The Xi – Putin phone call and bilateral trade
Navalny reportedly murdered on eve of prisoner exchange
As The Report went to press, Alexei Navalny’s team claimed to Politico Europe that he was murdered on the eve of a prisoner exchange. Russian forces are advancing on the battlefield, albeit at tremendous human cost.
It’s clear that the Kremlin feels emboldened. So much depends on ensuring Ukraine has the tools to defend itself.
Table of contents:
1) Bilateral political ties
2) Russia Corner
3) Cyber and Critical Infrastructure
4) PRC perspectives on the U.S. Presidential election
5) Chinese energy corner
1) Bilateral political ties
Xi Jinping emphasized that the two sides should intensify strategic coordination, safeguard their respective national sovereignty, security, and development interests, and resolutely oppose interference in internal affairs by external forces.
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Putin said that this year marks the 75th anniversary of the establishment of diplomatic relations between Russia and China. With the joint efforts of both sides, Russia-China relations have reached an unprecedented high level. Last year, Russia-China cooperation in various fields yielded fruitful results.
习近平强调，双方要密切战略协作，捍卫各自国家主权、安全、发展利益，坚决反对外部势力干涉内政。
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普京表示，今年是俄中建交75周年。在双方共同努力下，俄中关系达到前所未有的高水平。去年俄中各领域合作成果丰硕。
Comment: There was no mention of direct bilateral trade totals in the Chinese readout, likely to avoid reminding the West of bilateral ties.
Telephone conversation with President of China Xi Jinping – The Kremlin [February 8th]
The presidents summarised the latest results in developing the overarching Russia-China partnership and strategic cooperation. They reaffirmed that the neighbourly links between our countries are at a historically high level. They stressed, with satisfaction, that bilateral trade exceeded $200 billion a year ahead of the goal set by the leaders, reaching a record of $227.7 billion.
Comments: What’s going on with the bilateral trade totals? Per Chinese customs data, total direct bilateral trade in 2023 stood at $240 billion – not $227.7 billion, as the Kremlin reports here. The two sides should theoretically report identical trade flows. The discrepancy is likely due to Russian importers underreporting Chinese shipments, in order to evade tariff penalties.
Russia historically underreports bilateral relative to China (i.e. in 2021, China reported $147 billion in trade, while Russia claimed $141 billion).
Still, it’s likely that Russian customs officials are, in many instances, turning a blind eye to tariff evasion, with the implicit support of the central authorities. Many Chinese exports bound for Russia are also routed through Central Asia and other cutouts.
Also notice that Putin characterized ties as at a “historically high level.”
Putin, Xi sum up expansion of Sino-Russian comprehensive partnership —TASS [February 8th]
Russian President Vladimir Putin and Chinese President Xi Jinping summed up the development of comprehensive partnership between the two countries over the recent period in a telephone conversation, the Kremlin’s press service said in a statement.
"Heads of states summed up the development of Sino-Russian comprehensive partnership and strategic cooperation over the recent period," according to the statement.
It was stated again during the conversation that friendly ties between Moscow and China "are at an unprecedentedly high level," the statement said.
Comment: TASS says that ties are at a an unprecedentedly high level, while the Kremlin says they are at a historically high level. There’s an important distinction here (at least in English). “Unprecedently high” clearly expresses that ties have never been better, while “historically high” implies that support is very elevated but not necessarily without precedent. Translation issues may be at play.
China and Russia share extensive common interests, and mutually beneficial cooperation continues to gain momentum. In 2023, China and Russia exceeded the trade goals set by the two heads of state ahead of schedule, with the annual trade volume exceeding US$240 billion. China has been Russia's largest trading partner for 14 consecutive years. It is Russia's largest source of imports of mechanical and electrical products, and Russia's largest export destination of beef and seafood. China-Russia cooperation on large projects in the fields of energy, aerospace, science and technology has been steadily advancing, and trade settlement and logistics channels have become smoother and more convenient. The practical cooperation between the two countries is basically stable, highly valuable and highly complementary, and is a solid support and strong boost for each other's development and revitalization.
Comment: Notice that Zhang spells out annual trade volumes, whereas Xi did not.
Finally, there was an interesting divergence in the two sides’ characterization of bilateral political ties.
The Chinese side said that bilateral relations have reached an “unprecedented high level,” in a rhetorical continuity with messaging apparently first developed in the summer of 2021. Putin, meanwhile, stated that ties are at a “historically high level” – rhetoric he has used before, including at the 3rd Russian-Chinese Energy Business Forum on November 29, 2021.
Comment: It’s not clear if the divergence between “unprecedently high” and “historically high” is due to sloppy work from Kremlin translators or something else.
Foreign Ministry Spokesperson Mao Ning’s Regular Press Conference on February 21, 2024 – PRC MFA
“You mentioned that Russia might deploy nuclear weapons in space. I noted that Russia has made a response, emphasizing that Russia remains opposed to the deployment of nuclear weapons in space and urges everyone to adhere to all the agreements that exist in this sphere. China’s policy and position on relevant issue are consistent and clear.”
2) Russia Corner
Russia still maintains the strategic objective of bringing about the subjugation of Ukraine. It now believes that it is winning. Surrender terms currently being proposed by Russian intermediaries include Ukraine ceding the territory already under Russian control along with Kharkiv, and in some versions Odessa; agreeing not to join NATO; and maintaining a head of state approved by Russia. The only significant concession Russia proposes is that what is left of Ukraine can join the EU.
“The share of friendly countries in Russia’s foreign trade totaled over 75% in 2023, with Moscow having fast refocused supplies from the West to the East, Secretary General at ICC (International Chamber of Commerce) Russia Tatiana Monaghan said.”
The surprising resilience of the Russian economy – FT
Heavy public spending on defence has led to a rebound in growth but could also be storing up problems for the near future
In Moscow's Shadows 135: Navalny in the late Soviet Union – Mark Galeotti
Putin said that in the face of unprecedented external pressure, Russia and Belarus have cooperated closely on the world stage and have consistently provided each other with practical ally support; the two countries will be committed to building a democratic and fair multi-polar world order. Lukashenko said that the total trade in goods and services between the two countries reached approximately US$54 billion last year, a record high. This was largely the result of the implementation of relevant laws and regulations by the two countries in the past three years.
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Russia and Belarus signed the Treaty on the Establishment of the Russian-Belarus Union State on December 8, 1999, which stipulates that the two countries will establish a confederal state while maintaining their respective national sovereignty, independence, and national systems.
Comment: Russia’s ties with Belarus could move to center stage, again, after the invasion of Ukraine is resolved one way or another. Interesting that the PD underscored Belarus’ sovereignty, as the PRC MFA has occasionally included Belarus updates under its embassy in Russia.
Among the approximately 315,000 signatures of supporters submitted by Putin’s campaign headquarters, the Central Election Commission randomly selected 60,000 signatures for verification. The results showed that 91 signatures were invalid and complied with the relevant regulations for registering as a candidate for the presidential election.
Comment: A rather dry article, but noteworthy because it was included in the PD’s section on Russia, which returned in late January/early February after a 3 month absence.
The Spy War: How the C.I.A. Secretly Helps Ukraine Fight Putin – NYT
In 2015, Gen. Valeriy Kondratiuk, then Ukraine’s head of military intelligence, arrived at a meeting with the C.I.A.’s deputy station chief and without warning handed over a stack of top-secret files.
That initial tranche contained secrets about the Russian Navy’s Northern Fleet, including detailed information about the latest Russian nuclear submarine designs. Before long, teams of C.I.A. officers were regularly leaving his office with backpacks full of documents.
Comment: The article also includes claims that Ukrainian security services hacked Chinese spy satellites.
3) Cyber and Critical Infrastructure
The United States Needs a New Way to Think About Cyber – Emily Harding of CSIS for Lawfare
Also at the end of the year, the National Security Agency and cybersecurity researchers raised renewed alarm about China’s Volt Typhoon group, which continues to burrow stealthily into U.S. water, power, and port systems. Put bluntly, this access could give Beijing the capability to severely disrupt daily life, particularly around the U.S. military bases that would serve as the launching pads for U.S. troops in a Pacific fight, like the 14 bases in Hawaii or the more than 30 in California, including Naval Base Coronado, West Coast home of the Navy SEALs.
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With regard to China’s attacks, security firms likely found only a small percentage of embedded Chinese code. Imagine that the United States finds itself needing to deploy rapidly to defend an ally in the Pacific, but the base on Guam has no power, Hawaii’s traffic system is haywire and water systems are nonfunctional, and unexplained blackouts in Texas require intervention from the Federal Emergency Management Agency and the president’s attention.
The NSA has been warning since May that a Beijing-sponsored group known as Volt Typhoon has been targeting critical infrastructure networks, including power grids, as part of its activity.
Across U.S., Chinese Bitcoin Mines Draw National Security Scrutiny – NYT
Microsoft reported one site in Wyoming because of its proximity to a data center and nuclear missile base. Records show other cryptocurrency facilities have ties to the Chinese state.
Chinese Hacking Against U.S. Infrastructure Threatens American Lives, Officials Say – WSJ
U.S. officials say Beijing is preparing to set off potentially damaging cyberattacks in any future conflict, including over Taiwan
4) PRC perspectives on the U.S. Presidential election
Political polarization continues to tear America apart – People’s Daily [Chinese-language]
“The two parties have different attitudes towards immigration, but in fact they have their own political considerations. Hispanics and other ethnic minorities who make up the majority of immigrants in the United States have traditionally been supporters of the Democratic Party. Naturally, the Democratic Party places more emphasis on protecting the rights of immigrants and helping them integrate. The Republican Party does not want an influx of immigrants to "dilute" its votes and prefers to forcefully crack down on illegal immigration.”
两党对待移民的态度不同，实则各有政治考量。构成美国移民主体的拉美裔等少数族裔传统上是民主党支持者，民主党自然更强调保护移民权利、帮助移民融入。共和党不希望移民涌入“稀释”其选票，更倾向于强力打击非法移民。
5) Chinese energy corner
China's PV industry sees accelerated development, expanded overseas market – People’s Daily
Building overseas factories has become a prominent trend in the Chinese PV industry over the past two years. TCL Zhonghuan Renewable Energy Technology Co.,Ltd. is actively promoting the investment and construction of a solar crystalline wafer factory in Saudi Arabia. JA Solar plans to invest approximately 2.7 billion yuan to build a 5-gigawatt high-efficiency battery project in Vietnam. Canadian Solar has established a 5-gigawatt PV module production facility in Texas, United States.
Comment: Note that the PD claimed Canadian Solar as its own. There has been some controversy around the company’s ties to China.
Raimondo Warns Chinese EVs Pose National, Data Security Risks – Bloomberg
White House weighing data security order and more EV tariffs
Commerce chief draws parallel between autos, semiconductors
Moscow supports idea of meeting between Russian, Chinese, Mongolian premiers – TASS
He also noted that Moscow places great significance on promoting the project for building a transit gas pipeline from Russia to China via Mongolian territory. "We proceed from the premise that this important Mongolian initiative is mutually beneficial and responds to the interests of all partners," the Russian deputy foreign minister concluded.
Russia, China actively negotiating contract on gas supplies via Power of Siberia-2 — Novak – TASS
Moscow and Beijing are actively negotiating a contract for supply of gas to China via Power of Siberia-2 now, Russian Deputy Prime Minister Alexander Novak said.
"Active negotiations are underway," he told reporters.
Comment: “Active negotiations” have been underway since 2014 and are likely to remain that way.
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: he alone is responsible for the entirety of its contents.
Stephen Bleistine assisted with the compiling of this edition.
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.