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Through the summer of 2024 no issue related to East Asia drew more attention than ongoing troubles in Sino-Russian bilateral trade. Other themes were Sino-US relations, China’s economic agenda, the Tumen River project, the promise of the Shanghai Cooperation Organization (SCO), coverage of Putin’s visits to North Korea and Vietnam, North Korean succession, and South Korean artificial intelligence. Clearly, serious concerns abounded over Chinese banks refusing to finance many bilateral trade deals.
Sino-Russian Relations
On July 31 in MKRU, Yury Tavrovsky explained the history and sources of America’s hate for China, emphasizing civilizational and racist contradictions. Tracing the “Cold War” to Trump’s
“trade war” from the summer of 2018, as the US deemed China to stand in the way of “Make American Great Again,” not long after Xi’s 19th Party Congress speech in October 2017 affirming China’s goals as a successful economic competitor. In the US the thesis became popular that the “Cold War” against China would be more severe than the contradiction with the USSR, given its foundation beyond economic and political differences. As one American official asserted, Russians belong to the white race and start from the same worldview as the West. Tavrovsky traces US hate for Chinese back in history, acquiring ever newer, powerful stimuli and finds both candidates for the presidency in November adherents to this way of thinking.
On September 1, Sergei Tsyplakov examined ongoing Sino-Russian trade in the journal Rossiya v Global’noi Politike. After a “great leap forward”, he detected strained bilateral trade dynamics as well as conditions of turbulence in the global economy and rising international tensions. Over the past three years trade rose 28.8% and 6.9% and then fell 4.6%; imports, 29.7%, 1%, and a fall of 5.5%. Russian foreign trade dropped 16% in 2023, including a decline in exports of 28.3%, larger than the 11.2% drop in imports. The economy is isolated, supply chains are disrupted, and past financial arrangements are broken. One of the main reasons Russia in 2022 overcame sanctions pressure was China’s refusal to join in. In 2023, China continued to fill the niche left by Western countries, e.g., autos, construction and transport technology, mobile phones, electronic gadgets, etc., but in the second half of the year the volume slowed, as the value of the ruble fell. Exports fell due to lower energy prices, even as the volume of oil and coal exports rose, as especially did gas and agricultural products. De-dollarization meant that 92% of trade was in national currencies, mostly in yuan. China now accounts for 39% of imports, 28% of exports, figures which overlook the rapidly rising reexports through Central Asian states and Belarus. In four years, Russia has climbed from 11th to 7th in exports and 10th to 5th in China’s imports. As plans were made for the next stage of trade, they already stumbled by year’s end. Cooperation on investments did not advance. Much of Russia’s strategy in April 2024 was left unstated. Trade grew through extensive means, not qualitative change. The structure of bilateral trade has not changed, as China strengthens its presence in industrial exports and consumer goods. This does not permit stable and balanced development of bilateral cooperation, as Russia depends on prices in international markets. At the end of 2023 the US went further in excluding Russia from the international financial and trading system, striking a blow against Chinese companies and financial institutions. In the spring of 2024 Washington threatened China with secondary sanctions for so-called “dual use” exports, leading Chinese banks to pull back. This complicated Chinese exports, slowing the growth rate, in March even falling 15.6%. Some change is needed to a new form of trade and mechanisms for long-term economic cooperation.
In RBK Otrasli on August 30, Kirill Matveev advised on how to increase cooperation with China despite problems with financial accounts. Trade in 2024 is poised to reach $250 billion, versus $240 billion in 2023, as the July figure was 1.6% above that a year earlier. At the end of July, a Russian vice-premier said bilateral trade could reach $300 billion by 2030. In many cases Russia has no other export market, explaining a doubling of aluminum exports to China last year. China gets energy security, and it fills niches left by Russia’s loss of Western markets. China now takes 45-50% of Russian oil exports. Gas exports to China rose in 2023 by 22.5%, and in 2025 “power of Siberia” will reach its maximum capacity. With a huge leap in vehicle exports, China sent to Russia $22.5 billion worth of exports, jumping further in the first half of 2024. In June 94% of new cars to Russia came from China. Yet, payment is a problem. The major Chinese banks, one by one, have refused to work with Russian companies. Regional banks have followed. Russia needs to open bank branches in China, and Russian banks are trying, but China’s leadership must be willing. Locally, there is also a problem of investment cooperation. Chinese companies are wary of secondary sanctions and unpredictable Russian law. Much depends on regional authorities, who need to send a signal by first attracting 2-3 Chinese companies. The initiative of the Russia-China Investment Council is under discussion. A vice-minister in August offered examples of joint ventures in electronics, logistics, engines, and automobiles. More than 60 initiatives have been raised in recent bilateral exchanges.
In Profil’ on August 30, Ivan Zuenko asked who is guilty for putting trade relations between Russia and China in a serious crisis. He warned that all are losers, above all small and middle business and ordinary citizens. This is connected to the refusal of Chinese banks to work with Russian companies, which began with separate kinks in places and characteristic, traditional excess caution, but turned over the summer of 2024 into a major barrier to the development of relations, which could force Russian business to reorient to new partners. Bilateral trade in 2022-23 boomed, juiced by high oil prices and a switch to China for consumer goods, electronics, and industrial equipment earlier bought in the West. Automobiles had special prominence. Chinese banks are extremely cautious, not wanting to risk their reputation in the West, despite the interest of Chinese producers of all stripes. In the face of the oft-repeated message that Chinese business had the chance of a lifetime to fille the vacuum in the Russian market, even major companies active in the West had sought their piece of the pie, if not without some caution in distributing their name cards and allowing photographs. Ways were found to circumvent every barrier, if slowly and with difficulty. At the end of 2023 the first signals appeared of not only clouds but pitch darkness, due to the US sanctions on foreign banks supplying Russia with goods and technology used in the military-industrial complex. China sharply tightened control over deals involving sanctioned products. Banks made purchasers answer detailed questionnaires. Deals could remain on hold in Chinese banks for up to 40 days, blocking payments. These banks stopped accepting payment in dollars from Russian clients. Then some financial organizations stopped working in Chinese yuan, the list widening over the winter to all, major banks. In the spring the situation grew critical, even for Russian exporters. After Putin visited China in May, raising the issue, the situation somewhat improved, as regional banks unbeholden to the West filled the void. However, the June announcement by Janet Yellen threatening foreign banks working with Russia and widening the scope of “military-industrial complex of Russia,” made things worse. Preceding that, Yellen visited Beijing and made concrete the range of companies still working with Russian clients. As a result, in July smaller, provincial banks stopped as well. By mid-August, 90-95% of banks stopped working with Russia in dollars, Euros, and yuan, if the deal had any connection to high technology, affecting auto parts, mining equipment, etc. Russian citizens found it difficult to open an account in Chinese banks or to reach beyond a clear limit.
Businesses looked for work-arounds—filial companies in third countries, hiding actual owners; channeling payments through Hong Kong banks; or using cryptocurrency. Russian branch banks inside China offered an option, but demand far exceeded capacity and Chinese purchasers failed to receive more than 40-60% of the funds after a long interval with other funds returned. Agents are demanding big commissions as middlemen, including for used Chinese autos. Ancient ways of business are making a comeback. Yet, even as China strives to preserve the purity of its banking system before the Americans, so far no Chinese bank has faced US secondary sanctions. Zuenko notes the personal interests of Chinese bankers with accounts in Western banks, children in school in Boston, and lovers in villas in Miami. Also, the Russian market is not capable of compensating the Chinese economy for a break with the West. Russia’s significance is mainly to supply natural resources, and those with a discount and complicated logistics. Finally, Russia is not in a condition to dictate terms now; it must work within the limits set by Chinese partners. Chinese tell us that Russia survives through its cooperation. Meanwhile, captains of Chinese industry panic at the state of China’s economy, deciding to return to open foreign relations, in the still existing illusion that China and the United States can agree on their economies. There is also fear that if Trump wins, Russia will “return to the West.” Today’s wave of refusals to work with Russia can only be explained by politics emanating from all levels of the management ladder.
If in February 2022 a summit overcame the crisis of restrictions on Russian frozen fish, the May 2024 visit of Putin did not signify a lasting thaw. Li Qiang’s recent visit to Moscow led to a communique on financial coordination, whose effect is awaited. The only way forward could be the creation of a fully independent financial infrastructure for countries under sanctions. In the first half of 2024, Chinese exports to Russia fell 0.8%, while Russian exports rose 3.9%, adding to a 1.8% increase after a 5.2% rise in the first quarter, not promising for reaching $300 billion this year. At best, last year’s $240 will be reached due mainly to sales of Russian oil. Russian consumers will pay more, including agent fees, exchange fees, and insurance fees. Washington and its satellites will pressure China regardless of whether it respects anti-Russian sanctions. The anti-China vector of US policies will continue in the next administration, warns Zuenko.
On August 30 in Vedemosti, Vladimir Kulagin discussed Xi Jinping’s meeting with Jake Sullivan, which was expected to lead soon to a telephone conversation between Joe Biden and Xi Jinping and a third meeting between the two in mid-November at APEC in Peru or the G20 in Brazil. Xi asked for an answer, before everything else, to the main question in this relationship: opponents or partners? If one sticks to the facts, the answer has been delivered: in the US NSS of 2022 China was named a competitor, which could turn into an “opponent.” Xi underscored that China adheres to stable, healthy, steadily developing relations, while it “firmly defends its own interests, sovereignty, and security.” Xi wants Washington to view China positively focusing on possibilities, not challenges. Sullivan confirmed that the US is not seeking a “new cold war, a change in the system of the PRC, or confrontation due to strengthening its system of alliances. As before, it does not support Taiwan independence, does not intend to get into a conflict with China, or to use this island as an instrument for containing China. Sullivan recognized that China and the US made no progress in discussing a resolution of the Ukraine crisis and did not did any plan to manage it diplomatically. The US strictly adheres to the principle of “nothing about Ukraine without Ukraine,” said Sullivan after expressing concern over the support China supposedly gives to the military-industrial complex of Russia. Xi drew the number one red line, which must not be crossed, over Taiwan. Grigorii Yarygin found that despite the absence of detailed explanations of the results of the visit, it was an important milestone in the relationship, pointing to both sides’ readiness for a compromise, which could relate to the situation in Ukraine as well as to control over arms. If Trump were elected, the architecture of cooperation easily could change. Yet, Alexander Lukin argued that the problems in bilateral relations are too weighty for concrete agreements, while there is too little time before Biden exits or any assurance it would work with Trump. China sees no difference depending on who wins, but Lukin thinks it likely hopes for Harris, a more compromising figure.
On August 30, Vladimir Petrovskii in Mezhdunarodnaya Zhizn also discussed the Sullivan visit, asking if the two were opponents, and not partners, despite American side’s claim that the aim was to reduce tensions between the two before the presidential election. At first glance, Sullivan seemed intent on “breaking the ice in the relationship, but on the eve of his trip, the US applied new sanctions on more than 400 Chinese banks and companies, among which, according to US officials, were those helping Moscow to bypass US sanctions. Moreover, Biden signed a law on helping allies in the Indo-Pacific region with $8.12 billion, including weapons technology to Taiwan of $1.9 billion. TikTok was banned unless ByteDance sold it within nine months. Finally, just two days before Sullivan’s visit the State Department issued its annual report on human rights in various countries, faulting China for “genocide with respect to the Uyghurs. Not breaking the ice were the way Taiwan was discussed and accusations by the US regarding China’s assistance to Russia in the special operation in Ukraine. Sullivan tried to get agreement on a Biden visit to Beijing right after the elections, but all they decided was on a telephone conversation. This first visit in eight months of the US national security advisor ended as a “complete fiasco,” according to mass media and experts, but we can only partially agree. Again, a mechanism on strategic consultations with 22 working groups was formally in place. Xi met Sullivan, a sign of the significance of the visit for the Chinese side, and Xi again expressed hope for constructive cooperation, but that requires first deciding on opponents or partners. So far, the answer leans to the first variant, but Beijing pragmatically sides with continuing the dialogue.
On August 26 Vladimir Petrovsky in Mezhdunarodnaya Zhizn explained that the choice between Trump and Harris is not simple for China. He found it interesting that Trump enjoys popularity, noting that US elections are invariably a show, and Trump is the more entertaining candidate. Also noted is that Trump is recognized as an “open enemy” of China, simplifying the matter as opposed to the also anti-Chinese inclinations of the Democrats. In Chinese expert circles, views are more carefully weighed, recognizing that strategies of the two parties differ over what is most suitable in the struggle with China. China fears that Harris in the course of the campaign will repeat Biden’s approach, especially his promise on the “defense of Taiwan.” Notice has been taken of Trump’s declaration that Taiwan should pay for its own defense, equating the US with an insurance company, while also talking of gaining the respect of the Chinese side in order to improve bilateral relations, in contrast to China’s lack of respect for Biden and Harris. Trump’s interview with Elon Musk is cited, in which he commented on the leaders of Russia, China, and North Korea, calling them smart and defensive of their countries. It is suggested that China would prefer the unpredictable but well-known Trump over Harris who would probably stick with the foreign policy course of the Biden administration. No matter which is elected, China will not sit back as its enemy proceeds; it has its own strategic plans, which, if slowed, continued to advance.
On August 30, Artem Lukin, Roman Tarantul, and Pavel Cherkashin in Rossiya v Global’noi Politike asked if China would gain a direct pathway to the Sea of Japan via the Tuman river. The 17-km waterway separating Russia and Korea has since 1860 left China without direct access to the ocean. In 1991 Gorbachev at last acceded to China’s appeal for access for its ships, but North Korea remained as a factor as did the details of how to proceed. The issue reappeared in December 2023 in a communique agreeing to the constructive exchange of opinions along with North Korea, a theme repeated in bilateral meetings in May and August 2024. In the 1990s there was talk of a transnational Tumen River project including a major port and international transport center, kept alive to 2009, when North Korea officially withdrew from the UN effort. China would gain substantially, while the benefits to Russia and North Korea are described as hypothetical, as their own functioning ports could be diminished. The transnational zone, which China would dominate, also could erode Russian and DPRK sovereignty. Recent references to the Tumen River in joint documents suggest that Russia is reconsidering its opposition. Putin appears to have raised the issue with Kim Jung-un in June, when a bridge across the river for cars was approved to supplement the existing railroad bridge. If three-way cooperation were to proceed, Russia would be in the position of coordinator. From the spring of 2024 Jilin Province has hosted talks on the “Tuman River Pathway” with a consortium of Chinese and Russian businessmen, including tourist excursions on the river from the Hunchun area of China. Talks between Chinese and North Koreans in 2014 had unsuccessfully raised this issue. Rather than this being a modest initiative for small ships, the authors consider it an opening wedge for full access by China to the Sea of Japan. River dredging would be required as well as reconstruction of the railroad bridge, but China could easily absorb those costs. Landlocked Heilongjiang and Jilin would receive an economic boost, and Chinese naval vessels might seek an opening too along with sea and air drones. The article warns of ecological consequences, while claiming that a high level of trust between Russia and China would be essential in this strategically critical zone. Agreement would signify that their friendship has not limits with no forbidden zones.
On September 1, Olga Borokh and Aleksandr Lomanov in Rossiya v Global’noi Politike wrote about China’s productive forces and Xi’s renewal of reform. They contrasted pessimism among youth and others with professed optimism in the ideological mainstream. Reference is made to “garbage time” and an irreversible decline. The article points to the third plenum of 2024 in the context of prior economically oriented third plenums since 1978. It cites foreign pessimists and the wary mood before the July 2024 meeting. Since 2018 Xi Jinping has stressed self-reliance in the face of Western pressure and reliance on new, advanced technology or production forces of a new type. Threatened was a massive defunding of traditional industry through withdrawal of state support before Xi shifted to working with local governments and drawing on the existing industrial base. Calls for a “spirit of struggle” to overcome economic troubles arouse alarm, along with discomfort from degradation of cooperation with the US and the West. Talk of “capital without capitalism” is divorced from reality. Plans to increase Chinese international influence promise a more reliable and predictable system of financial cooperation with Russia Russians should succumb neither to “garbage” talk nor talk of a “glorious Chinese economy.”
In Mezhdunarodnaya Zhizn Sergey Lavrov of the Institute of China and Contemporary Asia described the Astana SCO summit on July 4 as a formula for the continental power of Eurasia. At the summit Putin Called the SCO and BRICS the most authoritative, multi-national structures in the world, one of the supporting constructions of a multipolar global architecture. This is contrasted to the Western-centric, democratic model of international relations. Ballyhooed are such slogans as equal rights, anti-bloc, multi-polar, mutual trust, and mutual benefit with respect for civilizational diversity and selection of one’s own path and indivisible security. The SCO is praised for its wide scope across Eurasia. In turn, Russia has a special place in development and security as an autonomous state-civilization, extensive Eurasian and Euro-Pacific power. It is grouped with China and India as world power-civilizations, distinct from influential regional players Pakistan, Iran, Uzbekistan, and Kazakhstan. Today, the territory of the countries of the SCO, readers are told, comprise 65% of the continental space of Eurasia, including most of East Asia and South Asia, and practically all of the central part of Eurasia. It is the most substantial organization on the continent, adding Iran in 2023, and now expanding to the first non-Asian state Belarus. This is the epoch of restoration of continental power, a platform for which is the SCO.
Rather than recognizing China’s centrality, the article emphasizes bringing into one space China, India, and Russia, balancing the interests of the greatest continental powers and world centers of power. The SCO, it adds, should be seen as a configuration of the contemporary “heartland” of Eurasia in conditions of the 21st century. The “struggle for Eurasia” proceeds through the struggle for the Eurasian integration project through a continent-wide agenda. Russia is a driver in: the formation of the SCO, Putin’s 2015 initiative to build the “Greater Eurasian Partnership, the destruction of the stereotypes of the Wet and the ideology of Great Britain and the United States to turn the Eurasian space into a field of geopolitical contestation, breaking the totality of this space into zones. Russia has striven for consolidation, rejecting a chessboard for geopolitical intrigues. The SCO differs from other “umbrella” proposals such as Turkey’s for a Turkish community or those of the US, even the wide-ranging BRI initiative of China, and it unites various sub-regional integration formats, including ASEAN. When in May 2024 Putin met with Xi Jinping in China, both agreed that Russia’s thinking does not contradict and actually is fully consistent with the basic principles of the Chinese initiative in the sphere of global security. It is important that Moscow and Beijing agree on the formula of “indivisible Eurasian security.” At the summit Russia proposed the formation in Eurasia of a principally new system of security, and it received unequivocal support, affirming that Eurasia wants to provide order in the region without the interference of outside players. At each step in the geopolitical development of the SCO, Russia with support for its partners has overcome maneuvers of Anglo-Saxons to break apart continental Eurasia and exert influence on the Eurasian agenda.
The development of the SCO has not proceeded without problems, unable to remain aloof from a large number of international conflicts, as between India and China, India and Pakistan, and Tajikistan and Kirghizia. Serious shortcomings are visible in the absence of a reaction from the SCO or a mechanism to resolved such situations. Much reorganization is needed, including a wider scope for integration and preparation to react to new challenges and geopolitical tensions, for instance, an SCO parliamentary assembly with controls and norm-setting rules. The article calls for an integration process for the “Greater Eurasian Partnership’ as a platform for inter-regional coordination to advance Eurasian integration. This would be a new architecture with indivisible security in the forefront. The old notion that the SCO is led by Russia and China is absent in this analysis, raising the institution to a higher pedestal with three leading states.
North Korea
Aleksandr Zhebin in Kart-Blanch on June 18 described North Korea’s wait for Putin’s imminent arrival, returning after a quarter century and expecting a qualitatively new bilateral relationship. In light of far-reaching evolution of the situation in the world, a new bilateral treaty is necessary, promising an all-around strategic partnership, one aimed at ensuring great strategic stability in the region of Northeast Asia. Zhebin argues that even after the West had shown its true colors for some reason in 2016-17 Russia had supported the application of the strictest sanctions in the history of the UN against the DPRK. Recalling that after 1961 high-level visits had not occurred except for two secret visits of 1966, he noted that only in May 1984, after 23 years, did Kim Il-sung go to Russia. In contrast, Kim Jong-un visited Russia in April 2019 and September 2023. A little-know episode, he adds, is a planned visit of Khrushchev at the end of the 1950s, despite the lack of enthusiasm in Pyongyang for “peaceful coexistence,” for which North Korea prepared a new residence for him and announced the trip officially. Such facts testify to the delicate ties between the two governments and the great patience required on both sides needed to deepen cooperation. Let’s hope that this summit in Pyongyang so soon after a meeting at the space port Vostochny last September will strengthen the continued cooperation of our states and people.
In Rossiya v Global’noi Politike, No. 5, on September 1, Andrei Lankov wrote about North Korea, reviewing the past two succession transitions and explaining what is happening now, amidst some uncertainty about the leader’s health. He concludes that for powers such as Russia and China, interested in preserving the status quo in East Asia, North Korea’s decision on managing the transition is fortunate, as it is for North Korea. It serves to preserve stability in both the North and the region. Lankov recognizes some risk within North Korea in choosing a female. He adds that the early selection of a successor increases the chance of both internal stability and maintenance of the foreign policy course. Looking forward, he expects a cult of personality for Kim Ju-ae, a shift to autonomous activities without accompanying her father, and designation of a high-level official post for her. The structure of state authority and political culture means that the mass of the population and the political elite will view the succession as something natural.
South Korea
Pavel Kuznetsov in Mezhdunarodnaya Zhizn analyzed the risks of misusing AI technology in South Korea, one of the world’s most technology advanced countries, including in AI produced by technological giants such as Samsung, LG, and SK. This technology, as others, can be used for good or ill-intended ends, the latter of which are examined here, notably its informational and psychological aspects. A 2019 national strategy on AI set priorities with state support aimed at declaring world leadership in a given sector. The danger of deepfakes was showcased, leading to demands for regulation. It was unclear what lessons Russians were supposed to draw about this.
Vietnam
In MKRU on June 20 Iury Tavrovsky spoke warmly of Vietnam being defended by the Kremlin, saying that socialism with Vietnamese specifics is beneficial to Russia. He argued that Putin’s visit to Hanoi is arousing dissatisfaction in Washington. Explaining that Vietnam is in the same stage of development as China had passed with “reform and openness” before fully defining “socialism with Chinese characteristics,” he sees similarities in the regulating role of the communist party, which determines the aims and tempo of the nation’s development. In Vietnam, he argues, the Chinese model began to be applied, step by step, after the collapse of the Soviet Union. Hanoi had remained a loyal ally of the Soviet Union to its end, and then began to apply the Chinese strategy with a time lag of a decade and a half, combining socialism and capitalism to transformative effect. Meanwhile, the position of the communist party stayed firm even as elements of the West were constructively introduced. Vietnam, as China prior to its “great rejuvenation of the Chinese nation,” conducts a passive, neutral foreign policy, avoiding military blocs and bilateral alliances. It refuses to be included in planned alliances against Russia, China, and North Korea. To a great extent the future of the South China Sea depends on it, which the US is beginning to prepare as the next field of battle after failing in inciting Taiwan to declare “independence from China. Putin’s meetings with the new Vietnamese leadership can strengthen Vietnam’s inclinations for a truly autonomous policy and resistance to attempts to drag it into irrational steps in an explosive region. Restoration of mutual economic, scientific, and military ties with Russia are being raised, as the Kremlin proves it possesses the strength to defend its allies and friends. Warm feelings toward Russia are as strong as Russian sympathies for Vietnamese, Tavrovsky concludes.
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