China and Southeast Asia 2023-2: Sino-Russian Relations and the War Against Ukraine

Since the beginning of Russia’s invasion of Ukraine, the China factor has always remained under the international spotlight. While China, driven by a very pragmatic interest, has been continuing to embrace and strengthen its strategic partnership with Russia, it has also been seeking to be seen as a neutral country to not damage its relations with the West, namely the EU and the US. While it is evident that Russia has embraced China, which provides economic, diplomatic, and financial lifelines, it has come with a significant cost that the Kremlin has no alternative but to pay. The cost of the Panda’s embrace is vividly reflected in Russia’s shrinking global outreach, most notably in Central and Southeast Asia. This article looks at both the benefits and the costs of China’s pro-Putin neutrality and argues that Russia’s shrank global role has resulted in China’s active push to absorb the Kremlin’s influence in the regions, at the cost of Russia’s continuous isolation.

1. The “Bright Spots” Penetrating Sino–Russian Relations in Times of War

“Holding together for warmth”[1] can arguably be one of the ways in Mandarin Chinese to describe China’s attitude toward Russia. The invasion of Ukraine and the chain reactions in its aftermath really added to the momentum for the two countries to huddle together to keep the economic and diplomatic warmth in their strategic condominium, in which China has found three “bright spots”.

Firstly, from the Chinese perspective, Russia is seen as an enormous neighbour, with whom China shares a colossal continental border. Unlike in the past, the border is now a source of stability that allows Beijing to divert its military resources to the principal strategic competition with the US and its allies in the maritime theatre. In view of this, it comes as no surprise that China, which is very much preoccupied with its own “stability preservation”[2], wants a stable autocratic regime in Russia as well and has no interest in its collapse. If those who come after Putin would turn Russia into a pro-US democracy and apply to NATO, it would be a genuine strategic nightmare for China. Therefore, keeping Putin’s regime afloat is a “bright spot” for China to prevent any sabre-rattling and unrest at its borders.

Secondly, Russia has, to some extent, been a like-minded authoritarian partner for China at the UN Security Council’s Permanent Five club. These are the only two authoritarian states inside the Council that have many overlaps on the global agenda, starting from the internet sovereignty to the peacekeeping operations and other issues where Russia and China find themselves aligned. Having Russia as a like-minded partner is quintessential. Both Xi’s and Putin’s worldview is informed by obsessive apprehensions against what they believe is the US strategy to not only maintain its hegemony, but also to make the world democratic and orchestrate colour revolutions to their respective regimes. Therefore, as China’s interests coincide with those of Russia, it is hardly surprising that China has abstained from a vote at the UN General Assembly for a resolution condemning Russia for its invasion of Ukraine and demanding immediate withdrawal. Complimentarily, China has been loathing unilateral sanctions imposed on Russia. It has been asking for the sanctions to be approved by the UN Security Council – the principal source of legitimacy in the international system. But given that the aggressor is a permanent member with a veto right, the Chinese claim seems to be rather inadequate.

Thirdly, the “brightest spot” in the Sino–Russian strategic condominium has been the enhanced economic linkages. China has been the major lifeline for Russia’s battered economy considering the US and its Western allies’ unilateral sanctions. The overall trade figures indicate that China–Russia bilateral trade rose to 173.5 billion euros in 2022, a record 34.4% increase. More profoundly, the newest Chinese customs data for the first 5 months of 2023 reveals that the sinification of Russia’s economy is on steroids again. Trade in January–May increased by 40.7% (Russia’s imports from China rose by 75.6%, while Russia’s exports to China grew by 20.4%). It is notable, however, that China’s opportunity to capitalize Russia’s heavily discounted exports, such as coal, has come at the expense of China’s commitments to the path of decarbonization and its climate goals of 2030 peaking and 2060 net-zero emissions – a widely overlooked consequence of the Russia–Ukraine war for China.

Nonetheless, what makes this “brightest spot” of the strengthened economic engagement even brighter for China is the swift yuanization of the Russian financial system. The share of Russian exports settled in yuan grew from 0.4% to 14% in the first 9 months of 2022. Concurrently, February 2023 was the first month in history of the Russian market when the Chinese yuan overtook the US dollar as the most traded currency. These changes in the Russian market accentuate not only Russia’s increasing dependence on the yuan, but more fundamentally a new reality: an unconvertible yuan becoming a regional reserve currency in Russia, thus increasing China’s monetary power and centering China in a regional financial architecture.

2. The Unveiling “Shadows” of China’s Engagement with Russia

Nevertheless, all the “bright spots” have their own shadows. Putin’s war has been an albatross around Beijing’s neck with the European Union, which remains China’s largest trading partner. Given that the US–China relationship has been venturing into the maelstrom after an infamous balloon incident coupled with US efforts to choke off China from critical supplies, access to European technology, markets, and finance has been a sine qua non of China’s economic prosperity and technological advancement. Therefore, China has been portraying itself as distancing from Russia and rhetorically stressing its ostensible neutrality underpinned by the mantra that China respects all countries’ sovereignty and territorial integrity.

However, China’s refusal to condemn Russia’s invasion of Ukraine and reluctance to impose Western-led sanctions on Moscow has ravaged its credibility and reputation across Europe. Indeed, the seeds of heightened suspicion and distrust of China have already been sown with the signing of a “no limits” partnership right before Russia’s invasion in Ukraine, demonstrating their deepening ties. China has been aware that the “no limits” partnership phrase – a pompous statement rather directed at the domestic audiences of both countries – perturbed the officials, decision makers, and experts who have never tracked the Sino–Russian relationship. Thus, being mindful of the economic growth imperative and clear-eyed that the pronounced “no limits” partnership undermined Beijing’s standing across Europe, China’s charm offensive began last year in earnest to rehabilitate its incurred huge reputational damage among the key European trade partners.

One of the highlights of China’s charm offensive has been China’s top diplomat Wang Yi’s European tour and his appearance at the 59^th Munich Security Conference (MSC) in February. Speaking at the Conference, Wang Yi urged for a resolution to the conflict in Ukraine, but he failed to read the room and went on to an un-charming charm offensive. Instead of mentioning what Russia could do to end its invasion, Wang Yi doubled down on the criticism of Washington. He called the US decision to shoot down the so-called Chinese spy balloon “mind-boggling and hysterical” and, in the context of the Ukraine War, stated that “some forces” do not want peace as they only care about their “strategic goals larger than Ukraine itself”, subtly referring to the US. Therefore, even though there have been vague talks of China supporting peace in Ukraine, it has mainly been dismissed and overshadowed by China’s self-centred, pragmatic interests, which have been reflected in China’s twelve-point position paper on Ukraine, released on the anniversary of Russia’s invasion.

Those who expected a peace formula for ending the war in Ukraine were largely disappointed. The position paper has not been geared toward restoring peace in Europe and has little to do with any real peace brokering and eventually ending the war in Ukraine. The paper has more to do with an attempt to provide a fig leaf for its escalating support for Russia, as well as to improve China’s image by portraying itself as a responsible global power and a peacemaker in contrast to America, which, according to China, is supporting the prolongation of the war. However, as much as China has been trying to profess its ostensible neutrality via the position paper, the Western leaders dismissed and criticized it with una voce not having much “credibility”, as it does not condemn the illegal invasion of Ukraine nor demand the withdrawal of Russian troops.

The Western leaders’ statement that China’s position paper is rather insignificant in terms of ending the war in Ukraine can be arguably substantiated by the most recent visits by Li Hui – China’s Special Representative on Eurasian Affairs – to Ukraine, Poland, France, Germany, and the EU headquarters in Brussels. Li’s visits, announced during the last Xi–Zelensky call, marked the first working-level dialogue between Ukraine and China since the war started. Nevertheless, China’s focus on visits has not been much about the Ukraine peace talks formula but rather about its own peace position paper, pointing to the need for a ceasefire, a way of recognizing the Russian occupation of Ukraine territory, and a return to peace talks. The fact that China is primarily concerned about its own interests has also been clearly reflected by the most recent China–Russia joint air patrol over the Sea of Japan and East China Sea, which followed right after Li Hui’s visits in Europe and greatly alarmed South Korea and Japan, prompting them to scramble for their fighter jets. Considering these developments, the position that China has been exhibiting so far is hidden in plain sight: China takes an iron fist with a velvet glove to subtly profess a rather pro-Russian neutrality, which hinders China’s efforts to woo European and Indo-Pacific countries to come into its circle of friends.

3. The Costs of the Panda’s Embrace: Russia’s Shrinking Global Reach

CENTRAL ASIA

Although Russia jumping into China’s arms allowed it to preserve its “lifelines” from an economic and diplomatic perspective, it has come at a significant cost. That is to say, the Kremlin’s obsessions with conquering Ukraine have left a vacuum in Central Asia, Russia’s traditional sphere of influence, thus putting a dent in Russia’s influence and giving way to China to step up its security and economic footprint.

Historically, the status quo has been Russia upholding the region’s military and political stability. For example, Kazakhstan’s President Tokayev invited Russian troops to quell popular protests and to restore the government’s control in January 2022. However, Russia’s faltering has created high levels of uncertainty with Russia’s future commitment, influence, and role in the region. Notably, Central Asian leaders have even voiced apprehensions over Russia’s belligerent behaviour. For example, Tokayev openly refused to recognize the Russian-controlled Donetsk and Lugansk as independent states, whereas Tajikistan demanded more “respect” from the Kremlin.

These new unfolding realities in Central Asia have thus led to China grasping the momentum and racing to court the region, in which China has been seen as a contributor to economic development for a long time. The most conspicuous display of China’s growing foothold in Central Asia has been exhibited at the most recent China–Central Asia Summit in Xi’an – the starting point of the ancient Silk Road, which facilitated the exchange of wealth and culture across the continent. At the Summit, China’s President Xi Jinping unveiled a grand development plan to help elevate Central Asia to the next level of its development – from building infrastructure networks to boosting trade – and underlined that “the world needs a Central Asia that is stable, prosperous, harmonious, and interconnected.” Indeed, the trade numbers with the five Central Asian countries have been truly encouraging. From January to April 2023, China’s trade with the region amounted to around 23 billion euros, a year-on-year increase of 37.3%, setting a new record.

Interestingly, Central Asia leaning towards a greater dependence on China can be seen as potentially attracting more followers. Armenia, for example, has already hinted that it could withdraw from the Moscow-led Collective Security Treaty Organization (CSTO) as an expression of discontent over the lack of support from its ally Russia in the face of military threats from Azerbaijan. Therefore, as a growing vacuum is now being left because of Russia’s vanishing influence, the main question for Beijing is to what extent it will step in and fill it. This development should be closely scrutinized for the years to come considering that Central Asian countries continue to show loyalty to Putin, for example by attending Moscow’s Victory Parade on May 9 and periodically praising Moscow in public speeches, thus somewhat leading to a conclusion that their own interests, paramount of which is the preservation of their own regimes, is a determining factor in whether to engage more with Russia or China.

SOUTHEAST ASIA

While Russia’s influence in Central Asia – Russia’s self-claimed backyard – is often under the media’s radar, the Kremlin’s ambitions in Southeast Asia are nevertheless interesting. In the last decade, the Sino–US strategic rivalry in the region noticeably intensified and Russia, whose reputation and credibility greatly suffered since the 2014 annexation of Crimea, identified a potential void that can be filled: Russia as a 3^rd power in Southeast Asia that could provide a “middle ground” for the countries that are trying to avoid choosing either side.

In light of the pivot to Asia, Russia’s ambitions surfaced at the start of Putin’s third presidential term; in December 2013, he announced that “Russia’s reorientation toward the Pacific Ocean and the dynamic development in all eastern territories are our priority for the whole 21^st century”. Up until the invasion of Ukraine, its Eastward policy’s results were minuscule; however, the war has forced Russia to accelerate its orientation towards Southeast Asia. In the Concept of the Foreign Policy of the Russian Federation, approved on 31 March 2023, the Southeast Asian region, namely the ASEAN bloc, is given significant attention and, in terms of prioritisation, only lags behind China and India. However, while Russia’s partnership with China has brought life support in the wake of an ongoing war, the embrace of Beijing is also casting a shadow on Russia’s ambitions in Southeast Asia.

Despite carefully calculated statements of concern by the ASEAN bloc at the beginning of Russia’s invasion of Ukraine, the attitudes are changing. Given the results from the 2023 Southeast Asia Survey Report released by the Singapore-based ISEAS-Yusof Ishak Institute, it is clear: the region, which has initially shown indifference to the war in Ukraine, is finally realizing the seriousness and long-lasting effects of the conflict. As indicated by the survey, over 82.9% of respondents are “very concerned” or “somewhat concerned” with the war in Ukraine (the highest number is 93.9% in the Philippines, while the lowest is 58.9% in Laos).

While this realization of seriousness is now shared among the ASEAN members, there still seems to be support for careful positioning and a willingness to distance themselves from a direct condemnation: 51.6% of respondents either “strongly approve” or “approve” of their government’s position in response to Russia’s invasion. But a closer look indicates deeper internal divisions that are related to public (dis)satisfaction with the current government: for instance, 70.9% of Cambodians strongly approve their official position, while in Thailand this figure merely reaches 4.2%.

Southeast Asia’s cautiousness and, perhaps, fear of secondary sanctions (that could be applied through the US Countering America’s Adversaries Through Sanctions Act), has forced countries to distance and/or limit their interactions with Russia. Perhaps the most painful change for Russia is related to the almost collapsed arms sales in the region, which was already slowly declining even before the invasion. According to Ian Storey, the factors influencing such transformation since the war in Ukraine can be accredited to a) fear of sanctions and tough export controls, b) reputational damage and the unclear future of Russia’s defence industry, and c) China factor (especially due to extremely elastic economic relations with the countries of the region). How might China capitalize on Russia’s weakened position in Southeast Asia?

1. Filling the gap in Arms Sales

In Southeast Asia, Russia’s closest partnerships are with Laos, Vietnam, Malaysia, Indonesia, and Myanmar, all of which are ASEAN members. Historically, one of the key cooperation fields with the region were arms sales. As stated by Jibiki and Ogawa based on statistics from the Stockholm International Peace Research Institute, between 2010 and 2019, Russia produced 28% of the arms in terms of value procured by ASEAN members (up from 24% between 2000 and 2009). In contrast, the US’ position sank from 23% to 18%, while China’s share, which more than doubled between the two decades, still lags far behind Russia at roughly 8% in this time period.

However, Russia’s invasion in Ukraine has dealt a significant blow when countries began to cancel orders and seek alternative suppliers: for instance, in July 2022, the Philippines refused to purchase 16 Russian Mi-17 military transport helicopters.

While China’s ability to fully replace Russia as a major arms supplier for the region is ridden with obstacles, mainly regarding potential backlash from Washington, regional countries are nevertheless actively seeking new alternatives, and an interest in the rapidly advancing Chinese military industry is evident. China is aware of this renewed interest: after its self-imposed isolation due to the pandemic, China is back with the fun fares. During the LIMA 2023, a major arms expo in Indonesia, China’s renewed interest in actively marketing its arms is evident: China had set up both military platforms of the PLA and most of the large Chinese state-owned defence conglomerates. Furthermore, China has also exhibited its new J-10C fighter jets and Type 052D destroyer Zhanjiang (only commissioned one year ago!) abroad for the first time. However, this newest attempt to woo regional countries is yet to provide tangible results.

2. Strengthening ties with ASEAN

While Russia’s ties with the region are beginning to crack, China has shown a renewed interest and activeness in promoting China–ASEAN ties in all spheres. In 12 April 2023, China–ASEAN upgraded their Free Trade Agreement, and a little earlier, China and ASEAN announced the establishment of the Comprehensive Strategic Partnership. In addition to this, as reported by the Australian Institute of International Affairs, trade in regional currencies is increasing at a faster phase in order to reduce reliance on the US dollar. More ASEAN countries are also showing interest in dual-currency use in their trade with China, which would result in higher yuanization in the region. Furthermore, Beijing is well aware that the fundamental problem in its relations with several ASEAN countries is related to territorial disputes in the South China Sea; therefore, China has shown a surprising interest to deal with the issue by pushing to accelerate consultations with ASEAN on the formulation of the South China Sea Code.

3. China and the region’s food security

According to 58.3% of respondents in the ISEAS survey, the most serious impact of Russia’s invasion of Ukraine was identified as “increased energy and food prices”, with this number being the highest in Indonesia (73.6%) and lowest in Brunei (38.3%). In the food security sphere, the challenges are significant: Southeast Asian nations are highly dependent on external sources of fertilizer (in 2020, Indonesia, the Philippines, Myanmar, and Thailand imported more than 80% of their fertilizer) and Russia, Belarus and China all hold significant roles. Indonesia, Vietnam, Brunei, and Malaysia were most exposed to the effects of the Russia–Ukraine war, as more than 20% of their fertilizer supply was imported from Russia and Belarus (Indonesia: 31.76% from Russia and Belarus in 2020, Vietnam: 27.94%).

While Russia and Belarus were uncrowned from their positions as reliable suppliers, China has increased its activeness to address this food security problem in which it sees potential benefits. As emphasized by China Daily, China and ASEAN greatly deepened their agricultural cooperation in the last few years and “China’s agricultural investment in ASEAN countries account for 40 percent of its total overseas investment in the sector”. In January, the Philippines secured a fertilizer deal with China to ensure food security and a sustained supply of fertilizer. Early this year, China and Laos signed MoU to build potash fertilizer industrial park which, according to the Chinese general manager, “is a platform for Laos to seize development opportunities and undertake the transfer of global industrial chains and supply chains amid world economic uncertainties and geopolitical conflicts”. Other countries, however, turned to domestic production: Thailand is set to revive a potash mining project to address global market volatility. Nevertheless, fertilizer trade with China is expected to increase.

4. Looking Ahead: Unequal Sino–Russian Friendship with Limits

Due to the conspicuous display of the growing power asymmetries between China and Russia, a narrative that has emerged in recent years is that of Russia as the junior partner to China. Indeed, the most well-known asymmetry has been on the economic level – the discounted access for China to the Russian market. However, there have been more subtle and often overlooked asymmetries in terms of symbols and global influence. For example, Xi’s signed article, which was published ahead of his state visit to Russia, was put on the front page of the Russian newspaper “RIA Novosti”, whereas Putin’s article was not even on the first pages of China’s newspaper “People’s Daily”. This indicates that Xi was given much more prominence than Putin when it comes to the communication with each other’s audience. However, this should come as no surprise. Whether it would be via domestic newspapers or in other ways, Russia wants to publicly show that it is not alone and isolated as China is behind them.

Nonetheless, fully embracing China has come with significant costs, further producing another stark asymmetry: Russia’s deteriorating global influence being supplanted by China to some extent. Indeed, Russia is slowly losing its strategic momentum in Central and Southeast Asia amidst Western sanctions strangling its economy and future perspectives. This has thus paved the way for China to strengthen its dominance in shaping security, financial and economic architectures and making the Kremlin’s objectives less attainable in both regions.

With that said, these asymmetries fundamentally unveil the bottom line of Sino–Russian relations in the context of the war in Ukraine going forward: Russia becoming substantially entrenched into a dependency on China for the medium-to-long term, thus putting a dark thick curtain on Russia’s long-held vision of being a 3^rd power and an alternative to China and the US. These are the prices that Russia is willing to pay considering its obsession with the war in Ukraine. And, even though amidst all of Russia’s setbacks it could be cast as a junior partner to China, it is better to think of the optionality term when looking ahead. Unless the war in Ukraine is concluded, China will continue to have many varied options commercially, financially, and diplomatically, while Russia will be in a poverty of these options as it has been until now. Therefore, the defining feature of Sino–Russian relations for the year to come and an asset in Beijing’s quest for regional and global power will be the increasing asymmetries largely stemming from China having the optionality and leverage over Russia.

[1] 抱团取暖 bàotuán qǔnuǎn.

[2] 维稳 wéiwěn.