“Interests of our peoples” reemerges; Putin’s comments at Vladivostok
The People’s Daily’s Russia section returns and focuses on Central Asia
More signs are emerging that Beijing and Moscow are attempting to “de-risk” relations by depersonalizing ties in the wake of the Prigozhin mutiny and institutionalizing the relationship between the two political systems. In a September 8th video address to a Russia-China economic conference, Lavrov said “Our ties are built on the principles of equality, mutual trust, and mutual benefit. Most importantly, they serve the interests of our peoples and look towards the future.” Lavrov’s framing echoes Xi’s characterization of bilateral ties.
The People’s Daily’s Russia section returned and included several stories focused on Central Asia, especially Kazakhstan. More below.
The NYT produced an article, “Russia Overcomes Sanctions to Expand Missile Production, Officials Say.” For reasons that are not immediately obvious, the word “China” doesn’t appear in a story about Russia’s military production capacity. even though Chinese exports account for about one-in-three of Russia’s total goods imports, as measured by value, before accounting for indirect shipments for exports nominally sent to Belarus and Central Asia (but really destined for Russian customers), and smuggling and underreporting.
The NYT article finds that Russian annual tank production has doubled to 200 units per year. While dual-use goods are undoubtedly slipping through European and North American dragnets, there’s also evidence suggesting that Chinese exports of ball bearings to Russia and Kyrgyzstan are enabling Russian tank production. More on that soon.
Table of Contents:
1. China-Russia political and economic ties; “interests of our peoples”
2. The People’s Daily’s Russia section returns amid the Eastern Economic Forum
3. Putin’s comments on China at the Eastern Economic Forum
4. Kyrgyzstan
1. China-Russia political and economic ties; “interests of our peoples”
“Russian-Chinese relations of comprehensive partnership and strategic interaction have reached an unprecedentedly high level and serve as a model of cooperation between major countries in today’s world. Our ties are built on the principles of equality, mutual trust, and mutual benefit. Most importantly, they serve the interests of our peoples and look towards the future. [Comment: Note the language “interests of our peoples.” This framing echoes Xi’s description of bilateral ties as a “strategic choice made by the two countries, based on the fundamental interests of their respective countries and peoples,” which was first uttered during Russian Federation Council Speaker Valentina Matviyenko’s visit to Beijing in the wake of the Prigozhin mutiny. This is further evidence that the political systems are attempting to depersonalize relations and institutionalize bilateral ties amid greater uncertainty in the Russian domestic political system.]
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We are witnessing a significant increase in bilateral trade, which has been growing by one-third every year for two consecutive years now. Considering the dynamic expansion of our economic exchanges, this year we will be able to achieve, before the deadline, the goal set by the heads of our states to reach $200 billion in Russian-Chinese trade by 2024.
It is gratifying to know that we are achieving these impressive results by transitioning to a broader use of national currencies. Over the past two years, the share of the ruble and the yuan in bilateral payments has grown from 25 percent to 80 percent.”
Comment: After factoring “indirect trade” that is nominally destined for Belarus or Central Asia, China-Russia trade figures for 2023 will likely be much higher than $200 billion USD.
China seeks mutually beneficial cooperation with Russia — vice-premier – TASS
China seeks to deepen mutually beneficial cooperation with Russia with a focus on high-quality development, Zhang Guoqing, the Vice Premier of the State Council of the People's Republic of China, has said.
"We are ready together with Russian colleagues to deepen mutually beneficial cooperation," he said at a meeting with Russian President Vladimir Putin at the 8th Eastern Economic Forum in Vladivostok.
Beijing is ready to act together, "to share development opportunities," Zhang stressed.
2. The People’s Daily’s Russia section returns amid the Eastern Economic Forum
Xinhua News Agency, Vladivostok, September 8 (Reporters Chen Chang and Liu Kai). “On the 3rd of this month, [Comment: This article was published on September 11th, probably to align with the other articles published amid the Eastern Economic Forum] Russia ushered in its first "Anti-Japanese Militarism War Victory Day and the End of World War II Memorial Day" grand commemoration event. This anniversary was renamed from the "End of World War II Memorial Day" and was widely supported by all walks of life in Russia, saying that the name change was intended to urge Japan to face up to its history.
Analysts pointed out that Russia’s establishment of the “Anti-Japan Militarist War Victory Day” is not only a symbolic measure to counter Japan’s imposition of sanctions against Russia following the West, but also indicates that tensions between Russia and Japan will continue to rise amid complex historical issues and contemporary conflicts.”
新华社符拉迪沃斯托克9月8日电（记者陈畅 刘恺）本月3日，俄罗斯迎来首个“反日本军国主义战争胜利纪念日暨二战结束纪念日”，俄各地举行隆重纪念活动。这一纪念日由“二战结束纪念日”更名而来，俄各界广泛支持，称更名旨在敦促日本正视历史。
分析人士指出，俄设立“反日本军国主义战争胜利纪念日”既是对日本跟随西方对俄实施制裁进行反制的象征性措施，也预示俄日紧张关系在复杂的历史问题和现实冲突背景下继续升级的趋势。
Comment: The article doesn’t mention that the Soviet Union didn’t enter the war in the Pacific until August 8th, 1945, two days after the atomic weapon was dropped on Hiroshima. Today (September 17th) is also the 84th anniversary of the Soviet Union’s invasion of Poland in 1939, after Stalin signed the Molotov-Ribbentrop Pact in August 1939.
“Kazakhstan Deputy Prime Minister Nurtreu recently stated that Kazakhstan is committed to becoming a regional logistics and transportation network hub, vigorously developing existing logistics and transportation corridors, actively opening up new transportation routes, and expanding the scale of cargo transportation. In recent years, Kazakhstan has continuously tapped its logistics and transportation potential and achieved results in many fields.
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By 2025, Aktau Port will also establish a container hub, with annual throughput increasing from 40,000 TEU to 202,000 TEU. The Salza Water Transport Terminal will also be built in Kulik Port, and will be supported by a grain terminal and a bulk cargo terminal.”
Comment: It’s worth noting that this article was published under the *Russia* section of the People’s Daily, even though Russia isn’t mentioned in the article. Aktau Port would also be a node in the “Middle Corridor” that would enable Europe-China rail trade to bypass Russia, although it remains unclear if this route will ever materialize.
"[The BRI] made me realize that Central Asia can become a regional logistics, transportation and cultural exchange center." O'Donnell said that the joint construction of the "Belt and Road" initiative allowed her to see the potential and future of Central Asia. "This initiative provides an opportunity and platform for all parties to have in-depth dialogue, allowing us to view this land from a new perspective, thereby forming our development advantages."
Comment: Again, it’s worth noting that this article was published under the *Russia* section of the People’s Daily, even though Russia isn’t mentioned in the article. The PD appears to be signaling that BRI developments in Central Asia will be undertaken in cooperation with Moscow.
“The first Russia-China Mutually Beneficial Cooperation "Sprout" Forum concluded on the 8th in Kazan, the capital of the Russian Republic of Tatarstan. Participants discussed how to tap the potential of local cooperation between China and Russia and help improve the quality and upgrading of bilateral practical cooperation.”
3. Putin’s comments on China at the Eastern Economic Forum
Vladimir Putin’s address at the plenary session of the 8th Eastern Economic Forum – The Kremlin
“Plans call for connecting the Sila Sibiri (Power of Siberia) and Sakhalin-Khabarovsk-Vladivostok gas pipelines and then for including them in the country’s integrated gas supply system. That will resolve – I dare say – a historical and global task for our country: to integrate the Russian western and eastern gas distribution networks into one.
Together with the construction of Sila Sibiri-2 [Power of Siberia-2], it will allow us not only to work flexibly on the global energy markets, which is relevant today, as we know, but also to significantly expand the programme to connect communities in Buryatia, the Trans-Baikal Territory and other Far Eastern regions to the gas distribution system and provide the local industries in the Far East with additional resources and local cities and villages with environmentally clean fuel. The capacities of the LNG terminal, which has already been built by one of our companies, will be used to connect Kamchatka to the gas distribution network,
This sector is developing actively, including in the Arctic. After the successful launch of the Yamal LNG project, a new major project has been started to build an LNG terminal in the Arctic: the first technological line of the Arctic LNG 2 project. It has already been delivered to the production site, and the startup work is underway, am I right? That’s great.
Comment: Chinese companies have been actively involved in the formation of Arctic LNG 2.
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Ilya Doronov: I would like to ask about Chinese cars.
The import of Chinese cars has increased by 543 percent this year. According to forecasts, nearly half a million Chinese cars will be imported this year. Is there a danger that they will dominate our market and we will become dependent on the Chinese car industry?
Vladimir Putin: No, we are working on this project together.
Take the Great Wall cars, which started to be assembled somewhere near Moscow.
Ilya Doronov: Haval is assembled in Tula.
Vladimir Putin: Yes, in Tula. The governor has presented one to me.
It is a good car. We are developing our automobile industry. Thankfully, we are doing this increasingly more on our own basis, and we are increasing localisation. And soon Moskvich cars will be produced as well. The Moscow mayor told me recently how that project is progressing. And our Lada cars will be improved. We must do this on our own basis.
Of course, when we were assembling cars almost 100 percent from foreign parts, how was it our own production? We will increase localisation levels. Yes, it takes time, but it is the right thing to do from the point of view of developing the automobile industry in our country on our own foundation.
We are not going to close down completely, or engage in DIY business.
Did we make Aurus? We did.
Ilya Doronov: But how much is it?
Vladimir Putin: Yes. The price is high because they do not produce enough. Once it goes into serial production, the price will be cut in half. Yes, it takes time, but it will be our own development. It is about acquiring and restoring competencies, it is about taxes and jobs. I do not need to tell you that. Everyone knows what goes into it. But at the same time, we will cooperate with those who want to work with us.
Ilya Doronov: I will ask…
Vladimir Putin: Officials certainly must drive domestic cars.
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Ilya Doronov: Can we ask you to share a secret with us? You remember Xi Jinping’s visit …
Vladimir Putin: I never share secret information. How could you think otherwise? I used to work for the KGB, after all.
Ilya Doronov: I see. In that case, can you share an insight with us, if possible. Xi Jinping visited Russia, and we remember the video when you saw him off, and he said: we started change which has not been seen for the past 100 years. What did he mean?
Vladimir Putin: You know, we talked to each other one on one for four hours. There were so many nuances and details. All I can say is that in recent years we have indeed reached an unprecedented level in our relations. This applies to our interactions in all their aspects.
We had a meeting with the Chinese delegation today. Compared to our statistics, the Chinese’ statistics show an even greater volume of trade between our countries. We have every chance to maybe reach $200 billion in trade this year, even if I cannot be sure that we will succeed since it depends on various changing factors like price fluctuations or currency exchange rates, so we will have to wait and see how they effect it. But what matters here is that we are proactive in promoting our cooperation, rather than specific figures.
Indeed, we have reached a remarkable level in our relations on international security matters and in terms of coordinating our positions. We act in each other’s interests and seek to hear each other on many important issues. This means both listening and hearing, and responding at the government level, at the heads of state level, at the ministerial level, as well as in the contacts between security and military agencies and institutions. We have upgraded our cooperation and reached unprecedented heights in this regard.
But here is an interesting fact: We are not creating any military alliance or trying to use our friendship against anyone. Our friendship is designed to serve our people. This is the way for us to move forward.
Ilya Doronov: Everything seems great as far as our relations with China are concerned, but there are issues too. I have been talking to business leaders, and what have they been telling me? For example, China is not in a hurry to bring its manufacturing to Russia and mostly seeks to export more finished goods here. And we cannot say that China’s domestic market is completely open to our non-commodity goods. In addition, we do not see much appetite on the part of Chinese investors to use the tools the Russian equity market has to offer.
What is the problem here?
Vladimir Putin: You know, China is an independent country, and it prioritises its own interests. The same applies to Russia as it pursues its own interests.
It would be wrong to argue that we do not respond to each other’s requests. Let me cite a sensitive issue dealing with opening the Chinese market to our coal and mining companies. China too faces some challenges in the coal industry, and they also want their miners to supply their goods to the domestic market, but still, they opened their market to our coal producers, and this has been quite a substantial effort. Indeed, we have yet to reach an agreement on pork, but they have their own contracts, and the Government has been reluctant to interfere in these business dealings since these companies have long-standing ties. We must resolve the African swine fever issue. Do we face these challenges? We do. And we need to address them.
These are all current matters and work in progress, and we need to address them at the corresponding level. We are making progress on all these fronts, and I have no doubt that we will succeed in resolving the issues you mentioned.
However, we must do our part and demonstrate the advantages we have to offer. And our Chinese partners have been quite receptive to our initiatives. You said that they refrain from launching manufacturing in Russia, but have they not done just that over in Tula?
Ilya Doronov: A car plant.
Vladimir Putin: A car plant. So how can you say that they do not open any manufacturing facilities here? They do, in fact.
But they need to explore the market, assess the investment they are willing to offer and the potential returns, right? This means that we must address certain issues on our side to offer investors favourable terms.
We have been quite good in high technology, and the project to build nuclear power plants in China goes on, and there are quite a few of them, in fact. Of course, Russia is a leading provider in this sector with outstanding performance, both domestically and internationally. Our Chinese partners acknowledge this and offer us these projects and let us use these sites, despite the fact that they are developing their nuclear sector too. However, they have been willing to reach out to us since our proposals have their own competitive advantages.
For example, we need to reach common ground on the wide-body aircraft project. This is a challenging task, but we are making progress, even if the talks have been going on for quite some time now, but still, we must deliver. To give you another example, in helicopter manufacturing we have a clear competitive edge on the international market, but this has not prevented us from working with China. We will make heavy-lift helicopters – there is an agreement to this effect too. We have been working together in the space sector, and despite certain challenges we have some competitive advantages here as well. They are quite willing to work with us.
Once again, we must recognise that the People’s Republic of China has achieved a lot in high technology under the guidance of its current leader. It is our duty to talk this over with them, and this work is underway. We must understand how they can benefit from working with us in order to offer them favourable terms. This is normal business practice. The fact that it rests on a solid foundation of mutual trust cannot be underestimated. I am certain that we will move forward.
Ilya Doronov: You have mentioned high technology. You probably do not know that the Chinese shook up the United States when they produced a 7-nanometre chip on their own and used it in their new smartphones.
Vladimir Putin: This is not what got the Americans so scared. The United States is scared of China because it is home to 1.5 billion people, and this economy is making great strides in its development. This is what scares the US. It is a challenge for the United States – that much is for sure. Chips are also important, of course, but it is only part of the story.
4. Kyrgyzstan
“In many cases, dual-use goods that Kyrgyz and Kazakh firms send to Russia from the United States or Europe are delivered directly to Russian clients without going through Central Asia, multiple industry sources told RFE/RL.”
Comment: More on this soon.
“Enormous discrepancies in trade statistics with China for 2022 possibly indicate the persistence of smuggling: according to Chinese statistics, trade turnover with Kyrgyzstan amounted to over $15.5 billion, while Kyrgyzstan’s national statistics indicate around $4 billion. The whereabouts of the approximately $10 billion seemingly lost en route from China to Kyrgyzstan remain a matter of speculation.”
Until next time,
Joe Webster
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.