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The Guardian - UK
The Guardian - UK
World
Andrew Roth, Amy Hawkins and Pjotr Sauer

Putin and Xi’s ‘no-limits’ friendship will be put to the test on state visit to China

Vladimir Putin and Xi Jinping shake hands while smiling
Vladimir Putin and Xi Jinping, the presidents of Russia and China, in October. They will meet in Beijing this week to discuss trade. Photograph: Sputnik/Reuters

Having secured a mandate to extend his rule of Russia to three decades, Vladimir Putin has arrived in Beijing on a state visit to meet Xi Jinping intended to shore up his most important international relationship.

The two men toasted their “no-limits” friendship in February 2022 – meant as a counterweight to the global influence of the US. That partnership has increasingly come under pressure as the Biden administration sought to isolate Russia from its Chinese lifeline after the full-scale invasion in Ukraine, which began later the same month.

But as the Biden administration unveiled tariffs on $18bn of Chinese imports on Tuesday, the strength of Xi and Putin’s relationship, based on a mutual opposition to a Washington-led global consensus, is likely to be bolstered this week.

Xi and Putin will gather with policy teams specialising in trade, energy and security cooperation. The two sides will be looking for ways to quietly circumvent US restrictions that have driven down Chinese exports to Russia following a postwar boom in both consumer products and dual-use goods that have been crucial to the Russian war machine in Ukraine.

Analysts in China and Russia said that while Beijing would prefer a quick end to the fighting in Ukraine, it would nonetheless tolerate the war and continue to prioritise trade and diplomatic relations with Moscow over the west while seeking to extract favourable conditions for greater trade and economic ties.

Russia, which has signalled it is unwilling to abandon the war, will become increasingly dependent on China as a trade partner and as a key diplomatic ally in its deepening conflict with the west.

In an interview with Xinhua state news agency released on Wednesday, Putin praised economic ties between the two countries, saying: “Today, Russia-China relations have reached the highest level ever, and despite the difficult global situation continue to get stronger.”

“If this is an existential war, then what are their other options?” said Alexander Gabuev, the director of the Carnegie Russia Eurasia Center. “There is no other China than China. Only China can bring in all this technology, from washing machines and cars to military-grade chips. Only China can provide its financial system and currency. Only China has this side of the market for all of these goods. India stands close to this, but China is bigger. And then there are the logistics. So there is simply no replacement.”

Yet US sanctions and Chinese fears of secondary sanctions have taken a toll, with a clear dip in Chinese exports after US threats in December to impose sanctions on any bank clearing payments for goods used in Russian military production.

Observers have noted that Chinese exports to Russia have dropped significantly in recent months after more than two years of booming bilateral trade since Russia invaded Ukraine in February 2022. Chinese exports to Russia fell to $8.3bn in April, according to preliminary statistics, a drop of nearly 14% compared with April 2023. In the first four months of 2024, exports fell by 2% in US dollar terms, although overall bilateral trade was still up by nearly 5% compared with 2023.

Shen Dingli, an international relations scholar based in Shanghai, said that the drop in Chinese exports to Russia “could be active risk aversion by Chinese companies in the face of US and western financial sanctions”.

Analysts in China and Russia told the Guardian that the two sides will look to resist US pressure to disengage from one another and will seek to find workarounds that could allow them to continue to expand trade away from the watchful eye of the US.

“When it comes to economics, the most critical question is the payment issue,” said Alexey Maslov, director of the Institute of Far Eastern Studies at the Russian Academy of Sciences.

China’s major banks are throttling payments out of concern over US sanctions, Maslov said, and Russia has proposed to solve the issue via a decentralised payment system that the west would be unable to track. “Both sides will look for sanctions-proof mechanisms going forward,” said Maslov.

Alexandra Prokopenko, a fellow at the Carnegie Russia Eurasia Center and former adviser to the Russian central bank, wrote that the teams would probably use the summit to brainstorm options to circumvent US restrictions before quietly implementing them, potentially developing tools that could be used by other countries seeking to evade US restrictions on trade.

“It is unlikely that we will hear statements as to how they plan to solve the sanctions given the sensitivity of the subject, it will just be quietly implemented,” said Vasiliy Kashin, a China specialist from the Center for Analysis of Strategies and Technology, a Moscow-based research group. “The drop in trade is likely to be just temporary, American efforts will turn out to be somewhat pointless. It is wishful thinking that China will just accept US pressure.”

China officially opposes US sanctions but in reality, banks and companies often find ways to comply so as to avoid encountering blowback from the US or being blocked from US dollar payments. One way to circumvent the restrictions is to trade through third countries.

Chinese exports to central Asian countries have surged since the start of the war in Ukraine. Compared with 2021, exports in 2023 to Kyrgyzstan, Kazakhstan and Tajikistan were up 164%, 77% and 118% respectively. Joseph Webster, a senior fellow at the Atlantic Council, has noted that dual-use technology in particular has seen an increase in trade through central Asia. In 2023 Kyrgyzstan’s imports of Chinese ball bearings, which can be used in tank production, rose by more than 1,500% compared with 2021. “There is no apparent legitimate reason for this dramatic surge,” Webster wrote, adding that the ball bearings are “almost certainly diverted to Russia”.

Russia also hopes to address its declining gas exports, which have plummeted since its invasion of Ukraine, resulting in record losses for Gazprom, once the country’s most profitable company. But observers question whether Moscow and Beijing will be able to finalise an agreement on the Power of Siberia 2 pipeline, a long-anticipated project that would supply China with Russian gas.

To bolster the Kremlin’s efforts at outreach, Putin is bringing an expanded team of advisers and industry leaders to Beijing. Gabuev noted that Putin’s team includes a number of seasoned technocrats that he called the Russian “A-Team”.

They include his new defence minister, Andrei Belousov, a veteran economist and former counterpart to Ding Xuexiang, a close ally of Xi and a member of the politburo standing committee, and Denis Manturov, a deputy prime minister acting as a point man for Russia’s military-industrial complex. Putin will meet with Chinese premier Li Qiang, to discuss economic cooperation.

Gabuev said: “They have invested a lot of effort to really get the teams acquainted, establish personal bonds, make them friendly. And now the Russian officials are not pulled in a thousand different directions because of Europeans and Americans because nobody talks to them.”

But Putin still holds some cards in the relationship with Beijing. Shen noted that Russia remains an important source of food and energy for China, as well as “strategic collaboration” on the international stage.

In his Xinhua interview on Wednesday, Putin said the two countries were working to build “equal, mutually beneficial economic and humanitarian cooperation, and strengthen foreign policy coordination in the interests of building a just multipolar world order.”

Webster said: “Meeting with Putin in Beijing allows Xi to hint that he might respond to western actions asymmetrically, such as by extending even greater semi-overt support for the Russian defence industrial base.”

That signalling is particularly acute under the shadow of the new Biden tariffs, which extends the Trump-era trade war. Trump introduced levies on more than $300bn of Chinese imports; Biden added $18bn of goods to that total this week. Tariffs were extended or introduced on a range of strategic sectors, including solar panels, electric vehicles and semiconductors. On EVs, rates were hiked from 25% to 100%.

All this prompted outrage from Beijing. Wang Wenbin, a foreign ministry spokesperson, said it was a “naked act of bullying”.

The ‘no-limits’ friendship between Putin and Xi

  • Putin’s relationship with Xi first took shape in May of 2014 when the Russian leader travelled to Beijing for a two-day state visit to discuss a major gas supply deal. The visit came on the heels of Russia’s annexation of Crimea, causing Moscow to be shunned by much of the western world.

  • Xi promptly returned the favour by visiting Moscow and sitting alongside Putin during the city’s Victory Parade, which celebrates its win over Nazi Germany. The parade was boycotted by western leaders as Russian-backed rebels seized territory in eastern Ukraine.

  • In the autumn of 2018, both countries celebrated their newfound military cooperation as China participated for the first time in large-scale strategic drills hosted by Moscow.

  • At the height of the US-China trade war in 2019, Xi flew to Moscow and praised Putin as his “best friend”. During the visit, the Kremlin announced that trade between Russia and China grew almost 25% over 2018. Xi ended the trip by giving Putin two pandas for the Moscow zoo.

  • Weeks before Putin sent his troops to invade Ukraine on 24 February 2022, the Russian leader flew to Beijing where the two leaders famously celebrated their “no-limits” friendship.

  • In an unmistakable show of support for Putin after his decision to invade Ukraine, Xi travelled to Moscow in the spring of 2023. Amid Moscow’s increasing isolation from the west, the three-day summit underscored the Kremlin’s growing economic dependence on Beijing, as bilateral trade between the two countries surged.

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