Социально-экономическое и политическое развитие современной Азии

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ФЕДЕРАЛЬНОЕ ГОСУДАРСТВЕННОЕ АВТОНОМНОЕ ОБРАЗОВАТЕЛЬНОЕ УЧРЕЖДЕНИЕ ВЫСШЕГО ОБРАЗОВАНИЯ

«НАЦИОНАЛЬНЫЙ ИССЛЕДОВАТЕЛЬСКИЙ УНИВЕРСИТЕТ

«ВЫСШАЯ ШКОЛА ЭКОНОМИКИ»

Факультет мировой экономики и мировой политики

МАГИСТЕРСКАЯ ДИССЕРТАЦИЯ

Поворот России на Восток: российское восприятие китайской политики в отношении Москвы после украинского кризиса

по направлению 41.04.03 «Востоковедение и африканистика»

студента образовательной программы

«Социально-экономическое и политическое развитие современной Азии»

Москва 2018

АННОТАЦИЯ

Тема данной магистерской диссертации - «Поворот России на Восток: российское восприятие китайской политики в отношении Москвы после Украинского кризиса». Целью данной работы является исследование ожиданий России от Китая в период после введения санкций и насколько эти ожидания оправдались и как менялось последующее восприятие политики КНР в отношении РФ в самой РФ между 2014 и 2016 годами. В работе использованы описательный и сравнительный методы исследования. Гипотезой данной работы является: стремление России к более активному участию Китая в энергетической, финансовой и технологической сферах не оправдало своих ожиданий из-за волатильности рубля, санкций, политической нестабильности и экономического кризиса в России. Результаты исследования показывают, что с момента кризиса на Украине, Китай не проявил ожидаемого вовлечения в энергетическом, финансовом и технологическом сферах, как ожидалось в Москве. Китай не смог заменить западные рынки капитала в полном объеме. Более того, Китай не смог предоставить современное буровое оборудование в кротчайшие сроки, как ожидалось в Москве. санкция россия китай кризис

Ключевые слова: ожидания, восприятие, «поворот на Восток», Китай, описательный, сравнительный, энергетический, финансовый, технологический, санкции, кризис в Украине, политическая нестабильность.

ABSTRACT

The present paper explores the expectations of the Russian Federation from People's Republic of China in the process of “Russia's pivot to Asia” and subsequent investigation of how the perception of the policy of the People's Republic of China in relation to the Russian Federation changed in Russia between 2014 and 2016. This research addressed the following hypothesis: Russia's ambitions of greater involvement with China in the field of energy, finance and technology have failed to meet its expectations because of ruble volatility, sanctions, political instability and the economic crisis in Russia. In particular, the author of the present paper has adopted descriptive research design as the main research method. In addition, the comparative research method will be used in order to contrast the expectations of Russia from China in the process of turning to Asia. The results show that there was no active involvement of China in Russian energy, financial and technological sectors since the Ukraine crisis as Moscow was expected. China could not replace Western capital markets in a full scale as it was planned and Chinese engagement with respect to advanced drilling equipment was very confined.

Keywords: expectations, perception, Russia's “pivot to Asia”, China, descriptive, comparative, energy, financial, technology, sanctions, Ukraine crisis, political instability.

TABLE OF CONTENTS

INTRODUCTION

1. SINO-RUSSIAN RELATIONS BEFORE AND AFTER CRIMEA

1.1 Russia and China before Crimea

1.2 Economic and trade relations between Russia and China from 1993 to 2013

1.3 Cultural Relations between Russia and China

1.4 Ukraine crisis and the annexation of Crimea

1.5 Russia's pivot to China

1.6 Main areas in Russian-Chinese relations

1.6.1 Energy

1.6.2 Finance

1.6.3 Infrastructure and technology

1.6.4 Central Asia

1.6.5 BRICS

1.6.6 The United Nations Security Council

Conclusions

2. RESEARCH METHODOLOGY

2.1 Research Method

2.2 Data collection instruments

2.3 Research procedure

3. EMPIRICAL PART OF THE STUDY

3.1 Results of empirical study of Russia's Turn to the East: Russian Expectations and perception of Chinese Policy Towards Moscow Since the Ukraine Crisis

3.1.1 Energy sector

3.1.2 Financial sector

3.1.3 Technology

3.2 How the perception of the policy of the People's Republic of China in relation to the Russian Federation changed in Russia between 2014 and 2016

3.3 Research results and discussions

CONCLUSIONS

IMPLICATIONS AND RECOMMENDATIONS FOR FUTURE RESEARCH

BIBLIOGRAPHY

INTRODUCTION

Disputes and discussions about Russian and Chinese relations are on the rise, especially after the Ukraine crisis in 2014 that drew the attention of experts and policy-makers all around the world. It is out of the questions that Russia and China besides the US are two of the biggest players on the global arena and international system, moreover, strategic partnership of both countries already has tangible geopolitical weight. However, the greatness of each country is represented in different ways; China is experiencing its rise through economic development while Russia still remains a military superpower. The Ukraine crisis in 2014 accelerated the fundamental shift in bilateral relations between Russia and China. Russia faced serious economic hardships concerning the sharp decline in oil prices and the sanctions imposed by the West. This concentration of circumstances made Russia to change its “pivot to China”. In spite of the strengthening of Russia-China relations since the capture of Crimea, the ties between these two countries still resemble to strategic, temporary and instrumental partnership which is not an alliance at all. For Russia, this partnership is built to fortify its role as an independent global player which is one of Putin's main foreign policy objectives. Russia still remains an appealing and helpful accomplice for Beijing because it procures China natural resources and technologically progressive wartime equipment. However, Beijing guards Russia from influence of Western sanctions, thus, saving Russia from complete isolation that the West bloc was trying to implement. Nevertheless, it should be taken into account that China's expedient economic interests with regard to the European Union and the United States of America are considerably higher than its economic concerns in Russia. In spite of assistance that China is providing for Russia right now, it can be easily limited as China is scarcely to undertake any performance that would seriously contradict sanctions imposed by the West on the Russian Federation.

However, in particular, little attention has been paid exactly to what Russia expected from China in the process of its “pivot to Asia”, what was fulfilled and what was not. Moreover, the author of this paper will focus on how the perception of policy of the People's Republic of China in relation to the Russian Federation changed in Russia between 2014 and 2016.

The goal of the present study is to determine and investigate the expectations of the Russian Federation from People's Republic of China in the process of “Russia's pivot to Asia” and explore how the perception of the policy of the People's Republic of China in relation to the Russian Federation changed in Russia between 2014 and 2016.

The following hypothesis is addressed: Russia's ambitions of greater involvement with China have failed to meet its expectations because of ruble volatility, sanctions, political instability and the economic crisis in Russia.

The enabling objectives of the research are the following:

1) to apply the theoretical framework of Sino-Russian relations and investigate the qualitative changes in relations since the annexation of Crimea;

2) to determine Russia's expectations in the field of energy, finance and technology from China in the process of its turning to Asia;

3) to investigate what expectations were realized and what were not;

4) to describe how the perception of policy of the People's Republic of China in relation to the Russian Federation changed in Russia between 2014 and 2016;

5) to compile and analyze collection of statistical data with regard to Sino-Russian relations containing information on economic and political issues for the analysis;

In particular, the author of the present paper has adopted descriptive research design as the main research method, in addition, the author of this paper will be using comparative research method in order to contrast the expectations of Russia from China in the process of turning to Asia. The main data collection tools include the analysis of analytical notes of think tanks, authors' opinions with regard to Russia's “pivot to Asia”, private and interstate contracts, statistical data from respected sources such as Central Bank of the Russian Federation, World Bank and European Commission and interviews of political leaders.

This research is based on analytical and theoretical contributions of (Gabuev, 2015,2016, Stent, 2016), analytical notes and authors' opinions (Karpov, 2015, 2016, Overland and Kubayeva 2018, Rechetnikova 2017), statistical data (The Central Bank of the Russian Federation, World Bank, Reuters, Bloomberg) and interstate agreements between Russia and China.

Short summary of chapters:

In chapter one, the author of this paper presents an overview of the sources and existing researches on the Sino-Russian relations before and after the Crimea. Moreover, a short description of the Ukraine crisis and the following implications with respect to Russian-Western relations are provided. Finally, the author will focus on main areas of Russia's turn to the East.

In the second chapter, the author will focus on detailed description of the research, research methods, data collection tools and the analysis of the data.

Finally, chapter three is focused on the empirical part of the research. The author will describe why Russia turned out to be so dependent on Western energy, finance and technology markets. Next, the expectations of Russia from China will be determined. We will continue with describing what expectations were realized and what were not. Finally, the analysis of how the perception of the policy of the People's Republic of China in relation to the Russian Federation changed in Russia between 2014 and 2016.

1. SINO-RUSSIAN RELATIONS BEFORE AND AFTER CRIMEA

In chapter one, the author of this paper presents a review of the sources on existing researches on Sino-Russian relations before and after Ukraine crisis. First, the relationship of Russia and China before Crimea are discussed. Then, the author proceeds with the nature and reasons of Ukraine crisis; positions of the United States of America, European Union and China, its impact on Sino-Russian relations. Finally, the author will focus on “Russia's pivot to China” and main realms of collaboration between Russia and China.

1.1 Russia and China before Crimea

Vladimir Putin and Xi Jinping do not overstate whenever they claim that Russia-China relationship is in a way better than ever before. There was a period when Russia and China had restless relations for centuries. In the end of 19^th century, Russia seized the opportunity to take over the land which was ceded as a result of Treaty of Nerchinsk in 1689, this territory is known as the Russian Far East. Sino-Russian relation were complex in the first half of the 20^th century and even sometimes conflicting. During the civil war in China, Russia did not support each of the sides fully, Moscow preferred to assist both to Mao Zedong and Chiang-Kai-Shek. Stalin believed that country will be divided between the communists and Kuomintang, however the victory of Mao was accepted in 1949 by the USSR (ibid). Starting from 1949 to 1989, relations between USSR and China were tense; the reason for that was the ideological question over the legitimacy of the USSR to head the communist world, stating that the USSR leader Nikita Khruschev left socialism and was trying to build close ties with the US (W. Griffith: 1964). The split between the USSR and the People's Republic of China began shortly after death of Stalin in 1953 when Khruschev without advising fraternal Soviet republic denounced Stalin in 1956. This led to subsequent deportation of 1,400 specialists that dealt with the development of nuclear program which left approximately 200 projects abandoned. The confrontation escalated further when several provocative mutual polemics followed which resulted in frontier clashes on the Ussuri River in 1969 (ibid). Only in 1989, the tension between the USSR and the PRC started to fall away. Gorbachev personally went to Beijing in order to settle the tension down, however, having arrived at the very peak of Tiananmen protests, he was welcomed as a true leader by pro-democratic Chinese activists. The fall of the USSR underwent a great effect on the Chinese leadership: it even promised to the nation that the collapse of China will never take place (ibid). Next, the arms trade between Russia and China set off in the 1990s. The pretexts for arms trade were the West's imposition of arms embargo on China as a result of Tiananmen massacre, moreover, the two former rivalry countries became mutually dependent on military industry, Russia became a very vital source of intricate weapons for China. In its turn, Russia managed to prevent its problematic military plants from collapse, so the cooperation with China was also of vital importance. As a result, the income of the defense industry of Russia constantly comprised 30% because of Chinese orders (ibid). However, the constant military trade between two countries encouraged Chinese manufacturers to launch their own line of military equipment and arms that were basically copied from Russian analogs, which could not leave Russian politicians calm about the further supply of the most advanced and complex weapons to emerging Chinese military forces (ibid). Two countries continued to improve their relations under Boris Yeltsin. There was a huge wave of Chinese laborers that helped Russia to boost falling economy. The collapse of the USSR brought new Central Asian neighbors to China in face of Tajikistan, Kyrgyzstan and Kazakhstan, which entered the “Shanghai Five” under the leadership of China and Russia in 1996. One of the most important events that happened between Russia and China is the agreement of the “Joint Declaration on a Multipolar World and the Formation of a New International Order” in 1997, both countries promised to support each other in the multipolar world. The ties between two countries continued to improve since the advent of Vladimir Putin and Jiang Zemin who managed to sign a Treaty of Friendship in 2001. This treaty was fundamental in building strong and lasting relations between two countries as it covered five important points of cooperation, and the most important is that they succeeded in solving the territorial frictions, where Russia ceded 337 km² of land to China in exchange for China's removal of some other territorial claims (ibid). Moreover, this treaty laid the beginning of a transformation of “Shanghai Five” into an association format, which is called today - The Shanghai Cooperation Organization. Two countries enhanced the level of joint political cooperation with regard to international issues such as opposition to the wars in Iraq and Afghanistan, resisted to the presence of the US military forces in Central Asia (ibid). Both countries are supporters of the notion of total sovereignty, which means that China and Russia would not devote themselves to an ally that would limit their scope of maneuver. Both countries quickly realized that political benefit would come from joint cooperation. Under Vladimir Putin the bilateral relations developed noticeably: Russia and China expanded their ties with regard not only to arms trade but to military cooperation, border control, hydrocarbon and energy fields. Moreover, both countries support each other concerning the domestic issues such as Russia's approval of Chinese policy regarding Taiwan and Tibet. Next, two countries jointly ignore Western criticism that relates to human rights. As to multilateral level, Russia and China do continue to cooperate via intergovernmental and international organizations such as the Shanghai Cooperation Organization that helps to solve certain problems in Central Asia. Next, Russia and China take one-sided position on the United Nations Security Council when it comes to the issues concerning Iran and Syria (ibid). Astoundingly, but with regard to main global issues, Russia and China have no contradictions, unlike Russia's Western counterparts have. The last but not the least, newly elected president Xi Jinping and his precursor Hu Jintao devoted their first foreign trips exactly to Russia, while Putin did absolutely the same when he was reelected in 2012 by cancelling his trip to G8 summit in Washington, justifying it that he was too busy with assigning new government (A. Stent: 2015).

1.2 Economic and trade relations between Russia and China from 1993 to 2013

According to Chinese scholar Gao Fei, the solid basis for successful and flourishing relations between Russia and China lies in their economic ties. Very similar position was expressed by Russian president Vladimir Putin in 2012, he mentioned that China provides great opportunity and potential for business cooperation between two countries, that it would be “a great opportunity to snap up with Chinese blows in the sails of our economy”. Dating back to Cold War times, there was practically no trade between Russia and China. Only starting from 1990, the trade started to revive because of disintegration of economic links throughout the whole country in Russia, as a result, cheap Chinese products flooded Russian Far East. Already in 1991, a trading agreement between Russia and China was signed, the agreement that made Russia “Most Favoured Nation” with respect to trade with China.

Graph 1. Turnover of trade between Russia and China from 1993 to 2011 in billions of USD

Source: Trade statistics of Russia and China, yearly basis. IMF.

As we can see, trade volume between two countries started to gain momentum after putting the signatures on the Treaty of Good-Neighborliness and Friendly Cooperation Between the People's Republic of China in 2001. This contract intended to spur economic, geopolitical and peaceful relations within 20 years. Two countries set the aim to achieve $100 billion trade in 2015 and $200 billion in 2020. People's Republic of China is considered to be Russia's greatest Asian investor reaching $568 million if FDI in 2010 comparing to $78 million in 2004. Nevertheless, we can see that trade with China constituted significant part of Russia's overall trade, however, as to China, trade with Russia comprised small share of its overall trade worldwide. It should be noted that Russia's trade with China has been growing steadily since 1993, while China's trade with Russia was declining in comparison with other countries.

Graph 2. Top ten exports from Russia to China in 1999

Graph 3. Top ten imports from China to Russia in 1999

Graph 4. Top ten exports from Russia to China in 2011

Graph 5. Top ten imports from China to Russia in 2011

All graphs clearly indicate that Russia mainly exports natural resources to China, including hydrocarbons, wood and minerals, while China exports diversified portfolio of all kinds of goods. It should be noted that hydrocarbons constituted nearly 8% of Russia's exports to China, already in 2011 this number reached 57%. In 2010, Russia ranked top 4 source of hydrocarbons for China, staying behind Saudi Arabia, Angola and Iran. According to graph 1, it should be noted that in 2006 China started to invest in Russia very actively. Mainly, the top investment sectors for Chinese investments are energy, metals and raw materials. According to China Global Investment Tracker, the total amount of Chinese investment in Russia is equal to $11.5 billion, while Russia invested only 818 million.

However, the general overview of Chinese investments in Russia by sectors should be presented in order to provide clear vision of main areas of Chinese interests in Russia.

Table 1. Chinese investments in Russia from 2006 to 2013

The main areas of Chinese interests are energy, metals and finance. In 2012, both countries agree to establish Russia-China Investment Fund that is meant to provide joint investments in Russia that would be worth of $4 billion. Moreover, the fund is intended to develop service, mining and agriculture sectors. However, Russia's accession to the WTO made some troubles for China as according to WTO rules, countries that are members of that organization should open up for free trade, thus throwing up additional challenges and competition for China, as market share should be divided among other countries that are willing to invest in Russia too. Entering WTO, will only boost quality and standards of trade environment which might be a big problem for China as its products may not be able to compete with the highly qualified products from other countries. Taking everything mentioned above into account, realizing that Sino-Russian trade has grown significantly from 1993, thus, making China one of the top partners for Russia, but it is worth mentioning that the European Union is in a way greater partner for Russia with regard to trade, comprising 43% of imports coming to Russia in 2010 in comparison with 18% coming from China and Russian exports to EU amounted 49% comparing to 5% going to China of Russia's total exports (ibid).

1.3 Cultural Relations between Russia and China

Cultural relations and ties between Russia and China today are not that strong as they were during the Soviet times. Cultural ties were in a way solid before the split between the Soviet Union and the People's Republic of China. USSR used to send soviet experts to China and Chinese undergraduates studied in Soviet universities, that was the reason that boosted mutual cultural ties. After the collapse of the Soviet Union and subsequent rapprochement of Russia and China, both countries intended to promote and improve cultural relations. It should be noted that both countries paid a tribute by organizing cultural events in both countries: in 2006, China celebrated the year of Russia in China, while Russia hosted the year of China in Russia in 2007. Moreover, since 2006 on, there was a series of mutual cultural exchanges devoted to cultural peculiarities of Russia and China. However, the main reason for that was to enhance economic cooperation between Russian and Chinese businesses through joint activities that would eventually lead to productive future cooperation, that such activities would dispel cultural differences (Ferdinand: 2012). Nevertheless, both countries called the year of 2012-2013 as Russia-China tourism year, since that time, the tourism flourished between two countries, and president Xi Jinping during his stay in Russia, highlighted that the amount of tourists from Russia and China increased and hit the peak with 3.3 million. Xi Jinping continued on Russia's being top third destination for Chinese tourists, while China's being the second one for Russians. All in all, Russia alongside Korea possess the second biggest number of Confucius institutes in the world numbering 17 institutes each, conceding only to the US with 70 Confucius institutes. All these efforts undertaken by both sides seem to pay off little by little. AS a result, China is considered in positive way by many Russians. According to surveys carried out by Levada Center, Russians started to perceive China in a more positive way than India. This might be explained by the outstanding economic progress shown by Chinese side. Nevertheless, despite the progress in mutual perception, Russians are still inclined to believe that they should develop alongside Europe. However, taking everything mentioned above into account, despite the improvements with regard to culture understanding between Russia and China, both countries still prefer to send their children to the West, thus, not implementing the potential that countries might achieve regarding each other.

Table 2. Top countries that Russians view as closest allies of Russia from 2005 to 2011 in per cent.

1.4 Ukraine crisis and the annexation of Crimea

The demonstrations known as Euromaidan originally started on November 21, 2013, when the government of Ukraine all of a sudden discarded its prospections to sign the Association Agreement with the European Union. However, on the night of November 29-30, the Berkut special forces severely dispersed the tent city on the Maidan square, beating up the protestors found in it. This dispersal of the tent camp led to an immediate aggravation of the political situation. Excessive use of force by law enforcement agencies led to a sharp negative reaction of the leaders of the West, which put Yanukovich in the position of justifying. If, prior to the dispersal of the tent camp, the main requirement of the protesters was the undersigning of the Association Agreement with the European Union, since December 1 the emphasis has shifted to the demands of the resignation of the government and the president. On the February 21, 2014, against the backdrop of pressure from the Western countries and the escalating flight of former supporters from the party of power, Viktor Yanukovich signed an agreement with the opposition on resolving the crisis, on the same day, Yanukovich left Kiev. On the February 23, the duties of the president of Ukraine were assigned to the new chairman of the Verkhovna Rada, Oleksandr Turchynov. The new Ukrainian government was recognized by the European Union and the United States. On February 27, Arseniy Yatsenyuk became Ukraine's Prime Minister, a provisional government was formed. On February 23-24, under the pressure of pro-Russian activists, the executive bodies of Sevastopol were changed. Early in the morning on February 27, Russian special forces occupied the buildings of the authorities of the Autonomous Republic of Crimea. On March 16, a referendum took place concerning the status of the Crimea based on the results of which the independent Republic of Crimea was unilaterally proclaimed, which signed a treaty with Russia, according to which the territory of the self-proclaimed republic was promulgated a part of the Russian Federation. Nevertheless, the official position of the European Union on Crimean issue is grounding on the UN Charter that asserts that an area and territory of any State cannot be taken by any State using military forces, as well as on Helsinki Final Act where undersigned countries admitted ones' aspiration to observe the inviolability of frontiers and integrity of any State, hence the non-recognition stance of the European union is supported by the matter of fact that the referendum that was held in Crimea is invalid. The non-recognition stance of the United States of America is similar to European one, with only difference that the White House announced sanctions on Russian and Crimean individuals just right after the Russian troops stepped in Crimea on February 28. Chinese position with respect to the Ukraine crisis and Crimea is based on three main points, which are laissez-faire (nonintervention in other countries' domestic matters), difficultness of political conjuncture and precedent driving forces and double standards of the West with regard to similar referendums that took place in the past, as a result, China abstained from voting for the resolution declaring the invalidity of the referendum.

1.5 Russia's pivot to China

After the takeover of Crimea in March 2014 and the consequent impairment of Russia-West relations, Vladimir Putin has repeatedly stated the importance of Russia-China partnership, putting an emphasis on preferential choice to the confrontational relations with the US and Europe. However, Beijing did not openly excoriate Russia's involvement in Ukraine nor did China sign up for the sanctions to full extent. China has been very careful in choosing right actions that would not contradict Western sanctions, especially in the field of finance in order not to endanger its economic bonds with the US and Europe (ibid). However, Chinese government provided a $2 billion worth loan to Gazprom, whereas, two development banks have given moderate loans to Russian government, the rest of Chinese banks, especially that are known to be “Big Four” followed the Western sanctions. China had an alternative with regard to increasing its posture in a risky market of sanctioned Russia or improving its positions in the stable and large markets of the US and the European Union, China went for the latter (ibid). Moreover, there was an improvement regarding the economic relations between China and Ukraine since the crisis took place. Nevertheless, Chinese political elite made a conclusion that the Ukraine crisis might have negative subtexts to Chinese concerns; the annexation of Crimea and the concept of Russian self-determination were considered as a serious menace to hectic Chinese regions such as Taiwan and Xinjiang. However, the high-level meetings between two countries continue to take place and both countries did not stop to praise their relations. In 2015, the total amount of common military exercises increased alongside Beijing participating in the Mediterranean for the first time, it was a sign for NATO that the sea does not belong to it anymore. The amount of naval and ground military exercises increased in 2016, for the first time Russia and China used computer-assisted missile defense drill. Such military drills only show the close friendship of two countries since the Ukraine crisis took off. Some of the Western officials had already expressed their anxiety about cohesive Sino-Russian relations that are experiencing a new development stage, relations that might cause a feasible military, political and economic menace to the West (ibid). It is clear that China turned into the focal point of Russia as a sign of anti-Western policy. In May 2014 a new declaration between Russia and China was signed, which is “Joint Declaration of the Russian Federation and the People's Republic of China on the New Stage of Comprehensive Partnership and Strategic Cooperation” this document has favorably influenced practical cooperation between two countries. However, Angela Stent (2015) claims that this kind of partnership is built only for achieving one of Putin's foreign policy goals who sees Russia as an independent hub of global power. Despite the fact that China neither supported nor condemned Russia's actions in Crimea, the support that comes from China is being considered as a legitimization of Moscow's behavior in Ukraine. As to BRICS, the group had a very strong position with regard to not to isolate Russia; countries of the bloc did not criticize openly the actions of Russia in Ukraine, moreover, they refrained to vote from the U.N. General Assembly in favor for the annexation of Crimea, next, BRICS countries performed as the main drivers of Putin to be present during the G20 summit in Australia in 2014, whereas, the Western bloc pondered excluding him from the list of participants. China appears to be a very important replacement to Western bloc as an economic partner with respect to trade and energy consumption. As leaders of great powers, president Vladimir Putin and general secretary Xi Jinping appear to have a lot of in common; both disagree on Western promotion of democracy and human rights that might have an impact on their domestic rule, both deny the current world order and both disagree on how the prospective world order should be viewed (ibid). Next, Moscow is considered as an important partner for China as Russia backs China's key foreign policy issues and does not interfere in China's local matters. Chinese specialists on global affairs may openly criticize Russia's actions in Ukraine, whereas, Chinese executives stick to a course of neutralism, in exchange, Russia do not condemn openly China's doings in the South China Sea (ibid). However, Angela Stent (2015) states that it is undisputable that Chinese assistance to Russia facilitated Moscow to escape from being isolated worldwide. It was China that performed as a facilitator of military actions undertaken by Russia in Ukraine and Syria, it was China that helped Russia to lift its international image, which led to renewal of the dialogue between Russia and the West (ibid). Despite the potential competition in Central Asia between Russia and China, both countries share a common approach with regard to international arena and distrust of the US aspirations and policies that will bind cooperation of two countries in the nearest future (ibid). Nevertheless, Karel Hille (2015) holds the position that relationships between Russia and China will remain only on official level, with less cooperation concerning public and private sectors. Next, Russia's ties with developed European countries like Germany or Italy where presence of Russian companies is in a way higher because of human contacts that established over the years of cooperation, as to China, on the contrary, there is very small number of Russian companies there. This clearly highlights that Moscow still associates its external policy with European countries and the US as preferable matter. The West is better understood by Russian officials than they understand China: Europe is still a destination for most of Russian gas and oil (ibid). It will take time for Beijing to replace Western bloc as a political and economic counterpart for Russia. The intensification of Russian relations with China started in 2012 since the reelection of Putin. According to Angela Stent (2016) the pivot to Asia set off in the annual Asia-Pacific Economic Economic Cooperation summit that took place in Vladivostok in 2012 (APEC). The summit was to symbolize the Russia's becoming a real Asian power. In 2013, Vladimir Putin proved to reinforce Russia's pivot to Asia by visiting such countries as South Korea, Indonesia and Vietnam. However, already in 2014, Putin attended the Conference on Interaction and Confidence Building Measures in Asia, where president signed 40 important documents that are meant to spur economic ties between Moscow and Beijing in the next 30 years. In October of that same year, Chinese Prime Minister Li Keqiang payed a visit to Moscow, where 38 documents were signed as an evidence of tremendous changes with regard to cooperation in different areas. Next, in November, while visiting APEC summit in Beijing, Vladimir Putin managed to sign 17 complementary agreements between Russia and China. The contracts were signed mainly in three fields such as infrastructure and technology, finance and energy, which will be discussed in greater detail in the next section.

1.6 Main areas in Russian-Chinese relations

1.6.1 Energy

Prior to the Ukraine crisis, cooperation in the energy field was a key part of Sino-Russian relations. The main constituent of Russia's budget earnings comes from realization of natural resources to international markets that estimate nearly 70% of budget income. As China started to gain momentum in the development, China sought for access towards new natural resources required for the economic growth. One of the most prominent achievements between Russia and China with regard to the field of energy is the acquisition of a significant share in Russian oilfield Vankor by China National Petroleum Corporation (CNPC) an agreement that was signed with Rosneft in 2014. Moreover, Chinese corporations such as the Yangtze, State Grid Corporation and Sanxia do have plans to build power plants in Far East and Eastern Siberia as well as common projects to enhance coal supplies to China. Nevertheless, these projects are not of that scale as a breakthrough concerning the cooperation in the field of gas. The gas deal was signed by Russian president during his visit to Shanghai in May. CNPC and Gazprom managed to sign a contract that will provide Chinese side gas from Siberian fields, namely Kovytka and Chayanda, the gas will be supplied through a pipeline that is named “The power of Siberia” that is expected to deliver 38 bcm per annum till 2030, both parties agree that it was an important factor towards mutual cooperation. When Putin visited Beijing in November in 2014, one more important contract on the second pipeline was signed, the contract that was envisaged in 2006, this project is to deliver 30 bcm annually from Western Siberian gas fields. Alexander Gabuev (2016) holds the position that the Ukraine crisis has motivated Russia to diversify its gas exports, thus, finding a way to enter Asian market, the greatest challenge that Russia encounters is that with the sanctions imposed and comparatively moderate prices for oil, Russia is compelled to opt ground-based pipeline projects that eventually limit gas exports to one costumer without any possibility of diversification. As to Russia, it should be taken into account that China as a partner could not replace European gas markets with respect to capacity and volume of trade, today, Russia sells nearly 170 bcm to Europe per annum, while in case if all the foreseen projects are carried out, Gazprom company can deliver 76 bcm for Chinese side.

1.6.2 Finance

While partnership with China in the field of energy is a long project, financial issues are more compelling for Russian businesses and firms. The sanctions imposed in July 2014 limited the admission to Western financial markets especially for financial institutions that belonged to state, which made financial institutions from West to reassess the sovereign venture for borrowers from Russia and reject future loans for entities registered in Russia. As a consequence, Russian companies turned to be isolated from the core financial centers of the world, which are London and New York that have been considered as a preferential destination for funding (ibid). In May in 2014, an official delegation headed by First Deputy Prime Minister Igor Shuvalov was sent to Beijing in order to find alternative replacements of Western loans by Chinese financial institutions. Chinese delegation headed by Vice Premier Zhang Gaoli, in his turn gave a word that Beijing will provide a support, also, Vice Premier touched upon the importance of boosting the pivotal role of State currencies with regard to reversible trade that would reduce the dependence on dollar and euro, next, there was agreed that Chinese state-owned banks will provide loans for Russian companies, and finally both parties agreed upon the listing of Russian debt and equity in Honk Kong. From that visit on, a number of significant developments demonstrated both potential and limitations regarding the financial cooperation between Russia and China. One of the most vivid achievements in bilateral transactions is the possibility of using natural currencies in transactions between two countries; when Li Keqiang visited Moscow in 2014, the Central Bank of Russia and the People's Bank of China managed to sign a currency swap agreement that amounted to 150 billion with a period of application equal to three years ($25 billion). However, basic guiding principle of currency swaps is not political, transactions that are implemented in national currencies will benefit up to 7% for a buyer of Chinese commodities, taking into account that renminbi is not a convertible currency, it will prevent from foreign exchange risks. It would become a challenge if Russia and China initiated the trade of natural products such as oil and gas in State currencies. In November of that same year, Russian president Vladimir Putin gave the whisper with respect to that issue will be discussed in the future prospects, according to Putin, Beijing proposed to acquire crude oil from Vankor oilfield already in Chinese currency, expecting that Rosneft would buy the drilling equipment from China afterwards. Once this question is solved, it will help Moscow reduce the peril of being too dependent on the euro and the dollar, as to China, there will be another opportunity to promote its currency before going fully convertible In May 2014, China alluded that it might open the Shanghai stock exchange for foreigners, and once it is open, Russian companies might obtain preferable attitude towards investments from Chinese state-owned banks and investment funds that would acquire Russian stocks. Unlike Shanghai Stock Exchange, Honk Kong Stock Exchange has been open for foreign companies for a long time and was a host for initial public offering of Rusal in 2010 (ibid). However, because of the pressure coming from the US Treasury, many Honk Kong banks refused to provide bank accounts for Russian individuals and companies. With regard to alternative for Western capital markets and possibility of receiving credits from Chinese state-owned banks, there are three main issues that should be considered. Firstly, Chinese state-owned banks and institutions are meant to provide the loans for Chinese state-owned enterprises, not for private or foreign companies. Secondly, since the launch of anti-corruption program initiated by Xi Jinping in 2013, a lot of managers were put into the jail, which eventually led to reluctance of newly elected managers to go for new loans provided to international companies. In third place, after the Third Plenum of Chinese Communist Party Central Committee's that was held in November 2013, requires Chinese state-owned enterprises and state-owned banks to be more conservative with regard to efficiency in using their capital (Ligang Song: 2014). Taking everything mentioned above into account, China will not replace Western capital markets at an early date, but in case if Western sanctions remain in place, in the medium and long terms, there is good potential for Russian companies to catch up with opportunities provided by China. There is a good possibility for China to seize the opportunity of Russia's isolation from West, which may provide ground for closing the deals on Chinese terms.

1.6.3 Infrastructure and technology

The last but not the least field of cooperation between Russia and China where noticeable changes happened after the Ukraine crisis took place is interaction in infrastructure facilities and technological realm. Prior to Ukraine crisis, there was an unofficial prohibition on Chinese involvement in great infrastructure building projects located in Russia for the last 15 years, as Moscow was afraid of increased competition for domestic companies and the subsequent inflow of Chinese migrants. The ban was removed in 2014. Such companies as The Chinese Railway Construction Corporation (CRCC) spoke up for taking several projects on constructing several stations in Moscow subway. With sanctions imposed on Russia and subsequent limitations with regard to transfer of technology from the West, and simply because many Western companies view Russia as a risky venture, this conjuncture may spur Russia to turn increasingly to China for technology. Russia cannot replace all kind of technologies that was bought from the West, especially regarding the offshore drilling, but there are some available alternatives for a reasonable price, one of the main areas where Russia shows deep interest is telecommunication facilities. Technological cooperation between Russia and China is particularly delicate in military sector. There was an informal ban imposed on selling to China highly advanced military equipment for the last 10 years. The ban was associated with Russia's concerns that weapons and equipment might be used against Russia in border clashes, moreover, Russia regarded that Chinese side might produce copies of weaponry and force competition in markets where Russia is an unconditional leader. As for now, the number of supporters of unlimited cooperation with respect to military-industrial realm is increasing and Moscow wants China to buy more advanced equipment as a matter of compensation for probable future copying of weaponries. However, Chinese side admits that cooperation with Moscow in the military field is vital for modernization of Chinese army.

1.6.4 Central Asia

As China has to handle with growing fundamentalism and separatism, especially in Xinjiang province and Russia encounters terrorism in North Caucasus, the policy of both countries coincides with regard to the support of Central Asian countries in fighting extremism. Because of these challenges, the Shanghai Cooperation Organization (SCO) becomes the main tool in collaboration between Russia and China on the issue of Central Asia. The main goals of the SCO is to jointly fight extremism, separatism and terrorism. However, Russia and China have some frictions concerning the enlargement of the SCO: China and India still have border disputes, while Russia and India relish close ties, this can lead to a greater contention between Russia and China. Nevertheless, Moscow and Beijing managed to decrease their contention in Central Asian region with Russia remaining ruling political power over the region because of long cultural and linguistic influence, while China becoming prevailing economic power in relation to its needs for resources and investment projects China's sweeping economic growth followed by the decrease of oil prices and subsequent devaluation of ruble and following imposition of Western sanctions, raised serious doubts in relation to Russia's and China's role in the region. Moreover, in 2013 China expressed its will and pursuit to build a Silk Road Economic Belt, which is better known for now as One Belt One Road (OBOR). The program is meant to bind China with Europe through several transportation and construction projects that will take place in Central Asia (ibid). Central Asian countries were extremely positive about this project, while Russia remained reserved, unless Vladimir Putin and Xi Jinping agreed upon Eurasian Economic Union (EEU) to be integrated into OBOR project in May 2014. It becomes more evident that China gets more and more involved in the region through economic activity, which can be witnessed through construction of railways, highways and pipelines. In addition, in March 2016, China expressed its willingness to create counter terror union including Tajikistan, Afghanistan, China, Pakistan and, which might be considered as Russia is decreasing geopolitically in Central Asia. Nevertheless, Moscow responded quite positively with regard to this alliance commenting on possible alternative to CSTO where dominates Russia, but only this time under Chinese umbrella. However, Central Asian countries got to know how to maintain equilibrium in their ties with both Moscow and Beijing, and how to control economic and political ties. Nevertheless, Central Asian countries are more familiar with Russia with regard to language, culture and common history, while they are quite new to China in all senses. In spite of this, Central Asian countries need Chinese investments and trade. As for now, China is very careful in maneuvering its activities concerning the region so as not to awaken Russian concerns and subsequent disturbance of balance in the area. Finally, all the central Asian countries including Russia and China share common vision of how the region should be run, this can be described by the fact that being mostly an authoritarian states, they are concerned about avoidance of any kind of uprisings, be it pro-democracy or Islamist forces, which eventually might menace their rule, taking into consideration current political conjecture, Central Asian countries are wary of opening up their societies for the West and that is why they welcome Russian and Chinese assistance in order to save the status quo.

1.6.5 BRICS

After 15 years since the term BRIC was coined by Jim O'Neill, the acronym turned from vague and doubtful notion into statutory political organization with promising ambitions. Nowadays, BRICS contributes to one-fifth of the global economic output and estimates nearly for 40% of world's population. Russia was playing a paramount role in creating the organization, which allowed Moscow to set the agenda for organization. China and other countries supported Russia's initiative for their own reasons. In 2006 the very first informal meeting of BRIC countries was held in Saint-Petersburg. Financial crisis of 2008 touched developed countries more than developing ones, which gave a justified reason for greater cooperation with the organization that led to a formal summit in 2009. However, there are still incredulity that different countries in relation to extent of democracy within the countries, population and wealth may operate as a whole. China stands out from the organization as a second largest economy in the world, a growing power that sees only the United States as a peer, moreover China is considered to be the largest holder of foreign exchange reserves. All countries of BRICS tend to gain a greater role on global arena, all five countries managed to establish new financial institutions in the face of New Development Bank and a Contingent Reserves Arrangement. Nonetheless, the plans of BRICS still are considered to be aspirational. China and Russia both consider the BRICS as a mean to reduce the dominance of the US over financial institutions. Finally, while Russia and China conduct the policy of anti-Western flank, Brazil and South Africa are eager to operate within the structures dominated by the Western countries, and India striving to interact with both sides, it will hinder the organization's ability to meet political and economic agenda.