The Unbalanced Triangle | Foreign Affairs Bobo Lo, a former Australian diplomat in Moscow and the director of the China and Russia programs at the Center for European Reform, in London, has written the best analysis yet of one of the world's more important bilateral relationships. His close examination of Chinese-Russian relations -- sometimes mischaracterized by both countries as a "strategic partnership" -- lays bare the full force of China's global strategy, the conundrum of Russia's place in today's world, and fundamental shortcomings in U.S. foreign policy. China's shift in strategic orientation from the Soviet Union to the United States is the most important geopolitical realignment of the last several decades. And Beijing now enjoys not only excellent relations with Washington but also better relations with Moscow than does Washington. Lo calls the Chinese-Russian relationship a "mutually beneficial partnership" and goes so far as to deem Moscow's improved ties with Beijing "the greatest Russian foreign policy achievement of the post-Soviet period." Precisely such hyperbole drives the alarmism of many pundits, who believe that the United States faces a challenge from a Chinese-Russian alliance built on shared illiberal values. But as Lo himself argues, the twaddle about Russia being an energy superpower was dubious even before the price of oil fell by nearly $100 in 2008. Even more important, Lo points out that the Chinese-Russian relationship is imbalanced and fraught: the two countries harbor significant cultural prejudices about each other and have divergent interests that are likely to diverge even more in the future. More accurately, the Chinese-Russian relationship is, as Lo puts it, an "axis of convenience" -- that is, an inherently limited partnership conditioned on its ability to advance both parties' interests. But even Lo does not go far enough in his debunking of the Chinese-Russian alliance: he argues that it "is, for all its faults, one of the more convincing examples of positive-sum international relations today." This is doubtful. The relationship may allow the Chinese to extract strategically important natural resources from Russia and extend their regional influence, but it affords the Russians little more than the pretense of a multipolar world in which Moscow enjoys a central role. STRATEGIC MISTRUST The year 2006 was the Year of Russia in China, and 2007, the Year of China in Russia, with both states hosting a slew of exhibits, cultural programs, trade talks, and state visits. At the opening ceremony in Moscow in March 2007, Chinese President Hu Jintao remarked, "The Chinese National Exhibition in Russia is the largest-ever overseas display of Chinese culture and economic development." (It is worth noting that every year could be called the Year of China in the United States and that the U.S. consumer market is essentially one endless Chinese National Exhibition.) By showcasing in Moscow 15,000 Chinese products from 30 industries -- machinery, aviation, ship building, information technology, home appliances -- Beijing sent the message that regardless of the substantial role the Soviet Union played in China's post-1949 industrialization, there is now a new ascendancy, with China enjoying the dominant position. This, in fact, is a return to the historical paradigm -- China has generally set the agenda for relations between the two countries. The Chinese-Russian relationship dates from the Russian conquest of Siberia in the seventeenth century. The Russian empire, then not very rich, sought to trade with China, then the world's wealthiest country. The two empires also discovered a common but often rivalrous interest in crushing the Central Asian nomads, leaving China and Russia with a 2,700-mile border, the world's longest. Since then, this shared border has shifted numerous times and served as a source of intermittent tension. As recently as 1969, the two countries clashed along the Ussuri River, which separates northeastern China from the Russian Far East, and Soviet leaders discussed retaliating with nuclear weapons if China launched a mass assault. Now, as Lo writes, their relations are, in many ways, better than ever. In June 2005, both sides ratified a treaty settling their border disputes. Cross-border business and tourism are brisk. In 2006, two million Russian tourists went to China and nearly one million Chinese visited Russia. Still, as Lo subtly demonstrates, the Chinese-Russian "axis of convenience" is bedeviled by "pervasive mistrust" rooted in historical grievances, geopolitical competition, and structural factors. Moreover, it is a secondary axis. China and Russia talk about being strategic partners, but neither actually is central to the other's concerns. China's indispensable partner is the United States; Russia's is Europe or, more specifically, Germany. In 2007, Chinese-Russian trade reached $48 billion, up from $5.7 billion in 1999, making China Russia's second-largest trading partner after the European Union. But current Russian-EU trade exceeds $250 billion -- the lion's share of it being between Russia and Germany -- and Chinese-U.S. trade exceeds $400 billion. China and Russia, Lo demonstrates, "pay far more attention to the West than they do to each other." Their relationship is opportunistic. As Lo puts it, the two giants "share neither a long-term vision of the world nor a common understanding of their respective places in it." In addition -- and this is the most important aspect of Lo's argument -- whatever opportunity does exist in the relationship, China is in a better position to exploit it. China extracts considerable practical benefits in oil and weapons from Russia. In return, Beijing flatters Moscow with rhetoric about their "strategic partnership" and coddles it by promoting the illusion of a multipolar world. In many ways, the Chinese-Russian relationship today resembles that which first emerged in the seventeenth century: a rivalry for influence in Central Asia alongside attempts to expand bilateral commercial ties, with China in the catbird seat. Lo politely calls this incongruity an "asymmetry." GIVING AWAY THE STORE The profound asymmetry in Chinese-Russian relations is most visibly illustrated by the two countries' roles in the Shanghai Cooperation Organization (SCO), a six-member security group founded in 2001, and by their energy and weapons trades. So far, China has consistently resisted Moscow's lobbying for building the SCO -- whose other members are the former Soviet states of Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan -- into a quasi-military alliance that could counter NATO. In addition, the SCO declined to publicly endorse Russia's account of its August 2008 war with Georgia (Moscow claimed that the Georgian army attacked first, an assertion implicitly recognized even by the U.S. ambassador to Russia). China, it seems, is unwilling to impart any strategic significance to disputes in the Caucasus. Meanwhile, using the SCO and business investments, China has been making economic inroads into Central Asia, a region that Russia has traditionally considered within its sphere of influence. Chinese companies have been on a buying spree in recent years, making investments throughout Central Asia in minerals, energy, and other industries. Beijing appears to have cracked even the difficult nut of Turkmenistan -- a pipeline now under construction is slated to run from the natural gas fields in Turkmenistan to Xinjiang, in western China. To a large extent, it is Russia's single-minded focus on pushing the United States out of Central Asia -- lobbying Kyrgyzstan, for example, to eject U.S. forces from a military base in Bishkek -- that has allowed China's influence there to grow relatively unhindered. And whereas the United States can scarcely hope to maintain a permanent presence in Central Asia, China can be counted on to stick around. Lo is doubtful about the prospects of a major Chinese-Russian energy deal. But in February 2009, after his book had gone to press, the two governments signed a deal under which Rosneft, the largest Russian state-owned oil company, and Transneft, the Russian state-owned oil-pipeline monopoly, would get $25 billion from the China Development Bank in exchange for supplying China with 300,000 barrels of oil a day from 2011 to 2030 -- or a total of about 2.2 billion barrels. Factoring in the interest payments the Russian companies will owe on the loan, the deal means that China will pay under $20 a barrel -- less than half the global price at the time of the deal and less than one-third the market price for future deliveries in 2017. This Chinese money is slated to underwrite the completion of an oil pipeline that will run from eastern Siberia to the Pacific Ocean, with an offshoot going to Daqing to serve the Chinese market. The proposed pipeline would increase roughly to eight percent Russia's share of China's oil imports, up from four percent now. Russian energy companies, laden with debt, lack the capital to build the pipeline by themselves or, for that matter, to drill for new hydrocarbons. With a projected capacity of 600,000 barrels per day, the pipeline is expected to supply Japan with Russian oil, too -- provided enough is available. Still, the $20-a-barrel price borders on the shocking. Considering the perhaps more advantageous energy deals that have been on the table with U.S. and European multinationals, Rosneft and Transeft's deal with China looks like a giveaway. It appears to be a consequence of the obsession many Russian officials have with denying the United States a strategic foothold in Russia's energy sector at all costs -- even if one of those costs is opening themselves up to exploitation by the Chinese. Energy is not even the most fruitful aspect of China's relationship with Russia. According to U.S. estimates, Russia supplies China with 95 percent of its military hardware, including Kilo-class submarines and Sovremenny-class destroyers. So far, Russian officials have not viewed the buildup of the Chinese navy as a direct threat to Russia; instead, they see it as a potential problem for Japan and the United States. Also, the post-Soviet Russian military was long unable to afford weapons produced by domestic manufacturers, making arms exports a necessity. Still, whatever benefits Russia gained by keeping its defense industry alive while waiting for better times, the benefits to China have been beyond compare. After the Tiananmen Square crackdown in 1989, many of the world's largest arms merchants -- France, the United Kingdom, and the United States -- imposed an arms embargo on China. As Russia moved to fill this gap, China began to reverse engineer weapons systems and pressure Russia to sell it not just the finished products but also the underlying manufacturing technology. For reasons that have yet to be explained publicly, Russian arms sales to China have declined in recent years. Nonetheless, China has the money and remains an eager customer for Russia's blueprints.