The world has admired the ‘Chinese Miracle’ for a couple decades now. In recent negotiations over gas and other contracts in Siberia, China drove a hard bargain with Russia. It is reported that the massive natural gas project that Russian President Vladimir Putin negotiated with the Chinese government, after the West invoked sanctions over Russia’s involvement in Ukraine, is actually underwater for Russia. In other words, the pricing was negotiated so tight that Russia is just breaking even or losing money on the deal at these prices.
There has been an outcry in Russia regarding the Chinese border in Siberia where China has cut long-term leases with Moscow on Russian land, leading to charges that China is ‘annexing’ land from Russia. This has been a long-term worry in the Kremlin about Chinese intentions and comes from seeds of mistrust planted during the Cold War when Chinese and Russian relations were frosty.
In regards to Russia, or with any other country for that matter, China has kept Chinese interests front and center. They had the economic growth, the cash in the bank, and were the envy of the world so they could demand very favorable terms with trade partners.
This may be changing.
As the Chinese economy slows and their ineptitude at managing financial markets becomes clear to the world, China may be less able to drive a hard bargain. The Chinese communist leaders may actually need Russia to help them. Infrastructure projects in the Russian far east would be a natural outlet for an overabundance of cheap Chinese labor. At the very least, Russia could provide a type of kindred, totalitarian support to Russia on the geopolitical stage. Russia and the Chinese government seem to be already coordinating propaganda but the need for this type of support could increase drastically if Chinese social unrest worsens substantially.
Simply put, China may be a little more humble in the coming years if this downturn lasts for a while. There is unfortunately a great deal of economic readjustment that needs to happen in China and they are going to need friends. Russia I’m sure will be one of them.
