China may produce drones for Russia
China may produce drones for Russia
Sino-Belarusian combined exercises; SCO meeting in Astana; Beijing’s curious oil market maneuver; Vladimir Kara-Murza; Taiwan
Beijing may soon back Moscow more openly and forcefully. Chinese soldiers conducted combined exercises with Belarusian forces on July 6, two days after Minsk joined the Shanghai Cooperation Organization. While these exercises are not unprecedented and their implications shouldn’t be overstated, the timing and context are nevertheless striking.
While Beijing has shied from technically violating sanctions, it has nevertheless provided substantial material and informational assistance to Moscow throughout the conflict. Beijing is reportedly ratcheting up this assistance by developing attack drones for Russia, in partnership with Iran. Beijing appears more and more likely to back the Kremlin’s aggression in Ukraine overtly, possibly even by providing lethal assistance, a threshold it previously has not crossed.
Turning to energy markets, Beijing is reportedly stockpiling significant amounts of crude oil, according to Reuters reporting from the Vortexa commodity firm. Beijing seems to be hedging against – or possibly attempting to influence – the outcome of the upcoming US election.
There are more signs that developments in Chinese gasoline and electric vehicles (EV) markets will gradually impact bilateral ties. CNPC released an interesting note on QQ about declining gasoline demand on stronger EV uptake and improving fuel economy across the vehicle fleet.
The interplay between EVs and gasoline demand will increasingly impact Sino-Russian ties. On a personal note, I moved from my hometown (Salisbury, MD) to Houston in early 2018 to work in energy largely because I anticipated that the sector would gradually but increasingly shape bilateral ties between Russia and China, and geopolitics more broadly. Six years later, there is more evidence to support that thesis. In another six years’ time Beijing and Moscow may find it increasingly difficult to manage contradictions between their respective interests in EVs and oil, although incentives for bilateral convergence and alignment will likely continue to persist.
Finally, there is growing alarm about the health of Vladimir Kara-Murza, the Russian dissident. In an ominous development, Kara-Murza has been moved to a prison hospital while his lawyers say they are being denied access to him. The situation is especially alarming since Kara-Murza was poisoned in 2015 and 2017, almost certainly by agents of the Kremlin. There are also parallels between his confinement in the Russian prison system and the treatment of Alexei Navalny, who was almost certainly murdered while in custody.
It’s possible that Putin has already ordered the execution of Kara-Murza, but the Russian force structures may be acting semi-autonomously. Russian security service often operate as a murderous adhocracy, carrying out lethal hits in anticipation of Putin’s approval. For instance, Ramzan Kadyrov, the Chechen strongman, almost certainly ordered the murder of Boris Nemtsov without Putin’s direct or even implicit approval. Still, if Kara-Murza is murdered, it will likely be due to Putin’s tacit consent, as he has failed to punish the perpetrators of the hits on Navalny.
It is unwise for Vladimir Putin to order the murder of Kara-Murza or, through inaction, allow the dissident to be murdered. The institutionalization of political murder in Russian poses risks for Putin’s own personal interests.
Russia’s institutionalization of intra-elite murders likely reduces the probability that Putin will ever leave office peacefully. While Nemtsov, Navalny, and Kara-Murza are “non-systemic” opposition leaders, the reality is that the Kremlin’s treatment of dissidents establishes the tone for all political competition within Russia. Furthermore, Russian elites will not have failed to notice that Yevgeny Prigozhin was also liquidated in spite of Putin’s “certain promises” and “certain guarantees.” If Putin signals that he will meet murder Russian elite political opponents, he will deter many rivals but potentially incentivize others to fight to the death.
Other post-Soviet strongmen may offer better templates for Putin as he ponders his eventual departure. While Putin may hope he will die in office like Islam Karimov, Boris Yeltsin and Nursultan Nazarbayev are better models.
Both Yeltsin and Nazarbayev were able to live peacefully after leaving office, largely because they limited intra-elite strife and, for all their other faults, did not engage in the murder of elite opponents. Their transitions were admittedly tumultuous and certainly not without frictions. Still, Yeltsin died of natural causes, while Nazarbayev continues to enjoy some degree of freedom and mobility, including a December 2023 trip to Moscow, where he met with Putin.
While Putin’s grip on power appears strong, for now, the 71-year-old will one day leave the political scene. Institutionalizing intra-elite murders makes it more likely that his exit from the stage will be violent. Ordering or allowing Vladimir Kara-Murza’s murder could have implications for Putin’s own fate one day.
- Joe
China-Russia military ties
China-Russia economic ties
The China-Russia axis, Western elections, and energy markets
China-Russia political ties and Central Asia
The batteries (and drones) competition with China
Taiwan Contingency Planning
1) China-Russia military ties
US Allies Say China Is Developing Attack Drones for Russia
Drones modeled on Iran’s Shahed could constitute lethal aid; Ukraine allies worry about China’s ability to boost production
Comment: Beijing’s decision to bolster Russia’s drone production and joint exercise with Belarusian forces suggest it may be considering more open – and significant – military support for Moscow.
Chinese Soldiers Arrive In Belarus For Anti-Terrorism Exercises – RFE/RL
Chinese soldiers arrived in Belarus on July 6 for joint a “anti-terrorism training exercise,” Belarus’s Defense Ministry said on Telegram. It said the maneuvers will be held from July 8-19. The joint training “will allow…the laying of a foundation for further development of Belarusian-Chinese relations in the field of joint training of troops,” it said. Belarus on July 4 joined the Shanghai Cooperation Organization (SCO), a regional grouping promoted by Beijing and Moscow as an alternative to Western influence, while China has been making moves in recent years to increase ties with countries in Eastern Europe and Central Asia.
Comment: Bilateral combined exercises between China and Belarus are not unprecedented. Still, the symbolism is striking, especially in the context of greater Western/European worries over Sino-Russian military cooperation.
Chinese airborne special forces go to Belarus for joint training – VOA Chinese (June 2015)
According to Xinhua News Agency and Belarusian media reports, an airborne special operations team of the Chinese Air Force went to Belarus on Monday to participate in the "Condor Heroes-2015" joint counter-terrorism training.
On the morning of August 5, the "Eagle Assault-2018" joint training of Chinese and Belarusian special forces started at a comprehensive training base in Jinan of the Northern Theater Army. This is the first bilateral joint training held with Belarus since the establishment of the Army leadership.
It is understood that this joint training is aimed at improving the professional skills of special forces and strengthening anti-terrorism tactics. China and Belarus each sent 50 special forces to participate in the training. The Chinese team members are composed of relevant personnel from a special operations brigade of the 80th Army Group of the Army, and the Belarusian team members are composed of relevant personnel from the Belarusian special forces. In the next 10 days, the participating team members of both sides will adopt a mixed training method to jointly complete the training of combat physical fitness, unarmed training and combat, helicopter parachute landing and other courses.
In 2011 and 2012, the Chinese and Belarusian airborne troops held joint training. This week, the two countries' airborne troops once again carried out joint anti-terrorism training activities.
Vostok-2018: Another Sign of Strengthening Russia-China Ties – Brian Carlson for SWP (from 2018)
Russia held its quadrennial Vostok (East) military exercises September 11–17. The two most notable aspects of Vostok-2018 were its projected size and China’s participation. Sergei Shoigu, the Russian defense minister, announced in August that the exercises would feature 300,000 military personnel, 36,000 tanks and armored vehicles, more than 1,000 aircraft, and 80 ships, making these exercises the largest on Russian territory since the Soviet Union’s Zapad-81 exercises in 1981. The actual size of the exercises appears to have been considerably smaller, as Shoigu’s figures for personnel reflected entire brigades and divisions rather than the particular battalions and regiments that actually participated.
2) China-Russia economic ties
Why China Is Sabotaging Ukraine – Alexander Gabuev of Carnegie for Foreign Affairs
Meanwhile, Beijing and Moscow are continuing to lay the foundations for a deeper and more durable economic relationship. During Russian President Vladimir Putin’s state visit to China on May 16, Chinese and Russian state railroad companies signed an agreement to expand cross-border infrastructure that will help facilitate Russian exports to the east. On the same trip, Putin likely greenlit a scheme to ship more Russian gas to Central Asia so that Kazakhstan and Uzbekistan could have more gas to ship to China, thus enabling Moscow and Central Asian governments to increase their profits. Following his trip, Putin called the presidents of Kazakhstan and Uzbekistan to tell them about the visit, something he has never done before. On June 7, Gazprom signed contracts that would expand Russian gas exports to Kazakhstan, Kyrgyzstan, and Uzbekistan.
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The war in Ukraine may be a drain on the West’s resources and on the economies of developing countries, but it suits Beijing’s interests just fine. China has gained power over Russia, all while paying minimal economic and diplomatic penalties. China, then, may stay the course. It can continue to ridicule the West’s approach to the war and call for diplomacy without trying to achieve much in reality.
Comment: DC has been able to rally support for stricter export controls of vital technologies, in large part, due to greater suspicion of Beijing throughout Western capitals.
Accordingly, Beijing’s “pro-Russia neutrality” has led to significant economic, technological, and diplomatic costs. Still, Beijing is calculating that many of these costs will only be temporary if Western alliance cohesion weakens or even fractures in 2025 due to the return of Trump.
3) The China-Russia axis, Western elections, and energy markets
Beijing is incentivized to undermine the more powerful U.S.-led alliance system, either directly or via proxy. Even a conservative definition of the constitutional bloc shows it produced nearly 60 percent of world GDP in 2023, as measured at current prices, over three times the share of the China-Russia axis.
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The axis’s approach to Western elections raises difficult questions. Should constitutional democracies passively observe as Moscow—with Beijing’s tacit approval or even participation—uses informational and, perhaps much more importantly, economic tools to bolster preferred candidates? Or should they counteract these efforts? Democracies face a difficult and consequential test.
Is SPR stockpile enough to support China’s crude imports? – Emma Li for Vortexa
China has recently planned a new round of SPR stockpiling, aiming to add 8 million tonnes [58.5 million barrels] of crude oil in majors-operated storages by March 2025. This translates to about [220,000 barrels per day] of additional crude demand, equivalent to 2% of China’s seaborne crude imports, if state-run refiners fulfill the government mandate evenly from July to March.
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The new SPR mandate will likely support Russian crude imports into China, as oil majors are cautious about touching other US-sanctioned discounted crude grades, while oil benchmark prices breaching $85/b will challenge the stockpile economics.
Comment: There are many potential reasons why Beijing would stockpile crude oil. As Li notes, however, the economics of stockpiling appear unfavorable. Crude oil spot markets are currently in backwardation, meaning that Beijing could likely access lower prices simply by waiting several months. Of course, the market could be wrong.
Still, why is Beijing undertaking this decision, which doesn’t appear justified by economic fundamentals?
Beijing could be hedging against greater volatility in US-China relations if Trump is elected. While its entirely conceivable that Trump could abandon Taiwan, he is at least as likely to pursue a policy of brinksmanship vis-à-vis Beijing, going so far as to ban oil and liquefied natural gas sales to China. Accordingly, the PRC could be stockpiling in anticipation of a Trump victory and a looming ban on US oil exports to China (which totaled a hefty 1 million barrels per day in 2023, accounting for both crude oil and crude products, such as natural gas liquids).
While China’s SPR stockpiling is equivalent to only about ~0.2% of total world demand (which stands at ~100 million barrels per day, oil demand is highly inelastic, meaning that small changes in quantity demanded can have disproportionate impacts on prices. In other words, Beijing’s stockpiling will, all things being equal, increase world energy prices in the near term, perhaps significantly.
Since rising oil prices raise the probability of a Trump victory in the US election, it’s possible that Beijing is putting its thumb on the scale for one candidate.
Contrary to popular belief, economic levers – not disinformation campaigns – are authoritarian governments’ preferred method of electoral interference. Moscow routinely aims to alter energy prices before US and European elections, while Beijing’s trade restrictions with Taiwan may have prevented a DPP victory in the island’s January 2024 parliamentary elections. Since swing voters are definitionally non-ideological, Moscow – and potentially Beijing – may attempt to sway elections via economic and energy levers.
Beijing is the world’s largest crude oil importer and its largest refinery market, by capacity. China’s energy market decisions – for both crude oil but also crude products such as diesel and gasoline – will be worth watching very closely in the weeks and months ahead.
Online ride-hailing vehicles are deeply electrified, and their high frequency of use has had a serious impact on gasoline consumption in cities.
At present, domestic new energy vehicles are developing rapidly, and electric power is replacing gasoline consumption more and more. When the peak of gasoline consumption will come is a problem of general concern in the industry.
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At present, the number of new energy vehicles in my country accounts for only 8.8% of the country's total number of cars. Due to the use of a large number of online ride-hailing vehicles, the actual mileage of new energy vehicles accounts for as high as 20%, which has a great impact on the replacement and impact of gasoline consumption.
Comment: Very interesting article for all sorts of reasons. Two major trends are displacing Chinese gasoline demand. First, electric vehicle uptake. Second, fleet turnover and the cycling out of older, less fuel-efficient vehicles leads to higher average fuel economy.
It’s worth noting two addendums. Chinese oil demand is tilted towards the export-oriented petchem sector, while the US market is gasoline-heavy, and the EU disproportionately uses diesel. Additionally, even if Chinese gasoline demand has peaked, China will continue to consume significant levels of gasoline over the medium and even long term.
4) China-Russia political ties & Central Asia
At present, changes of historical significance across the world during our times are unfolding in ways like never before. The international landscape is undergoing rapid transformation. A new round of scientific and technological revolution and industrial transformation is advancing fast. As human civilization marches forward in big strides, factors of insecurity, instability and uncertainty are evidently increasing.
To cope with this major transformation, the key is to have the wisdom to see the changes, the ability to deal with the changes, and the courage to make changes. We need to bear in mind that we live in a community with a shared future, and always uphold the Shanghai Spirit. We need to stay firmly on the development paths that suit our respective national conditions and regional realities, and jointly build a more promising home of the SCO so that our peoples can live a peaceful, successful and happy life. To that end, I wish to propose the following:
First, we should build a common home of solidarity and mutual trust. A few days ago, China held the Conference Marking the 70th Anniversary of the Five Principles of Peaceful Coexistence. The Shanghai Spirit is consistent with the essence of the Five Principles of Peaceful Coexistence. It is the shared value of our Organization, and should be all the more cherished and faithfully observed at all times.
We need to respect the development path of respective, independent choosing, and support each other in safeguarding core interests. We need to bridge our differences, build more consensus, and enhance mutual trust through strategic communication. China proposes that SCO member states do more to share their experience on governance and hold the SCO Political Parties Forum at an appropriate time.
Xi, Putin Kick Off SCO Summit In Kazakhstan With Belarus Set To Join – Reid Standish for RFE/RL
Russian President Vladimir Putin and Chinese leader Xi Jinping met on July 3 in Kazakhstan as part of a two-day summit for the Shanghai Cooperation Organization (SCO), which is poised to admit Belarus as a member.
The expected expansion of the club of Eurasian countries is part of another push from Beijing and Moscow to use the regional security bloc as a counterweight to promote alternatives to the Western institutions that make up the U.S.-led world order.
Putin told Xi ahead of their bilateral meeting that Russia's ties with China were stronger than ever and touted the SCO as a powerful instrument to advance their foreign policy agendas.
Xi Jinping’s Russian Lessons – Joseph Torigian of the Hoover Institution for Foreign Affairs
The elder Xi’s dealings with Moscow showed the dangers of intimacy and enmity, how growing too close created unmanageable tensions that produced a costly feud. Understanding that history, the younger Xi by all appearances believes that the current relationship between Moscow and Beijing is indeed stronger than it was in the 1950s, and that he can avoid the strains that led to the earlier split.
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[I]t is hard to imagine that Xi Jinping spent part of his teenage years digging an air-raid shelter in preparation for a possible Soviet attack—or for that matter, that his father had been invited to see NORAD. The fluidity of the Washington-Beijing-Moscow triangle over the last 75 years has led some to hope that Xi might somehow be convinced to rein in his support for Russia. But those wishing for a redux of the Sino-Soviet split are likely to be disappointed.
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As the son of a man so involved in his country’s relationship with Moscow, Xi Jinping knows his history. The past has shown the dangers of both incautious embrace and full-blown enmity. Now, Xi wants to have his cake and eat it, too—move close enough to Russia to create problems for the West, but not so close that China has to decouple entirely. It is not an easy cake to bake, and it may become harder.
Comment: Torigian’s excellent piece persuasively describes how personal ties between Xi and Putin bind Beijing and Moscow closer together. More broadly, he also identifies how Chinese and Russian elites share largely congruent worldviews and threat perceptions.
Still, non-personalistic fundamentals matter (as Torigian also notes). In the wake of the Prigozhin mutiny, Xi increasingly emphasizes “the fundamental interest of the two countries and their peoples.” While both figures are likely to maintain power for at least the medium term, Putin’s hold on power appears less certain. Bilateral ties could be impacted by a leadership change in Moscow and Beijing’s continued emergence as an electricity superpower.
The Five Futures of Russia – Stephen Kotkin of the Hoover Institution for Foreign Affairs
Washington has learned the hard way that it lacks the levers to transform places such as Russia and, for that matter, China: countries that originated as empires on the Eurasian landmass and celebrate themselves as ancient civilizations that long predate the founding of the United States, let alone the formation of the West. They are not characters out of the playwright George Bernard Shaw’s Pygmalion, ripe for conversion from street urchins to refined ladies: that is, from authoritarian, imperialist regimes to responsible stakeholders in the U.S.-dominated international system. Efforts to remake their “personalities” invariably result in mutual recriminations and disillusionment. Leaders such as Putin and China’s Xi Jinping did not capriciously reverse a hopeful process; in no small measure, they resulted from it. So Washington and its partners must not exaggerate their ability to shape Russia’s trajectory. Instead, they should prepare for whatever unfolds.
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Since the Prigozhin mutiny, Xi has stressed what he calls “the fundamental interest of the two countries and their peoples,” implying that the special relationship would outlast the Kremlin’s current leadership. In truth, an authoritarian China could hardly afford to lose Russia if that meant ending up with a pro-American Russia on its northern border, a scenario parallel to, yet drastically more threatening than, a pro-American, reunited Korean Peninsula. At a minimum, access to Russian oil and gas, China’s partial hedge against a sea blockade, would be at risk.
Kazakh Journalist’s Killing Sends Chill Through Exiles in Ukraine – NY Times
A small crowd of mourners gathered on Friday for the funeral of the Kazakh opposition activist and YouTuber Aidos Sadykov, who was assassinated in Kyiv, Ukraine — a killing that colleagues said had cast a chill over journalists and exiles in Ukraine and the wider region.
Comment: It’s possible that Sadykov was assassinated by Kazakhstani agents – or that the Kremlin was behind the hit, possibly in an attempt to frame Astana. I suggest keeping an open mind until further evidence emerges.
5) The batteries (and drones) competition with China
If the United States wants to keep building electric cars without depending on China, then Washington will need to capitalize on the new bipartisan battery consensus to mobilize hundreds of billions of dollars to extract and process minerals. Otherwise, the United States might squander much of the IRA funding for the end stages of battery assembly and could lose the chance to become a major producer of electric vehicles.
Comment: I recommend this article but believe it understates the stakes of the battery competition with the PRC.
Batteries as a military enabler – Joseph Webster of the Atlantic Council for War on the Rocks
Batteries are an increasingly important feature in military affairs, with use cases ranging from diesel-electric submarines to unmanned platforms and more. Moreover, synergies between China’s battery, drone, and shipbuilding complexes are alarming. There is, however, only limited recognition of batteries’ growing importance in military affairs, especially in a contingency over Taiwan. While positive steps are being taken to limit Beijing’s industrial and technological capacity in batteries, the Washington- and Brussels-led alliance system must act more vigorously.
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Solid-state batteries offer even greater capabilities than lithium-ion batteries, including greater energy density, capacity, and range. Crucially, solid-state batteries are advantaged over lithium-ion batteries at preventing fires, which are a major risk aboard submarines. While solid-state batteries have yet to be commercialized due to cost and technical challenges, military customers — including in China — are not as price-sensitive. The development of solid-state batteries could therefore offer substantial performance improvements for both diesel-electric submarines and unmanned systems below, on, and above the surface.
Comment: It’s worth noting the CCP’s doctrine of “People’s War,” which calls for whole-of-society grassroots mobilization. In the event of a confrontation or conflict over Taiwan, the PRC would likely attempt to mobilize its considerable civilian and military maritime assets, drone capabilities, and battery complex. More on this soon.
A Stunning Leap in Engineering Just Made Solid-State Batteries 100x Better – Popular Mechanics
Solid-state batteries, currently only found in small devices like hearing aids, pacemakers, and wearables, provide benefits in both power and safety.
TDK Corporation in Japan, a component supplier to companies like Apple, says it’s increased its solid-state battery energy output at 1,000 watt-hours per liter, which is 100 times better than its previous battery.
While this battery breakthrough will first arrive to wearables and other small devices, similar solid-state breakthroughs could also revolutionize electric vehicles, laptops, and smartphones.
Comment: … and could alter – or even revolutionize – military affairs.
Battery maker SK On declares ‘emergency’ as EV sales disappoint – FT
A leading South Korean producer of electric vehicle batteries has declared itself in crisis as its customers struggle with disappointing EV sales in Europe and the US.
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But Tim Bush, a Seoul-based battery analyst at UBS, said the South Korean battery makers had been “badly let down” by US car manufacturers, which he said had failed to produce EVs sufficiently attractive to mass market consumers to meet their own bullish sales projections.
China’s lithium-ion battery complex also has latent military potential, as batteries are critical components for diesel-electric submarines, unmanned maritime platforms, and aerial drones. Moreover, technological advances in solid-state batteries could offer significant, potentially game-changing performance improvements for military use cases.
Given the economic and security risks, Europe should impose tariffs on Chinese exports of EVs and lithium-ion batteries. To balance decarbonization goals with these other needs, however, Europe could follow the US approach by phasing in certain tariffs, such as on Lithium-ion non-electrical vehicle batteries. These batteries are useful for grid decarbonization but pose few direct security threats.
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In other cases, such as solar panels, Chinese clean tech exports pose few economic and security risks to Europe. This industry has left Europe and isn’t coming back, especially since European solar potential is limited. Although inverters should be monitored closely, there are no known security risks for solar panels, which cannot communicate with the grid. Consequently, Europe should accept Chinese solar imports while still ensuring that global supply chains are not held hostage to a single supplier.
6) Taiwan Contingency Planning
In the context of a more contested environment such as a quarantine,2 blockade, or a kinetic conflict, Chinese actions could seek to cause leadership failures and loss of social cohesion; undertake cyberattacks to target critical infrastructures; generate energy shortages; and seek to defeat Taiwan militarily before the United States could provide effective support.
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As part of its efforts to enhance resilience, Taiwan must mitigate its energy vulnerabilities, as its reliance on maritime imports for about 97 percent of its energy needs creates acute risks. To lessen its dependency on maritime imports and strengthen its resiliency in the face of potential PRC coercion, Taiwan should curb energy and electricity demand, bolster indigenous supply, overhaul its inventory management, and prepare rationing plans. A resilient energy security approach would credibly signal to the PRC that Taiwan could hold out for long durations without maritime resupply.
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Taiwan’s heavily subsidized electricity prices incentivize maritime imports, especially coal. Astonishingly, Taiwan was the world’s largest per capita user of coal generation for electricity in 2022, higher than even Australia, a major coal exporter.
A quarantine is more feasible for China and more likely than an invasion or blockade in the near term; it also presents unique challenges in terms of how Taiwan and the international community can respond. This brief explores two hypothetical maritime quarantine scenarios that are informed by in-depth research, tabletop exercises, private consultations, and expert surveys conducted by the CSIS China Power Project.
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A quarantine would entail China’s coast guard and other forces conducting gray zone operations intended to stay below the threshold of an armed conflict. Thus, the military would play a supporting role—not a leading role—in such operations.
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Joseph Webster is a senior fellow at the Atlantic Council and editor of the China-Russia Report. This article represents his own personal opinion: he alone is responsible for the entirety of its contents.
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.