China's takeover of Russia

As Russia becomes a Vassal state world trade and energy flows will forever be alter and so will U.S. hegemony

Amidst the ongoing proxy conflict between the United States and Russia, and NATO's recent move to freeze Russia's $300 billion in foreign reserves to fund the Ukraine war, Russia has forged an uneasy alliance with several influential nations. Notably, India, Iran, and China have emerged as crucial partners, providing Russia avenues to circumvent Western sanctions and sustain global trade in oil, natural gas, and commodities. This strategic alignment has bolstered Russia's economy, with GDP experiencing a significant surge amidst wartime conditions. According to the IMF, Russia's economy grew by 3.6% in 2023 and is projected to expand by 3.2% in 2024. These growth rates outpaced both the United States and Europe, despite enduring severe economic sanctions and isolation from major global markets.

Of these alliances, the relationship with China stands out as pivotal, profoundly influencing global energy dynamics and international trade patterns.

Russia's pivot from West to East coincides with a period when both itself and its ally China are navigating tense geopolitical and military relations with the United States. On the surface, this alignment may seem ideal—a close geographic proximity, a shared adversary in the United States, historical ties, and China's status as the largest consumer of commodities juxtaposed against Russia's role as one of the largest producers. However, beneath this apparent harmony, China is strategically leveraging its position to gradually undermine Russia's economic sovereignty.

The enemy of my enemy

In the weeks preceding the onset of the Russian-Ukraine War, Chinese and Russian leaders proclaimed their partnership as limitless. More than two years since the conflict began, China has refrained from condemning Russia, instead openly backing Russia's broader security concerns and laying blame on NATO and the United States for prolonging the conflict through military aid to Ukrainian forces. Demonstrating solidarity, both nations conducted joint air patrols near South Korea and Japanese airspace during President Joe Biden's visit to the region. These actions suggest a relationship that echoes a military alliance.

However, despite their alignment, both Russia and China remain independent global powers with distinct agendas for Eurasia. Russia's historical focus has long been its strategic position in Eastern Europe, underpinned by its geopolitical imperative to dominate the Eurasian Steppe. This ambition was most pronounced during the Cold War, when natural barriers like the Baltic Sea to the north and the Carpathian Mountains and Black Sea to the south provided defensible positions, limiting potential Western invasions to narrow straits easily controlled by Russian forces.

Following the collapse of the Soviet Union, Russia lost control over the strategic steppe regions as former Warsaw Pact countries gravitated towards NATO. This shift marked red-lines for Russia, particularly with Georgia and Ukraine, which faced the prospect of NATO membership. Recognizing the geographical disadvantage and potential strategic encirclement should Georgia or Ukraine join NATO, Russia opted to take preemptive action. This led to the invasion of Georgia in 2008, resulting in the occupation of 20% of its territory, followed by the annexation of Crimea in 2014, and ultimately the invasion of Ukraine proper in 2022.

Simultaneously, China has been pushing back against what it perceives as U.S. encirclement in the Indo-Pacific region. China's primary political objective is the reunification with Taiwan, driven by three strategic imperatives for Beijing:

1. Finishing the Chinese civil war

   

2. Gaining the control of the semiconductor industry

   

3. Continual access of energy to feed it’s industrial base economy, more than 70% of it’s oil and natural gas comes from the Strait of Malacca

If China were to decide to invade Taiwan, they would confront a Taiwanese military equipped with advanced American weaponry, potentially escalating into a kinetic conflict involving the United States. The U.S. maintains significant non-NATO partnerships with countries like Japan, the Philippines, and South Korea, while also engaging in the Quadrilateral Security Dialogue with India, Australia, and Japan. These alliances are primarily focused on containing China's regional influence and ensuring stability in the Indo-Pacific.

China, much like Russia, adopts a strategy of asserting claims over broader territories. This includes the entire South China Sea encompassing the nine-dash line, airspace in the East China Sea, disputes over islands with Japan, and territorial disagreements with India in the Himalayas.

A friend in need is a friend indeed

Economically, Russia and China complement each other quite effectively. China's economy, valued at $18 trillion nominally and surpassing the United States at $35 trillion in Purchasing Power Parity terms, benefits from a vast population base that is capital-rich but resource-poor, particularly in crucial industrial resources such as oil and gas which it can not easy access.

In contrast to China, Russia's economy is smaller at $2.24 trillion, with ten times fewer people and reduced capital stock due to Western sanctions. However, Russia excels as an energy superpower, possessing all the essential resources and minerals that China lacks. Russia boasts proven oil reserves of 80 billion barrels, ranking 8th globally, alongside the largest proven natural gas reserves at 47.8 trillion standard cubic meters as of 2022. Additionally, it holds significant coal reserves, ranking 2nd globally at 160,364 tonnes, along with vital minerals such as lead, nickel, copper, diamonds, and zinc. Importantly, these resources are predominantly located on Russia's Asian side, closer to China's industrial base.

Russia's vast natural resource deposits, located far from its population centers and capital, have hindered its ability to fully exploit these valuable assets. In contrast, China, with its immense human and financial resources, is better positioned to capitalize on Russia's shortcomings. Russia struggles with domestic innovation, shallow capital markets, human capital erosion due to ongoing conflicts, and heavy reliance on gas and oil exports, factors that have pushed it towards closer alignment with China.

The economic relationship between China and Russia has historically swung between mutual exploitation and strategic trade, especially in the realm of arms. China's practice of reverse-engineering Russian technology and its targeted support for Russia during periods of economic isolation underscore the intricacies of their relationship, which oscillates between cooperation and competition. Recent trends show a reduced level of arms trade between the two nations, suggesting a strategic reassessment by China, possibly influenced by diminishing returns from Russian technology and arms.

Despite publicly declaring non-support for Russia's conflicts, China has played a crucial role as a supplier of dual-use technologies that help Russia bypass Western sanctions. This support is essential for Russia's ongoing military operations, highlighting a strategic collaboration that is substantial though not openly acknowledged. Russia's growing economic and military reliance on China, intensified by Western sanctions, has shifted the regional power dynamics. This dependence risks curbing Russia's strategic autonomy and influence, potentially increasing vulnerability to Chinese influence and terms in their bilateral relations.

The dynamic between China and Russia is poised to evolve further, with China consolidating its advantage. Russia's dependence on China for economic and military backing, exacerbated by international sanctions, positions China as the preeminent partner. This situation may empower China to pursue more assertive regional policies, potentially at Russia's expense, particularly in the post-Ukraine conflict geopolitical landscape. This trend increasingly places Russia in a subordinate role to China, a development long feared by Russian national security strategists over the past decade.

The economic relationship between Russia and China is marked by significant asymmetry, where China plays a pivotal role in Russia's trade turnover while Russia holds a minor position in China's global trade portfolio. This imbalance underscores Russia's increasing economic reliance on China, particularly in the aftermath of sanctions and restricted access to other global markets due to its actions in Ukraine. Following the Ukraine conflict and subsequent sanctions, Russia has found itself in a weakened negotiating position, compelled to sell its oil and gas to China at reduced prices. This situation not only highlights China's economic leverage over Russia but also demonstrates China's strategic use of economic policies to exploit Russia's geopolitical vulnerabilities.

Russia faces substantial logistical and infrastructural hurdles in redirecting its energy exports from Europe to Asia, exacerbated by its vast geography and inadequate transport networks. These challenges significantly raise the costs and complexity of supplying energy resources to China, further diminishing Russia's economic gains and reinforcing its subordinate position in the relationship.

The evolving dynamics suggest that Russia is increasingly aligning itself with China in the long term, characterized by economic dependency and strategic concessions. Despite its asymmetry, this partnership appears poised to persist because Russia has limited alternative markets, while China benefits from discounted resources and a weakened competitor on its borders.

The Sino-Russian relationship, often described as a "strategic partnership," starkly highlights Russia's limited alternative alliances compared to China's extensive global engagements. This contrast underscores Russia's growing strategic isolation and reliance on China, particularly following Western sanctions imposed after the annexation of Crimea. As a result, Russia has been compelled to shift its focus on energy exports from Europe to China, facilitated by major pipeline projects such as "Power of Siberia 1 & 2".

These adjustments signify not only a redirection of trade but also a significant shift in leverage towards China. China benefits from accessing discounted Russian energy while maintaining a diversified global energy portfolio. However, Russia's strategic pivot towards Asia encounters substantial logistical and infrastructural challenges, especially in rerouting energy supplies from European to Chinese markets. The vast geographic distances and inadequate infrastructure further strain Russia's economic position.

The complexities of energy agreements between Russia and China, exemplified by projects like the Power of Siberia pipeline and potential expansions, underscore the intricate nature of their economic ties. China's cautious negotiation stance and delayed agreements reflect its advantageous position, allowing it to dictate terms and timelines due to Russia's urgent need to compensate for reduced European demand.

The evolving dynamics suggest a pattern where Russia's economic decisions are increasingly influenced by Chinese interests, potentially leading to a future where Russia aligns more closely with Chinese geopolitical priorities. This dependency could prompt Russia to make political concessions, further deepening its alignment with Chinese foreign policy objectives, including in contentious areas like the South China Sea.

Broader Crossing

Russia's current economic vulnerabilities could present opportunities for China to revisit historical territorial grievances from what it terms the "century of humiliation" spanning 1839 to 1949. During this era, Russia took advantage of a weakened and divided China, deploying thousands of troops along their border to pressure China into conceding substantial territories, particularly Outer Manchuria. The formalization of this territorial transfer occurred through the Treaty of Aigun in 1858.

Today, Russia's economic challenges, compounded by sanctions and geopolitical isolation, may weaken its capacity to resist assertive territorial claims by China. This situation highlights the intersection of historical legacies, economic pressures, and contemporary geopolitical strategies within the Sino-Russian relationship.

Outer Manchuria held significant strategic importance for Russia. It encompasses key cities like Khabarovsk and Vladivostok, the largest port on the Pacific Ocean and home base of the Russian Pacific Fleet, crucial for maintaining its naval and nuclear deterrence capabilities. Conversely, China's relinquished territories restricted its access to the Sea of Japan, confining its maritime access primarily to the East and South China Seas.

During the 1960s, China and Russia saw their relationship deteriorate primarily due to differing interpretations of communism. Tensions escalated to a military engagement in March 1969, when these two major communist nations clashed over the demarcation line of an island.

This territorial dispute is not the sole source of divergence between the two countries. Following the collapse of the Soviet Union, five new countries emerged, many of which turned towards China after centuries under Russian rule. China has dedicated years to cultivating its Belt and Road Initiative, aimed at reviving ancient Silk Road trade routes. The region is rich in hydrocarbons, and with China's assistance, a network of oil and natural gas pipelines has been constructed to transport resources from Central Asian countries—primarily Turkmenistan, Kazakhstan, and Uzbekistan—into China.

Conclusion

China has effectively positioned former Soviet Union countries, which now supply 15% of its natural gas, as direct competitors to Russia in the global market. Consequently, Russia has relinquished much of its influence over these states to China. These developments have compelled Putin's Russia to increasingly open up its Far East to Chinese capital, investment, and labor. With both countries sharing a common adversary in the United States and the West imposing sanctions that isolate Russia from Western capital markets, China has the opportunity to observe Russia's drift towards economic dependence. This trend could potentially transform Russia into a vassal state, reliant on China for economic protection while given China access to it’s vast natural resources and formidable military capabilities. Russia currently boasts the world's fifth-largest military force, with 1.15 million active-duty personnel and nearly two million reservists. It also maintains the largest stockpile of nuclear weapons globally, possesses the second-largest fleet of ballistic missile submarines, and ranks among the few nations with operational strategic bombers. Such dependencies would arguably consolidate China's status as a global superpower.