undermining the Kremlin’s aspirations to become a major player in the global LNG market.
Comment: Smart, detailed article. Worth your time if LNG or sanctions are relevant to your work.
China Restores Coal Tariffs in Threat to Russian Exporters – Bloomberg
Russia’s sales to China have declined since peaking in June; Indonesia and Australia are shielded by free trade pacts
Russian Prime Minister Mishustin pursuing busy agenda on December 19-20 visit to China – TASS
Strategic cooperation in the energy sector is expanding with exports of Russian hydrocarbons to China on a growth trend. Russia has become the number one supplier of oil to the Chinese market, and holds second place as a supplier of coal and third place as a supplier of liquefied natural gas (LNG), the Russian government stressed. Natural gas flows to China via the Power of Siberia pipeline are being systematically increased, the Far Eastern gas pipeline is being planned, and the terms for delivering gas supplies to China through Mongolia are being worked out.
Perspectives | Central Asian states walking fine line on Russian sanctions - Nurbek Bekmurzaev for Eurasianet
Kazakhstan and Kyrgyzstan are walking a geopolitical tightrope when it comes to international sanctions against Russia, striving to please both the Kremlin and the West. Kazakhstan seems to be managing the balancing act better than Kyrgyzstan.
China building up electric auto infrastructure in Central Asia – Eurasianet
China is moving forward with a variety of investment and infrastructure projects in Central Asia designed to boost exports to the region and beyond.
China eclipses Russia as Central Asia’s top trade partner in 2023 – Eurasianet
China has eclipsed Russia as the main trade partner of all five Central Asian states, according to official statistics. Kazakhstan is the most recent Central Asian country to see Beijing pass Moscow in terms of annual trade turnover.
Special Roundtable: Ambassador Rosenblum on U.S. Policy Toward Kazakhstan – Caspian Policy Center
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Until next time,
Joe
Joseph Webster is a senior fellow at the Atlantic Council and editor of the China-Russia Report. This article represents his own personal opinion.
The China-Russia Report is an independent, nonpartisan newsletter covering political, economic, and security affairs within and between China and Russia. All articles, comments, op-eds, etc represent only the personal opinion of the author(s) and do not necessarily represent the position(s) of The China-Russia Report.