Novaya Gazeta under the heading “Current Events Guarantee Victory for China. Russia's dependence on the Celestial Empire will begin to grow at a gigantic pace. Why?" published an interview with a well-known Russian sinologist, director of the Center for Comprehensive European and International Studies at the Higher School of Economics (HSE) and a former employee of the Center for Analysis of Strategies and Technologies (CAST) Vasily Kashin .
- China, as a rule, supports Russia when voting at the UN, and now it has already abstained twice. What does this say about his position?
Vasily Kashin: - The Chinese usually stand in solidarity with Russia, but in some cases, when the Russian position is too contradictory, when support directly involves China in some kind of deep conflict, where it does not want to get involved, then it refrains. An example is the Chinese vote during one of the meetings of the UN Security Council during the aggravation of the crisis around the Syrian city of Aleppo in 2016. There was an assault on the city, everyone terribly condemned Russia, but China abstained.
When it comes to territorial issues, China also abstains, for example, when Russia annexed Crimea. Therefore, it was predictable that China would abstain from voting on the condemnation of Russia on the issue of the territorial conflict in Ukraine. A yes vote would cause direct foreign policy damage to the Chinese.
They will never support the violation of territorial integrity on the basis of referendums. That is why they could not support either Crimea or the recognition of the "people's republics" of Donbass.
“They have Taiwan right next to them.
“That's right: the referendum is the Taiwanese separatists' favorite tool. And the Chinese will not approve such a precedent, they will not subscribe to it. However, this does not reflect their attitude towards Russia's actions. In the issue of the same Crimea, the Chinese provided some practical support to Russia.
- Practical - what is it?
— For two years, in 2014-2015, they gave Russia loans to refinance company debts for more than $30 billion. And they built an energy bridge to the Crimea, since a special submarine cable of such power is produced only in one of the European countries and in China. What they could do. But of course, they will not shoot themselves in the foot out of love for Russia.
- But love for Russia itself - does it exist? If, say, China has to choose whom to "love" more - Russia or the United States, who will it choose?
We have common interests with China. Both countries are involved in a confrontation with the US. In China, it began in 2018, and in 2020, against the backdrop of covid, there was also a sharp deterioration in relations. At some point, even before the start of hostilities in Ukraine, China was close to Russia in terms of hostility to the United States. When the "military special operation" in Ukraine began, we already had a simple break in ties, and China still has only bad relations.
At the same time, the Americans have an understanding: Russia, no matter what it does, does not pose a systemic threat to American dominance in the world economy and cannot claim world leadership. And China is indeed an existential threat to the US. Their economic models are incompatible. Therefore, the struggle between the US and China will go on until one of the parties loses and retreats.
So far, we have a common interest with China: to oppose and harm the United States.
Can China use this as a tool against the US? Will he help Russia to spite America?
— They helped us, as I already said, in 2014‒2015. Now our stability is based on the fact that, judging by the latest data, we have transferred a significant part of our gold and foreign exchange reserves into Chinese securities. We have about $130 billion now in yuan assets. That is why the actions of the US and the EU led to the arrest of only half of Russia's gold and foreign exchange reserves. And given that the reserves were initially excessive, the situation is not as sad as it could be.
In addition, in recent years, China has been very actively replacing Europe in a number of market segments related to the supply of components, industrial equipment, and so on. We gradually saw a decrease in the share of Europe and an increase in the share of China in trade; last year, China was already about half of the European level. I expected China to catch up with Europe in terms of trade with Russia within about 10 years. But now we have practically a blockade from Europe, there are supplies of energy carriers and certain goods, and it is not clear what will happen to them next.
And now, I think China will be our main trading partner either this year or next.
And further, Russia's dependence on trade with China will begin to grow at a gigantic pace.
— How useful is the transfer of reserves in yuan, if it is an inconvertible currency?
- The yuan is included in the basket of IMF reserve currencies, although there are indeed certain restrictions, it is not as convenient for making international payments as the dollar and the euro. But the share of the yuan in the settlements was constantly growing, and in principle it is possible to conduct international trade in yuan, albeit with slightly higher transaction costs.
And with China, you can simply trade in yuan, we have a legal framework for this for a long time. And there is trading in the yuan-ruble currency pair, that is, there is no need to convert them through the dollar, there is an infrastructure for this.
And you can, as I understand it, try to use the yuan in settlements with third countries. China generally has a goal - to promote the yuan as an instrument of international settlements. I think that what is happening today will give the potential for a powerful breakthrough in this direction. For China, this could be a good moment.
- What can we get from China when the volume of trade increases? For example, automakers stop deliveries of cars and spare parts to Russia. Can China replace them?
China is the world's largest manufacturer of industrial products of all kinds. I believe that Chinese automakers will take the place of Korean and European ones. They, apparently, can somehow get the production assets.
- All these factories in the Leningrad region, in Kaluga and others will go to the Chinese?
- I think yes. We already have assembly plants of Chinese car manufacturers, for example, Haval. At an earlier stage, the Chinese tried to enter Russia, but were not very competitive. Now they will come here again - and this will be a powerful export breakthrough for the Chinese auto industry, after all, Russia is not the smallest market, and the Chinese here, as I assume, will become the dominant force.
They have bad cars.
- It's not like that anymore. They invested a lot in quality improvement, they followed the path of the Koreans. And now the reputation of Chinese cars as "buckets of nuts" is not true, the quality is acceptable. In some ways, of course, they can lose, but in some ways they are comparable to budget models of European cars. Plus, they have no competition in Russia. That is, the Chinese have two directions here. The first is the occupation of the Russian car market where European imports will leave, the second is the gradual replacement of Europeans in the supply of auto components.
- Once I inadvertently bought Chinese headlights for a Volkswagen, then I really regretted it.
- What year was that?
- About eight years ago.
- It was a different reality, then the reputation of the Chinese auto industry was different.
- In Russia, the car fleet is predominantly European and Korean, in the coming years, spare parts will be needed specifically for it.
— I think the Chinese will be able to supply them. The same cars are sold on the Chinese market, where they have a much higher localization, and all this will most likely go to Russia. Even if the Europeans try to prevent this, then, given the Chinese realities, a huge number of resellers will immediately appear who will provide any flow of spare parts. Although here, of course, it is necessary to talk with experts in the automotive industry.
- A much more serious problem awaits us with the fleet, when Western companies withdraw the leased aircraft, stop serving those that remain in Russia, and will not even sell spare parts. We will stay with the Superjets, and a dozen and a half of them are produced a year.
- "Superjets" we can produce more...
- Only their engines consist of French components, which will not be.
- It's true. But in this regard, China cannot help us. The Chinese are even worse off than we are because their civil aviation programs are even more dependent on foreign components than our Superjet. And if we have the possibility of at least limited production of old and completely Russian models - Tu-204 or Il-96, then the Chinese do not see such prospects.
Most likely, they will not be able to help us in the aviation industry.
- How will China help our "special operation" industrial complex? It also depends on supplies from the West, doesn't it?
- With our military-industrial complex, it's just easier. Both in our country and among the Chinese, it has been under almost comprehensive Western sanctions for a very long time. The Chinese have been strengthening in recent years, and we have cooperated with them in the military-industrial sphere. Apparently, cooperation will grow, I believe that sanctions will have the least impact on it. The only thing, due to the complete impossibility of buying Western industrial equipment, we will buy more Chinese.
“We received from the West not only equipment, but also technologies and software. Here, too, can we count on China?
- It is impossible, of course, to talk about all technologies at once, this field consists of a thousand different directions. According to some of them, China has already become one of the world leaders, and according to others, it can only copy something sadly. There is a group of industries where we can develop powerful synergy with China, we can work together.
They will be interested in using Russian developers, mathematicians.
There are areas where they may be interested in industrial cooperation, there are areas where they are able to meet our needs for equipment. And they already have enterprises that, as part of the economic war with the United States, are under American sanctions. Including manufacturers of electronics and certain types of industrial equipment. Such enterprises simply God himself ordered to go to the Russian market. Although it is clear that there will be a number of areas where Chinese equipment will not be able to replace European equipment, and Russia will still try to purchase it in Europe through some channels.
- Will China be able to replace equipment for the oil and gas sector?
- Some kinds can. China is doing very well with equipment for the electric power industry, as well as with transport engineering. If our friends start refusing to service us, say, "Sapsanov" or in spare parts, then China copied, improved and produces similar trains a long time ago. Although there are areas where they will not be able to help us.
For example, medical equipment?
- In fact, the Chinese are just large manufacturers of medical equipment. This also manifested itself during the covid crisis, when it was they who increased the export of, for example, ventilators.
- And the quality?
- Yes, in general, the whole world bought their equipment, including the Americans, no one particularly complained. Although medical equipment is a delicate thing, I can’t speak with confidence here, you need to ask narrow specialists.
- Russia, apparently, will not only have to look for imports somewhere, but also somewhere to put its exports. Does China need so much gas, oil, metal and everything that Russia supplies to Europe?
- Potentially, yes. China is 80% dependent on iron ore imports and 70% dependent on oil imports. And he will greatly increase gas consumption, as he set an ambitious goal of reducing CO2 emissions. At the same time, China's relations with the United States are aggravated, and this is expressed in economic wars that involve America's allies - Canada, Australia and New Zealand. And these are our direct competitors as suppliers of wood, gas, oil and other raw materials to China. Therefore, China will have an interest in reorientation.
Where will the infrastructure for this come from? Experts laugh at Power of Siberia: there is no gas at one end, and consumers at the other.
— The sharp increase in deliveries to China really requires a new export infrastructure — the construction of new pipelines, the expansion of the railway network, the construction of port facilities. This will take time and investment. That is, it is impossible to instantly increase exports to China. In addition, when China becomes a monopoly buyer for many of our products, it will have the opportunity to dictate prices. And you have to live with it.
This will allow our industry to survive and provide employment, but we will lose money until there is a reduction in foreign political tensions around Russia.
- That is, until we can return to trade with the West?
- Generally speaking, yes. This will be a very high degree of dependence.
— The Chinese do not give investments just like that, they put forward very strict requirements for their share of the profits.
- They are not so tough, they behave like normal investors: if they see an opportunity to squeeze you somewhere, they will do it.
- As a result, Russia will have a huge dependence on China, much more than now on the West. What does this threaten us with, except that the Chinese will begin to dictate prices?
- If economic dependence reaches a very high level, then China will have the opportunity to use the levers of economic diplomacy to influence our political positions.
Is China generally inclined to political pressure on those who depend on it?
— China has recently been developing a policy of sanctions pressure and economic coercion.
In cases where they believe that someone has violated their fundamental interests, they do it very harshly.
It can be for any wrong position on the issue of Taiwan, for supporting any opposition movement within China. They have been waging a sanctions war against Australia since 2020. They didn't do that with Russia.
“Just keep in mind that they can do it too. Before the “special military operation” in Ukraine began, it was believed that China would reach the level of the European Union in trade with us for another ten years, and in the meantime we would develop ties with other Asian countries. And by the time Europe has reduced its importance, we will have, in addition to China, good trade with other states. But the sanctions have already dealt a blow to our relations with South Korea and Japan. Now everything has accelerated, and a complete reorientation towards China, I think, will take place within a year or two.
- If China decides to put pressure on a partner, does it concern its position on some purely Chinese affairs, such as relations with Taiwan, or may it want to correct something in Russian domestic policy?
— Why the Chinese are good as partners, for which many people love them, is their non-interference in internal affairs.
- That is, they will not demand respect for human rights and other "nonsense"?
- Will not. And there is a specific example that dates back to the 1990s. He played an important role in creating an atmosphere of Russian-Chinese trust. If you remember, then there was a period when the communists controlled the executive power in many Russian regions and had the largest faction in the State Duma. They demonstrated to China in every possible way that they love it and want to be friends. But China, having such a trump card, did not take a single step. They did not have any activity, except for inter-party relations and joint trips to the Mausoleum. As far as I understand, the leadership of Russia, back in the Yeltsin era, appreciated this. Therefore, there is a certain level of trust.
- In the 1990s, China could not influence much.
- They had the opportunity to get into politics with us, but they did not use it.
“They didn’t help Russia in the 1990s the way the West did.
- Our entire defense industry survived at the expense of China. That is, the Chinese still played their role.
- It turns out that not directly, but China can actually support the “special operation” in Ukraine? Because sanctions are designed to stop hostilities, and China can smooth out their effect on Russia?
- It would be correct to formulate it this way: China will not spoil relations with Russia for the sake of pressure towards ending the “special operation”.
Western sanctions will not be lifted, even if stopped now, they are designed to destroy the Russian economy and lead to regime change. And China is clearly not interested in this.
The Chinese do not like the "special operation" in itself, it surprised them, there is a statement by the Minister of Foreign Affairs Wang Yi about this, but they do not need the defeat of Russia.
- China, it turns out, in this situation - the only beneficiary. Does he sit quietly and wait "until the corpse of the enemy floats by"?
- Exactly. Armed conflicts, as we know, benefit the most from those who do not participate in them. In fact, all these developments guarantee China's victory in the new cold war. Everyone involved in this will suffer the heaviest economic losses, and China hardly. Probably, it will be affected by the rise in energy prices, but strategically its positions will have to be strengthened. And Russia will become economically dependent on him. Another important factor: after the introduction of extreme sanctions against Russia, the United States has no tools to contain it, except for the military. Accordingly, significant US military forces will be tied to Europe and cannot be used to contain China in Asia.