The Status Quo of Cooperation between China and Russia, and Their Problems

Toshihiko Shiobara

Representative of the Ryoma-kai in the 21st Century

 

Russia promoting Eurasian Economic Union (EEU), and China implementing Silk Road Economic Belt (SREB) and “Belt and Road” initiative (BRI) are confronted with each other on interests in Central Asia. Now, Vladimir Putin proposes a new idea, that is, “Larger Eurasian Partnership” (Большое евразийское партнёрство) in order to sublate this contradiction. In this paper, analyzing four aspects－transportation, oil and gas, arctic zone, and military affairs－of Russian-Chinese cooperation, some problems hidden in this cooperation will be shown.

 

1. Overall Schemes of Russian-Chinese Cooperation

 

After Ukrainian crisis which became an issue in the spring, 2014, Russia tried to escape from the political and economic crisis by tightening relationship with China against American and European sanctions to Russian annexation of Crimea. Consequently the coupling Russian EEU to Chinese SREB or BRI become a topic. President Putin indicates in the message to Congress in December, 2015, that Russia concludes an agreement in principle that Chinese SREB initiative should link with Eurasian integration. This statement was based upon the joint statement between Russian and Chinese top leaders in May, 2015.

In October, 2015, at the EEU Summit in Astana held in Kazakhstan, leaders of Armenia, Belarus, Kazakhstan, Kyrgyz, and Russia confirmed the intention to cooperate with China, and the Committee of EEU was required to be engaged in regulation of cooperation with China at the EEU Summit held in May, 2016. General Secretary of the Communist Party of China, Xi Jinping and President of Kazakhstan, Nussultan Nazarbayev signed a plan to cooperate to couple SREB to Nurly Zhol (Bright Path), determined as the development program of state infrastructures during 2015 and 2019 by the Kazakhstan government. In addition, there is the cooperation program of industrial investment between China and Kazakhstan, as well. A special zone called “Great stone,” which means an industrial park of China and Belarus is also a project concerned with SREB.

It is interesting that the Chinese side considers that projects based upon existing bilateral agreements with members of EEU should not be included in the list of linking projects. This view is the same to the each member country. These states do not intend to use EEU as the place to negotiate with China. In the members of EEU, there is Belarus, which is only an observer of the World Trade Organization (WTO), while Kazakhstan has just become its member on November the 30^th, 2015. EEU is hard to negotiate with China in a whole.

The appearance of ambiguous concept, BRI, made the situation intricate on the background of different objectives in mind. In May, 2017, International Forum “One Belt, One Road” was held in Beijing. The idea, “One Belt, One Road” was appealed by Xi Jinping, who became President of People’s Republic of China in 2013, and became widespread. This concept links “One Belt” expressing a land route, “Asia-the Middle East-Africa-Europe” with “One Road” consisting of a sea route called as the 21^st Sea Silk Road in order to expand Chinese interests.

On the other hand, Russia began to promote an idea of BEP against America’s initiative to build Trans-Pacific Strategic Partnership and China’s BRI. This concept intensifies the importance of Asia, which is illustrated in the proposal of Sergei Lavrov in August, 2017. The proposal requests to strengthen the relationship among Association of Southeastern Asian Nations (ASEAN), Shanghai Cooperation Organization (SCO), and EEU.

In June, 2016, at the meeting of St. Petersburg International Economic Forum Putin made a statement that Russia and other nations of EEU approve of creation of BEP into which China, India, Pakistan, Iran, counties of Commonwealth of Independent States (CIS), and other states will join. It is said that this idea of BEP was published after it was recognized by the Chinese government in May, 2016.

Linking EEU with SREB is developed, keeping ambiguous relations between BEP and BRI. On 25 June, 2016, Eurasian Economic Committee and Chinese Trade Ministry signed the joint statement on the beginning of negotiating process concerning a comprehensive agreement on trading and economic cooperation between EEU and China. The considering items include regulations on customs, technologies, sanitation, veterinary science, and plant sanitation, protection of intellectual property rights, competition, and electronic transactions. On August, 2016, a general approach to coupling EEU to SREB was agreed, and the first talks was held in Beijing. Thereafter, negotiations at the level of a working group are continuing to be held once in every two months.

On 24 August, 2016, at the meeting between the chairman of the board of directors of Eurasian Economic Committee, Tigran Sarkisyan, and Vice Premier of the People’s Republic of China, Zhang Gaoli establishment of a general data bank concerning plans and existing projects of EEU and China. The work to build a data bank has already started. On March, 2017, Eurasian Economic Committee finished to investigate and bring to light on preferential infrastructural projects which are to implement within its districts in order to support the formation of SREB, as well. 39 cases of the list of the preferential projects realized by members of EEU, and conducive to form SREB, are connected with construction of roads and modernization of existing roads, establishment of logistics centers, and development of traffic hubs.

In this way, it seems that EEU led by Russia and SREB initiated by China are moving to linking with each other. Nevertheless, BEP led by Russia and BRI initiated by China are difficult to understand the relationship (It is amazing that the joint statement of leaders of the two states did not refer to the word, BEP). According to a view, SREB does not have any aim to establish a free trade zone between EEU and ASEAN, while BEP does not promote political movement to cooperation within the BRI, infrastructural cooperation, free trade, unrestricted transfer of capitals, and development of human relations. The idea of BEP is still on the forming process, and has not become definite yet.

While Russia aims to form a strong regional center in the whole Eurasia through approaching EEU into SREB and BRI, which results in attracting investment in infrastructural projects in Cyberia and Far East, china aims to toughen function of transporting corridors in the Eurasian district through coupling EEU with SREB and BRI, and to increase an influence on all regions of the Eurasia by establishing the Free Trade Zone between EEU and Shanghai Cooperation Organization (SCO). It seems that the Chinese authority has not determined its position to BEP led by Russia, because China does not know the outline of BEP.

Chinese government intends to conclude with an agreement to build a free trade zone with ASEAN members. Simultaneously with negotiating well-grounded conditions on technology to establish a free trade zone with EU, China prepares for signing bilateral agreements with each country. Under the same way China is promoting to prepare for trading and investing institutions with EEU, and intends to bring about the creation of a free trade zone in the future.

 

2. Concerning cooperation with transformation

 

BRI is related to SREB on land. The following 6 projects are focused upon: 1) an economic corridor (China-Mongolia-Russia); 2) a new Eurasian land route (China Xinjiang-Uygur Autonomous Region-Kazakhstan-Russia-Belarus-Western Europe); 3) China-Central Asia-Western Asia (Xinjiang-Uygur Autonomous Region-Kazakhstan [or Kyrgyz or Uzbekistan])-Turkmenistan-Iran-Turkey-the Mediterranean or the Persian Gulf via Iran; 4) China-the Indochina Peninsula; 5) China-Pakistan (from Kashgar to Gwadar, approximately 3,000km); 6) China-Myanmar-Bangladesh-India. China aims to promote trade through building networks of railways and roads.

From the perspective of Russia, the project 1), the project 2), and the project 3) have important significance to link EEU with SREB. The project 1) includes aspects to enhance linkage between the initiative of SREB and Mongolian “Step-road” project, and it also has relations with Russian “Trans-Eurasian Belt” scheme and Northern Sea Route (NSR). Related with the project 1), an agreement on economic cooperation was concluded by presidents of Russia, China, and Mongolia at the SCO Summit in Dushanbe, Tajikistan in September, 2014. In July, 2015, roadmap for development of cooperation among three counties was adopted. In June, 2016, those presidents sighed the agreement of economic partnership among three countries when SCO Summit was held in Tashkent, Uzbekistan.

The project 2) has the international transportation route as a new automobile road, connecting Western China with Western Europe, besides the plan to build a high-speed railway between Moscow and Kazan. In future, this railway will be extended from China to Poland via Kazakhstan, Russia, and Belarus. In October, 2014, when Chinese prime minister, Li Keqiang visited Russia, Ministry of Transportation of the Russian Federation, Russian Railway, the Chinese National Development and Reform Commission (NDRC), and Chinese Railway signed the protocol on cooperation of the high-speed railway to build the Eurasian High-Speed Transportation Corridor between Moscow and Beijing. As for the railway connecting Europe with China, the first container train linked between Chongqing in China and Duisburg in Germany in 2012. It is said that at present in 2016, trains are operated from 17 Chinese cities to 39 cities in Europe(1). In August, 2017, the Russian-Chinese Working Group discussed the High-Speed Transportation Corridor “Eurasia” not only for passengers but also for freight, connecting Berlin-Moscow-Kazan- Ekaterinburg- Chelyabinsk-Kazakhstan-Beijing. Nevertheless, this project has no idea to find investors.

Related with the project 3), China, Kazakhstan, Azerbaijan, Georgia, and Turkey concluded an agreement on establishing a freight transportation consortium to build the route from China to Europe in November, 2015. In December, 2015, the regular railway service called Trans-Caspian Transportation Corridor, China-Kazakhstan-Azerbaijan-Georgia-Turkey-Europe, had begun. There is a plan to extend the railway from China to Uzbekistan into the Middle Eastern countries, and an idea to build a railway from Armenia to China via Iran and Kazakhstan.

Here, let us argue issues on a track gauge. If the gauge of a state A is different from the gauge of the neighboring state B, the same trains cannot be operated. It is necessary for the axle to be changed, or the freight should be transshipped. This means that different gauge can prevent tanks from moving from a state A to a state B. This issue has a great significance in the aspect of security.

In Russia, Kazakhstan, Uzbekistan, Turkmenistan, Armenia, Ukraine, and so on, composing the former Soviet Union, 1,520 mm gauge is adopted. The gauge in the age of the Russian Empire was 1,524 mm, but it was reformed into 1,520 mm in May, 1970. On the other side, the gauge is 1,435 mm in China, Iran, and Turkey. In both of India and Pakistan, 1,676 mm is adopted. Because the gauges are different in each region, how to determine the gauge is very important judgement to operate international railways. This judgement is concerned not only with security but also with cost of transshipment, therefore, the gauge issue should not be ignored in order to understand the influence of Russia and China in the Eurasian Continent.

In October, 2014, the Mongolian Parliament approved the bill to permit 1,435 mm gauge in the railway from the coal dressing factory to the border of China, appended with the agreement on cooperation to pass the national border between Mongolia and China. The new railway track gauge for Tavn Tolgoi-Gashuunsukhait, Khoot-Bichigt, and so on was agreed to be 1,435 mm, while

the new railway track gauge for Tavan Tolgoi–Gashuunsukhait and Khoot–Bichigt was agreed to be 1,435 mm. The Russian wide gauge (1,520 mm) spurs were approved for Arts Suuri-Erdenet, Tavantolgoi-Sainshand-Baruun-Urt-Khoot-Choibalsan, and Khoot-Numrug(2). According to the other information, the policy on rail transport, which was approved by the Mongolian Parliament, stipulates that the new railway track gauge for Tavan Tolgoi-Gashuunsukhait and Khoot-Bichigt was agreed to be 1,435 mm(3). In May, 2016, construction of the railway adopting the 1,435 mm had begun. On the other hand, it is well known that there is an idea of building a dual-gauge track from Ulan-Ude in Russia to Jining in China via Mongolia(4).

China intends to build the railway route, Kyrgyz-Uzbekistan-Iran from the Western China. There may be development of this idea as a result of the fact that President of Kyrgyz, Almazbek Atambayev and Presidento of Uzbekistan, Shavukato Miruzuiyaefu attended the International Forum “One Belt, One Road,” in May, 2017. There is a report that Beijing and Bishkek determined to formalize the construction of railway, China-Kyrgyz-Uzbekistan(5). Nevertheless, this information cannot be confirmed. Whether or not 1,435 mm gauge will be adopted has not yet been ascertained.

Whereas possibility of the other route, Iran-Afghanistan-Tajikistan-Kyrgyz-China, proposed by Iran in 2010, still exists. In December, 2014, the preparatory agreement of the plan was concluded in Dushanbe. In the same month, the formal opening of the railway, connecting Iran, Turkmenistan, and Kazakhstan, was held, while the railway between Turkmenistan and Kazakhstan had been opened in 2013. The almost total length of the railway adopts 1,520 mm, although the 1,435 mm gauge is used in the route from Gurgan in Iran to the national border.

In November, 2016, the railway from Atamurato in Turkmenistan to Akina in Afghanistan was opened as a part of “Lapis Lazuli Corridor,” which links Afghanistan with the West. In this way, networks of railways in this district are so complicated that it is not known that China will be able to build railways adopting the 1,435 mm gauge.

It is very interesting that China had succeeded to make Russia to permit the adoption of the 1,435 mm gauge in the interior of Russia. China built the railway from Hunchun City in China to Zarubino Port in Russia, using the 1,435 mm gauge. Although the Ministry of Defense and the Federal Security Service (FSB) which controls the frontier guards vigorously opposed this plan at the beginning, the Russian government abandoned the principle of application of the 1,520 mm gauge within the state because of friendship with China(6). In the Far Eastern district, the International Transportation Corridors like “Coast-1” and “Coast-2” are now coming into practice as the cooperation of transportation between China and Russia. In July, 2017, the head of the Ministry of the Development of the Far East, Aleksandr Galushka, and the Chairman of the National Development and Reform Commission (NDRC), He Lifeng, signed the protocol on cooperation of development of the two projects.

 

3. Concerning cooperation with oil and gas resources

 

Next, cooperation with oil and gas resources is discussed. Table 1 shows the occurrences concerned with oil and gas cooperation between China and Russia. In case of Rosneft, it signed the agreement of supplying 15 million tons oil per year for twenty years (from 2011 to 2030) with CNPC in February, 2009. One of the conditions of the agreement was that Rosneft and Transneft would accept $ 25 billion loan from China Development Bank. The loan was to spend on building the Eastern Siberian and Pacific Oil Pipeline. In June, 2013, Rosneft and CNPC concluded a new contract to supply additional 365 million tons (14.6 million tons per year) for 25 years(7). The value of the contract amounted to $ 270 billion, and approximately $ 70 billion should be paid in advance. After a passage of time, On December the 30^th, 2016, Rosneft and CNPC signed the other agreement, as shown in the Table 1. On the background that Rosneft could increase the volume of export oil, Rosneft became to be able to interchange oil of Bashneft, of which 50.08% shares were purchased by Rosneft in October, 2016. In order to increase exporting oil there is a scheme that Kazakhstan will supply oil to China through the oil pipeline, connecting Atas in Kazakhstan with Alataw Pass in China in exchange for the Rosneft’s supplying oil to Pavlodar Refinery located in the Northern East of Kazakhstan.

In addition, in September, 2017, it was informed that China CEFC Energy Company decided to purchase 14.16% of the share of Rosneft, held by the QHG Oil Ventures. The value of the transaction will amount to $ 9.1 billion. CEFC is a private company, established by Ye Jianmin, who is said to have relations with leaders of the Chinese Communist Party. After completion of the transaction, Rosneft will become the third largest shareholers: state-owned Rosneftegaz (50% plus 1 of share), BP with 19.75%, and CEFC (14.16%).

Although such a change seems to show that the relationship between Russia and China is deepening, it does not mean that the relationship is satisfactory. Because the purpose of the Chinese government that it will expand into the upstream oil sector in Russia as a lever to strengthen the relations with Rosneft has not been carried out. Sinopec got the first chance to participate for mining oil in Russia, and it established a joint venture called Udmurtneft with Rosneft in 2006. Rosneft holds 51 % of its share. Sinopec signed a basic condition of the joint construction of the cooperative agreement in a Ruskoe mining area and an Urbcheno-Tomuskoe mining area with Rosneft in September, 2015 in order to take part in developing the other mining areas related with Rosneft. According to the condition, the purchase of 49% of share of VSNK and Cyumenineftegaz was anticipated.

 

Table 1  Main Occurrences concering Oil and Gas Cooperation between Russia and China from spring of 2016 to the end of July, 2017
3 March, 2016	Gazprom and Bank of China signed the agreement of 2.0 billion euro loan within five years.
Spring, 2016	CNPC and Rosneft approved the project of construction of Tianjin refinery.
29 April, 2016	Yamal LNG concluded the agreement on loans, consisting of 9.3 billion euro and 9.8 billion yuans, within fifteen years with Chinese Import and Export Bank and China Development Bank.
11 May, 2016	The Chinese quota of Yamal LNG had increased.
2 June, 2016	CNPC and Gazprom negociated with the supply of Russian gas in the Western route.
June, 2016	Rosneft and Sinopec signed the temporary agreement on the participation to the gas processing and the construction of oil and gas chemical complex in the Eastern Siberia.
25 June, 2016	Gazprom and CNPC signed the protocol of mutual understanding in the field of gas underground storage and gas power plant.
2 September, 2016	Rosneft and Sinopec signed the agreement on obligation to prepare for the joint fesibility study to the project of the gas processing and the construction of oil and gas chemical complex in the Eastern Siberia.
November, 2016	Beijing Gas in China purchased 20 percent of shares of Verkhnechonskneftegaz, controlled by Rosneft at the price of 1.1 billion dollars. Rosneft aims to cooperate with Beijing Gas in order to supply gas to China.
7 November, 2016	Gazprom and CNPC signed the agreement of cooperation with joint working on establishing the international technical standard on estimating activities, and the protocol on the implementation of research to possibility of cooperation in the field of gas fuel.
7 November, 2016	Gazprom and China Development Bank signed the protocol of mutual understanding, in which a general principle of cooperating with financing to realize the project of construction of Amul Gas Processing Plant was determined.
30 December, 2016	Rosneft and CNPC concluded the five year contract in which the volume of oil supply was increased from 70 million tons a year to 91 million tons.
15 February, 2017	In Beijing, the top of Gazprom, the deputy prime minister of China, and the member of the Permanent Committee of the Politburo of the Chinese Communist Party had met.
2 May, 2017	Rosneft and Haohua Chemical Corporation, a subsidiary of ChemChina, signed the agreement of development of the project of constructing the polymer coating plant.
15 May, 2017	Rosneft and CNPC signed the agreement to establish a joint regulation committee in order to support the implementation of the agreement concluded before by the two companies.
15 May, 2017	Gazprom and CNPC concluded the contract on the implementation of prior research to construct gas underground storages at the three places in Heilongjiang, sharing the border with Amul oblast, where the gas pipeline called Sila Siberia arrives on..
4 July, 2017	Gazprom and CNPC signed the additional agreement in which the gas supply based upon the gas pipeline “Sila Siberia” will be aimed to begin on December the 20th, 2019.
4 July, 2017	Rosneft and China Energy Company (CEFC) signed the agreement that CEFC would acquire the rights of option to get q quota of a retailing company from Rosneft.
(sources) Various kinds of data.

 

Nonetheless, the Chinese side had dissatisfaction to the fact that it could not take the initiative in management, therefore, it disagreed with investment in the share of Vankorneft, holding the rights to develop a Vankor mining area. Consequently, on 16 March, 2016, Rosneft and Indian ONGC Videsh concluded the protocol of mutual understanding on the issue of cooperation in the Vankor mining area on the assumption that two companies may increase the quota of Vankorneft to 26%, while Rosneft, and Oil India etc. signed the agreement with a basic condition that the Indian group would get the share of Vankorneft until 23.9%. The Russian government formulates its policy that foreign enterprises must not hold more than half of share of oil and gas companies. As a result, China abandoned the purpose to get the share of Vankorneft, then, Indian company decided to acquire some of its share.

Sinopec concludes cooperative relations not only in mining sector but also in importing oil. In October, 2013, Rosneft and Sinopec signed the contract to supply 10 million tons per year of oil for ten years. The transaction amounted to $ 85 billion. Sinopec purchased 10% of share of Sibul, a Russian chemical company, at the end of 2016. The Foreign Investment Committee of the Government permitted for Sinopec to acquire its share until 20%. However, it remains to be seen that such a cooperative relation will lead to a good result.

 

Gazprom’s Cooperation with China

It is well known that on 11 May, 2014, Gazprom and CNPC concluded with the contract to supply gas 3.8 billion cubic meters per year for 30 years. This is predicated that gas will be exported through the truck gas pipeline, “Sila Siberia” (Yakutia-Khabarovsk-Vladivostok). It is called the Eastern Route. In November, 2014, preliminary conditions on gas supply through the Western Route (Altai Route, later Sila-Siberia 2), that is, 30 billion cubic meters per year, were agreed. On the other hand, even now, the gas pipeline to South Korea through North Korea is envisaged.

From the point of Chinese view, China was more interested in the gas supply from Russia to the Northern East part than the Western Route, because the gas pipeline from Turkmenistan to China through Uzbekistan and Kazakhstan. If this gas will be transferred to the Eastern part with much population, the cost will be increased. As for cities located in Pacific Ocean coast, they can import LNG. Hence, China had positive attitude to import gas through the Sila Siberia to Harbin, a big city in Heilongjiang.

China tried to develop gas in Turkmenistan, Kazakhstan, and Uzbekistan (See Table 2). Comparing these cases with the situation in Russia, Chinese participation on probing and mining gas in Russia is less developed. Chinese global policy to import resources is as following: 1) mandating companies with the rights of mining to export resources like oil and gas to China through investment and loan to these companies; 2) building the scheme that loans should be returned by the export price; 3) mandating local companies to utilize Chinese goods and services for probing and mining; 4) mandating local firms to utilize Chinese man power. In case of developing oil and gas, China is making an effort to expand its influence through making loans and supplying facility to the construction of pipelines.

Table 2  Chinese Approach to Three Countries in Development of Gas
Turkmenistan	In April, 2006, Council of Ministers of Turkmenistan and National Development and Reform Commission in China signed the general agreement on the realization of the Chinese gas pipeline project and sales of Turkmenistan gas. In July, 2007, the National Agency of management of oil and gas in Turkmenistan, the state konzern, Turkmengas, and CNPC concluded the Production Sharing Agreement on exploring and developing gas on the right bank of Amu Darya river. Turkmenistan promised to supply 30 billion cubic meters gas per year to China. In August, 2007, President Gurbanguly Berdimuhammedow had dispensed the rights of exploring and mining in Bagtyyaryk mining area to CNPC. In November, 2011, the agreement on the additional supply of gas, 2.5 billion cubic meters per year, was singed between Turkmenistan and China. Then, construction of the D Route had begun. In June, 2012, Turkmengas and CNPC concluded the agreement to increase the volume of gas export to 6.5 billion cubic meters per year.  In September, 2013, Turkmenistan, Uzbekistan, Tajikistan, Kyrgyz, and China signed the agreement on the forth route D (tranfering 30 billion cubic meters per year). In September, 2014, Turkmengas and CNPC signed the contract on building gas production facility in Galkynysh Gas Field, and the contract on the sale of 2.5 billion cubic meters as well.
Kazakhstan	In November, 2009, Central Asia Petroleum sold the 100% shares of Mangistau Munaigas to Magistau Investments B.V. (MIBV). MIBV is controlled by KazMunaiGaz (100% shares are belonged to the National Welfare Fund under control of the state) and CNPC Exploration and Development Company, holding 50% shares in each. There are several cases in which Chinese companies invested in CNPC-Aktobe Munaigas, Buzachi Operationg Ltd., and so on. In August, 2007, the Intergovernmental Agreement between China and Kazakhstan on building the gas pipeline between China and Kazakhstan was signed. In November, 2007, KazMunaiGaz and CNPC concluded the agreement on fundamental principle to build the gas pipeline between China and Kazakhstan. In February, 2008, a joint venture between China and Kazakhstan, Asia Gas Pipeline, was registered. In September, 2011, KazMunaiGaz and CNPC concluded the agreement on the fundamental principle of the design, finance, construction, and operation of the Route C between Kazakstan and China. In June, 2017, MazMunaiGaz and CNPC signed the mutual understanding protocol for concluding the contract on sale of Kazakhstan gas to 5 billion cubic meters per year.
Uzbekistan	In May, 2005, the state holding, UzbekNefteGaz and CNPC established UzCNPC, a joint venture to explore and develop mining areas in Uzbekistan. In June, 2006, UzbekNefteGaz and China National Oil and Gas Exploration and Development Corporation signed the agreement on implementing geological exploration in five blocks like Fergano in Uzbekistan. In September, 2013, the two companies established a joint venture to explore and develop Karakul investment block. In April, 2007, UzbekNefteGaz and CNPC concluded the agreement on fundamental principle on joint exploration and development cooperation of Mingblak mining area. In 2008, the two companies signed the agreement to establish Mingblakneft. According to the implementing measures to realize the exploring and developing investment project by the President, the exploration had begun in July, 2017. In April, 2007, the Intergovernmental Agreement between China and Uzbekistan on the construction and operation of the gas pipeline between China and Uzbekistan was agreed. In July, 2007, UzbekNefteGaz and CNPC concluded the agreement on the construction and operation of the gas pipeline between Chine and Uzbekistan. In January, 2008, UzbekNefteGaz and CNPC concluded the document on the establishment of a joint venture to implement the gas pipeline project between China and Uzbekistan, Asia Trans Gas. In June, 2010, the two companies signed the agreement on sale of gas, promising to export Uzbek gas, 10 billion cubic meters per year, to China. In September 2011, the two firms also concluded the agreement on the construction and operation of the gas pipeline, route C, connecting Central Asia and China. In August, 2014, when  President Islam Karimov visited China, the provisional agreement on implementing the joint project to build a gas chemical complex was concluded.
(sources) Various kinds of data.

 

From the point of Russian side, the construction of Sila Siberia as the Eastern Route, of which source is Chayanda field and Kovikta field, has no problems. On the other hand, as for the Western Route, Gazprom had intention to promote it, because the route has two sources, gas fields in Western Siberia and the gas mining areas in Yamalo-Nenets Autonomous Okrug. Both of them can be the source of gas supply to Europe, therefore, Gazprom can have the rights of choice whether gas should be exported to Europe or to China. In Yamalo-Nenets Autonomous Okrug, construction of LNG plants is planned, which means that in accord to fluctuation of spot prices of LNG Gazprom can take measures suited to the occasion. Holding transferring route to China is advantageous for Gazprom in negotiating prices.

In reality, the Eastern Route is now under construction, while negotiation of the Western Route has a difficult journey because of interest opposition between China and Russia.

At the period of May, 2014, projects related to Sila Siberia are expected to invest 5.5 billion dollars, including expense of construction of pipelines and maintenance cost of Eastern Siberia mining area(8). It is interesting that Chinese side did not spend money on the construction of Sila Siberia, which is different from the case of the East-Siberian and Pacific Oil Pipeline.

As for the Western Route (Sila Siberia-2), Chinese government requires Russia to apply the same conditions to build the pipeline in which China mines a field and builds a pipeline in Turkmenistan to the conditions of the Western Route (Neft i Kapital, No. 6, 2017). For example, in 2011 China supplied 8 billion dollars for the investment of the pipeline in Turkmenistan, and then, almost all payments for export of oil are spent on the payments for the loan(9). There are three lines of gas pipelines from Turkmenistan to China through Uzbekistan and Kazakhstan. Those length is approximately 7,500 km. At the end of 2012, the first two lines had been completed. At the end of 2010, all the sum of the capacity of the transferring gas lines amounted to 30 billion cubic meters. Subsequently, in May, 2014, the third line started, and the annual capacity of gas transportation became 55 billion cubic meters. Turkmenistan and China have already agreed to build the forth gas line through Turkmenistan, Uzbekistan, Tajikistan, and China, of which capacity is 25 billion cubic meters per year. Although they are aiming at operation until 2020, the plan is delayed.

It is said that China proposed the construction of the pipeline on the assumption of joint development of gas source (Vedomosti, 15 June, 2016). Nonetheless, Gazprom is cautious of the commitment of foreign investors to gas fields. In November, 2014, Gazprom signed the mutual understanding protocol with CNOOC, and showed the attitude to seek to the possibilities of joint activities in the fields of exploring and mining. In March, 2016, two companies held the meeting of joint regulatory committee, which resulted in nothing. A subsidiary of Gazprom, Gazpromneft, began to negotiate with CNOOC about the possibility to develop the continental shelf. Nonetheless, it does not appear achievements. Additionally, China is negotiating to import LNG from the United States in order to fend off criticism of the President of the United States, Donald Tramp. Now, America is faced with oversupply of gas as a result of mining shale gas. This tendency discourages China’s interest to the Western Route. Export of LNG from the US mainland had begun from February, 2016. The authority of the US had already decided that China did not be dealt with the inferior than the other non-member states of Free Trade Agreements. The export of LNG to China, which was started in 2016, amounted to approximately 400 thousand tons during January to May, 2017.

Attention should be paid to the project to extend the gas pipeline through Sakhalin, Khabarovsk, and Vladivostok to South Korea through North Korea. This project was focused upon on 24 August, 2011, when the President of Russian Federation, Dmitry Medvedev at that time, and the Chairman of the National Defense Commission of North Korea, Kim Jong Il, met and agreed on the construction of the gas pipeline to South Korea through North Korea. It was decided that the special committee for this cooperation would be established. Subsequently, in September, 2011, Gazprom sighed the protocol on the implementation of this project with Kogas. At that time, the construction of the gas pipeline with the transportation ability of 10 billion cubic meters per year from Vladivostok to South Korea, having an overall length of 1,100 km, had been planned. This pipeline goes through North Korea, where consumption of gas is not supposed. The pipeline means going south of the Russian pipeline, therefore, the part of the pipeline is able to go to China(10).

Gazprom which put into difficulty of funding form the European and American financial markets by virtue of sanctions against Russia strengthens the dependence on Chinese money. As shown in Table 1, on 3 March, 2016, Gazprom and Bank of China signed the agreement of 2.0 billion euro loan. The interest rate of the credit with five years maturity was EURIBOR plus 3.5%, fluctuating in every six months. These conditions are not advantageous to Gazprom. Although Table 1 shows that Yamal LNG concluded the agreement on loans, consisting of 9.3 billion euro and 9.8 billion yuans, within fifteen years with Chinese Import and Export Bank and China Development Bank, both loans are supplied by credit lines, in which both interest rates are only EURIBOR plus 3.30%. Gazprom issued a Swiss franc-dominated bond with maturity of the end of November, 2018 on 30 March, 2016. Its interest rate was 3.375% per year. In August, 2015, Gazprom borrowed 1.5 billion dollars from Asian banks syndicate for five years, and the interest rate of the loan was LIBOR plus 3.5%. It seems that there is no significant difference between this rate and the rate of the loan from the Bank of China.

Never forget that China is the third largest country where shale gas is mined, following the United States and Canada. The amount of mining shale gas in 2016 became approximately 7.9 billion cubic meters. It is said that the Chinese mining possible reserves amounts to 764.3 billion cubic meters, of which 600.8 billion cubic meters are located in Fuling suburban district of Chongqing. If the development of shale gas fields will be progressed, China will be able to reduce dependence on importing foreign gas, therefore, we must pay attention to the future of Chinese shale gas.

Focusing upon other energy, cooperation of the construction of nuclear power plants between China and Russia is important. Since Russian Atomstroieksport and Chinese Jiangsu Nuclear Power Corporation concluded the contract of building Jiangsu nuclear plant in December, 1997, the first reactor had begun in 2007. Now two reactors are under operation. The third and forth reactors are under construction. There is a plan to build other new nuclear plants in the same Jiangsu. There is a possibility that Russian side will build two reactors. The scale of the transaction seems to amount to 12 billion dollars, therefore, it will become centerpiece of cooperation between China and Russia, if it will be implemented.

 

4. Concerning cooperation with the Arctic

 

The project in Yamal Peninsula promoted by Yamal LNG under control of Novatek, an independent gas company, can be seen as the example of cooperation in the Arctic between China and Russia. The project is going to build production facility for LNG to produce 16.5 million tons per year (three lines with production ability of 5.5 million tons in each). The formation of shareholders of Yamal LNG consists of the following members: Novatek (50.1%), Total and CNPC (each 20%), and Fund of Silk Road (9.9%). The 20% shares of CNPC was purchased by the contract concluded between Novatek and CNPC in September, 2013. Subsequently, the supply of LNG, 3 million tons (3.9 billion cubic meters) per year to CNPC was determined. The supply of LNG to Total (Total Gas & Power) becomes 4 million tons per year. In case of Gazprom Marketing & Trading Singapore, it becomes 2.9 million tons. As for 9.9% shares of the Fund of Silk Road, Novatek sold them in September, 2015. In December, 2013, Novatek decided to receive 730 million euro loan from the Fund of Silk Road for the project financing. Additionally, on 29 April, 2016, Yamal LNG concluded the agreement on loans, consisting of 9.3 billion euro and 9.8 billion yuans, as shown in Table 1.

The amount of investment to Yamal LNG until 2018 will be 1.3 trillion rubles, that is, exceed 20 billion dollars. Loans of the project will amount to 717.2 billion rubles. The sum of money from investors will be 407.3 billion rubles. The money of the National Welfare Fund, 150 billion rubles, will also be spent.

Chinese side requires preferential treatment in the aspect of supply of facility for Yamal LNG through investment and loans. This strategy is the nucleus of Chinese foreign investment strategy, focusing upon infrastructures. According to Parag Khanna, “Indeed, China views the world almost entirely through the lens of supply chains”(11). China sees New Zealand as a food supplier, Australia as an iron ore and gas exporter, Zambia as a metal hub, Tanzania as a shipping hub, and Greenland as a uranium mine. In such a way, China compensates for a weakness through trade, and makes a use of investment as a lever in order to reinforce her influence.

Even so, Chinese strategy is only reproduction of strategies of European and American countries, therefore, it is unworthy of criticism. For example, American Export and Import Bank, holding nickname of “a bank of Boeing,” tried to make foreign companies to purchase airplanes made by the Boeing by virtue of giving them low interest rate credits, which resulted in profits of General Electric and Caterpillar, supplying their facility.

On the other hand, in the Arctic Zone in the territory of Russia, Rosneft, ExxonMobil, Eni, and Statoil concluded the agreement on development of the Arctic continental shelf in 2012, then, it came into effect in 2013. Nonetheless, the project is at a standstill because of sanctions against Russia. Rosneft has the rights to develop 28 fields in the Arctic Shelf, holding 3.4 billion tons’ oil equivalent resource. In addition, Gazprom tried to develop Shtokman field, cooperating with Total and Shell, however, Gazprom gave up the project by virtue of the deterioration of markets in 2012.

As for Northern Sea Route, NSR, a deputy prime minister, Dmitry Rogozin, called it “Golden Silk Road” in December, 2015. He wanted to connect the development of the Arctic with Chinese “Belt and Road” initiative, BRI. Here, let us argue NSR to analyze the cooperation between China and Russia.

Discussion on the defense of the Arctic is necessary. First of all, the fact that ice of the Arctic is thinner and melting is becoming a big threat to Russia(12). Because ice plays a role of barrier for submarines deployed in the Arctic. The Presidential Decree in July, 2010, changed the six military district system into the four. Subsequently, in November, 2014, the establishment of the de fact fifth military district, Joint Strategy Headquarters “North” was determined. Then, since December, 2014, the Northern Fleet began to hold command authority to protect the Arctic. Until December, 2015, six military bases had already been reformed. Two brigades consisting of infantries were created in Murmansk and Yamalo-Nenets Autonomous Okrug. The new military doctrine published by President Putin in December, 2014, is envisaged by considering the Concept of the Long Term Social Economic Development of the Russian Federation until the period of 2020, the National Security Strategy until 2020, the Sea Doctrine of the Russian Federation until 2020, and the Strategy of Development of the Arctic Zone and the National Security of the Russian Federation until the period of 2020.

It is said that the Northern Fleet has the base in the closed city, Severomorsk, located in Murmansk Oblast, and two thirds of nuclear weapons of Navy are deployed(13). The Northern Fleet has nuclear submarines, divided into 11 SSBN equipped with Intercontinental ballistic missiles, 4 SSGN equipped with cruise missiles, and approximately 20 multi-purpose attack submarines (SSN). The aircraft carrier, Admiral Kuznetsov, belongs to the Northern Fleet. It must be paid attention that NSR is under control of the Federal Security Service of the Russian Federation (FSB) through airplanes belonging to the FSB, and the Northern East Border Guard under the control of the FSB controls the land and sea. Gazprom, Lykoil, Norilsk Nickel and so on are related to ship operation in the Arctic, because they have mining areas in the Arctic, therefore, they are building cooperation with the Defense Ministry.

Never forget that cooperation with coast guards of the Arctic has been maintained even after the Crimea annexation, though the military cooperation had deadlocked. In 2015 the Forum of the Arctic Coast Guards had been established by eight countries related to the Arctic. At this moment, attention should be paid to the fact that Russian coast guard is under control of the FSB, American one is under control of the US Department of Homeland Security, and Norwegian one is controlled by the blanch separated from the Navy. In case of China, it is under control of the China Coast Guard.

On 30 March, 2017, a LNG tanker named Christophe de Margerie, who was the leader of Total and died in the international airport, Vnukovo, reached Sabetta harbor, located in Yamalo-Nenets Autonomous Okrug. It is the first of the sixteen LNG ships of ARC7 class, of which the maximum payload amounts to liquidated 172.6 thousand cubic meters gas. It was built by Korean Daewoo Shipbuilding Marine Engineering.

Let us overview the policy of the NSR. In Article 3 of the Federal Law on the introduction of the change to the individual Russian ordinances on the state regulations on commercial voyage in the NSR water area on 27 July, 2012, the space range of the NSR was defined and voyage rule was specified in the water area by the addition of the Article 5.1 to the Commercial Voyage Law on 30 April, 1999 (the first clause and the second clause). The third clause prescribed reforming the general office of the NSR into the Organization of NSR for the control of voyage of ships in the NSR water area.

In order to operate the NSR, preparation of ports for ships and communications network is indispensable, and the Russian government drew up various plans. For example, the Federal Targeted Program, “Development of Russian Transportation System (2010-2020)” was approved by the government determination on 5 December, 2001, and the Federal Targeted Program, “Development of Private Marine Technology during 2009 and 2016” was determined by the government decision on 21 February, 2008. After the approval of the government ordinance, “Strategy of Social and Economic Development in the Far East and Baikal region until 2025,” President Putin approved “Strategy of Development of the Arctic Zone and National Security of Russia until the period of 2020.” In addition, “Social and Economic Development of the Arctic Zone of the Russian Federation until 2020” was accepted by the government ordinance on 21 April, 2014.

In June, 2015, the project on unified development of NSR from 2015 to 2030, formulated by the Ministry of Transportation, was consented by the government. Because of this project, preparation for navigation of ships in the water area of NSR could be financed by the government support measures. In February, 2017, the plan of the program to develop the Arctic Zone from 2017 to 2025, including contributions of the federal budget, 209.7 billion rubles, was submitted to the government by the Ministry of Economic Development. Nonetheless, in May, 2017, it was reported that the Ministry of Economic Development was considering the reduction of the planning contributions from 209.7 billion rubles to 50.9 billion rubles (РБК-daily, 12 May, 2017). If it will be realized, this means that development of the Arctic has low priority, and is put on the back burner, since Russian government is forced to cut expenditure by virtue of economic recession after the Ukrainian crisis.

This reduction includes construction costs of a nuclear-powered icebreaker, “Leader,” which amounts from 40 billion to 80 billion rubles. The “Leader” is a large ship with heat output 120 megawatts, while present building nuclear-powered icebreakers (Project 22220) have only heat output 60 megawatts. Therefore, in order to build the “Leader,” a dock should be prepared.

Here, let us focus upon marine transportation business in the Arctic. The Federal Government unitary enterprise (FGUP) “Atomflot,” which was established in 1957, when a nuclear-powered icebreaker began to operate, is under operation of four nuclear-powered icebreakers now. The control of the enterprise was transferred from the Ministry of Transportation to the State Corporation, “Rosatom.”

In 2006, “Sovkomflot,” of which 100% shares are held by the Federal Agency for State Property Management, began to operate oil transport tankers from De Castries harbor in Khabarovsk Krai, included in the Sakhalin projectⅠ. Subsequently, it also operates 3 oil shuttle tankers in Barents Sea. They can work in the NSR, because they are reinforced by iron plate.

In June, 2017, a shipbuilding factory, “Zvezda” concluded the mutual understanding protocol on design and construction of LNG transporting ships with French engineering company, Gaztransport & Technigaz (GTT). “Zvezda” aims at acquiring the LNG ship building capacity through technology transfer.

On the other hand, Chinese COSCO succeeded to dispatch a container to Europe via the NSR in 2013 for the first time in the world. A Chinese freighter, Yongsheng, belonging to COSCO, sailed to Rotterdam in Netherlands from Dalian Port. It took 33 days from August to September in 2013. It saved approximately two weeks. Five ships of nineteen ships which sailed the same route in 2016 were operated by COSCO. In June, 2017, the Chinese National Development and Reform Commission (NDRC) and the China Shipping Bureau jointly issued Concept of Cooperation of One Belt, One Road, and Marine Construction. The route from China to Europe through the Arctic is included in the five joint construction routes.

China is dealing with the development of the route between Greenland of Kingdom of Denmark and China, utilizing not only the NSR but also the Northern West Route, which passes the North American continent. Because Greenland is an important place in which iron ore and uranium ore are lying under the ground.

The government of Greenland permitted the transfer of all shares of London Mining, holding the rights of development of Isua iron ore mine, into a trader, General Nice Development Limited, under control of a company in Hong Kong. General Nice is a flying column of the Chinese government, and owns IRC Limited related to development of iron ore, Pluton Resources operating iron ore mine in Western Australia, and Palabora Mining Company operating a copper mine in South Africa.

Subsequently, General Nice offered acquisition of a base in Greenland, which was left as it was. However, the Denmark government, controlling Greenland, declined the offer by virtue of security. On the other hand, in December, 2016, a subsidiary of Shenghe Resources Holding purchased 12.5% of shares of Australian Greenland Minerals and Energy (GME), holding the rights of developing mining areas of rare earth and uranium ore. It seems that the rights of option to purchase until 60% shares of GME additionally are given to the subsidiary. China Nonferrous Metal Mining Group is trying to support the project of development of zinc in Shitoronen Fjord, of which the rights of development were belonged to Australian Ironbark.

Chinese investment in Greenland seems beneficial for those who hope the independence of Greenland from Denmark. Hence, Khanna indicated that no wonder China tacitly supported Greenland’s independence movement(14). It seems that here China’s toughness of long-term strategy may be felt.

China succeeded to become an observer of Arctic Council, which is an international cooperative organization for environmental protection and sustainable development of the Arctic. The Arctic Council was founded in September, 1996, including the coastal states of the Arctic like the United States, Canada, Denmark (including Greenland and Faroe Islands), Norway, and Russia, and the neighboring countries like Iceland, Finland, and Sweden. It was created by the Ottawa Declaration. Other countries laid a plan to participate in the Council in order to reflect their interest in development of the Arctic. China, Japan, India, and South Korea were permitted to become observers in 2013. In 2010, China could reach the Sea of Japan directly, receiving the use rights of Rason Port near the border between China and North Korea. There is information that Chongjin Port was opened to China as well in 2012.

 

5. Concerning cooperation with military affairs

 

It is not left paper width. Let us overview military cooperation between China and Russia. As shown in Table 3, military cooperation such as various exercises and meetings of Ministers of Defense had already been built.

As for transactions of weapons, in November, 2015, the contract of supplying 24 Su-35 to China was concluded. The sum of the transaction amounted to at least 2 billion dollars. The first Su-35 was handed over at the end of December, 2016. In April, 2015, the first contract of the order of missile defense complex, S-400, was signed, and the first S-400 was exported to China in March, 2017. In October, 2016, the contract of supplying engines for airplanes, AL-31F and Dz-30KP2, to China was concluded by ODK, belonging to the state corporation, Rostec. The volume of the transaction seemed to be 1.2 billion dollars, and there were no big transactions.

The sum of export of weapons and military technology exceeded 15 billion dollars in 2016. This amount was more than the result of 2016, 14.5 billion dollars. In 2016 newly concluded contracts became approximately 9.5 billion dollars, and at the end of 2016 the order backlog amounted to 50 billion dollars.

Nonetheless, there are a lot of problems concerning military cooperation between China and Russia. For example, during 2012 and 2013, China and Russia signed letter of intent to supply two submarines called Amul-1650, however, the final contract has not been concluded even now. It seems that Russian government does not respond to the Chinese demand for licensed production. Although the China needs the purchase of engines for a Chinese military heavy transport aircraft, Xian Y-20, and a new large bomber, Xian H-6K, of which development is facing rough going, Russian government does not agree with the demand.

China diverts Russian military technology to Chinese military weapons, and exports bombers equipped with Russian engines to Pakistan. It is well known that Russia is opposed to China concerning competition between MiG-29 and JF-17 (FC-1). Now China and Russia are under competition in exporting weapons to Africa. For instance, in August, 2017, the Russian state-owned enterprise, Rosoboroneksport, concluded the contract of exporting two helicopters, Mi-17, to Burkina Faso, located in the central west of Africa. This contract resulted from wining the competition with China.

As for private airplanes, there rivalry and cooperation between China and Russia. Commercial Aircraft Corporation of China, COMAC, is now developing CoMAC 919 (C-919), which is a rival in a Russian Trunk Line Aircraft in the 21^st Century, MS-21. While MS-21-300, of which engine made by Pratt & Whitney is deployed for the first time, and the engine made by ODF, PD-14, will be deployed gradually), succeeded to fly on 28 May, 2017, C-919 made the first flight on 5 May, 2017. MS-21 has from 181 to 211 seats and flies within 6,000 km, while C-919 seats are from 168 to 174, and its flight distance amounts to 5,500 km.

In spite of such rivalry, leaders of Russian OAK and Chinese COMAC concluded the agreement on the joint venture to develop, produce, and sell large long-distance passenger planes on 25 June, 2016. This new plane is called ShFDMS (ШФДМС) in Russia, and C-929 in China. It is planned that two companies will sign the final contract in 2019, make the first flight in 2023, and begin to supply in 2026. It will become a 280-seater passenger aircraft. This program will continue until 2045. According to the estimate of OAK and COMAC, the world demand on large airplanes during 2023 and 2041 will become 8,200 at a minimum, of which 1,500 are in need in China. According to the expectation of Boeing during 2016 and 2035, the demand on large aircrafts will amount to 8,570. As a result, it is expected that large airplanes by China and Russia jointly will ride to profitability.

 

Table 3  Main Occurrences Concened with Military Cooperation between China and Russia from April, 2016 to July, 2017
27 April, 2016	The meeting of Chinese and Russian Ministers of Defense was held in Moscow.
27 April, 2016	The first forum between China and Russia of issues on development and security of information communication technology was held in Moscow.
24 May, 2016	The eighteenth conference on military strategy between China and Russia was held in Beijing.
26 May, 2016	The exercise of commanders and staff officers “Aviation Security 2016” was implemented.
3 June, 2016	The meeting of Chinese and Russian vice-Ministers of Defense was held in Singapol.
25 June, 2016	The joint statement of Chinese and Russian heads on mutual activity in the field of development of information space was published.
3 July, 2016	The joint exercise of the Federal National Guard and Chinese Secret Military Institutions was implemented.
7 July, 2016	The meeting of Chinese and Russian military prosecutors was held in Moscow.
25 August, 2016	The concerence between China and Russia on misile defense was held.
12 September, 2016	The joint exercise in South China Sea, “Joint Sea-2016,” was held during eight days.
1 November, 2016	The eleventh Airshow China-2016 was held in Zhuhai City.
23 November, 2016	The Russian Minster of Defense visited China officially.
28 November, 2016	The exercise of shooting troops of Shanghai Cooperation Organization was imlemented.
25 July, 2017	The joint military exercise with Chinese force was implemented in Baltic Sea.
(Souce) Российско-китайский диалог: доклад № 33 (2017) Лузянин, С.Г.(рук.), и др.; Чжао, Х. (рук.) и др.; Иванов, И.С.(гл. Ред.); Российский совет по международным делам (РСМД), p. 100, and others.

 

Concluding remarks

 

Before concluding remarks, I would like to indicate that the concept of Eurasia was used by Putin expediently. He stated that Russia had felt that she was a Eurasian state at any time on 13 November, 2000. He tried to strengthen his own power by showing his understanding to “Eurasianism.” Putin is neither an absolutism’s Tsar nor an autocrat. He seems to be on the position where he behaves himself, keeping balance at a hub of modern noblemen, that is, боярины. According to Charles Clover, rather than viewing the Kremlin as a military unit with a strict top-down command and control structure, the concept of network organizations seems to provide a better metaphor(15). In short, structure of Putin’s power is not a chain of instructions but only networks, connected loosely and horizontally, responsive to cues and signals rather than a classic chain of command.

Understanding shown above circumstances, it may end in a conclusion that Putin has no option but to attach importance to China as a part of Eurasia by virtue of deteriorating relations between Russia and the West after the annexation of Crimea. This conclusion is expressed appropriately by Yulia Latynina, a journalist, as follows: We are visible that weak Russian power is making an effort to become a vassal of China, expecting China will support the maintenance of Russia’s power (Novaya Gazeta, No. 74, 2015).

Lastly, let us summarize some issues concerning cooperation between China and Russia. Firstly, focusing upon the difference of power bases between China and Russia is of great importance. While Eurasian strategy of the Russian Federation is based upon the military cooperation through the Collective Security Treaty Organization, China originates in the medium long term strategy, which aims to enhance relations through strengthening economic alliance engaging in investment of infrastructure. The Chinese strategy is formed by Xi Jinping, who can be regarded as an Emperor, and builds a strong centralization of administrative power based upon the Chinese Communist Party. If Xi will be able to reinforce his power in the 19^th National Congress of the Communist Party of China in October, 2017, his regime will be kept firmly at least for five years. On the other hand, Putin’s power base is not stable, because he depends on the balance of domestic power relations. Even if he will be elected as the President in 2018, Putin’s power will not kept for a long time. Since his presidential term is the second, he cannot maintain his job after 2024. After 2020, the issue about who will become the Post Putin will be the main issue, therefore, Putin will become a lame duck. This difference of the power bases will bring about splits in cooperation between China and Russia.

Now, the splits appearing in Tajikistan are can be seen. During 20 October to 24 October, 2016, the national defense of Tajikistan and Chinese People’s Liberation Army operated the military exercise at the Tajik-Kazakh border. The sum of participants amounted to 10 thousand. China aims to build a corridor passing from Pakistan, Afghanistan, and Tajikistan for the reason of not only economic assistance but also anti-terrorist policies. China is trying to grab a thing in Turkmenistan, where China is forming economic rights, Tajikistan, Uzbekistan, and Kazakhstan, after China had built rights and interests in Pakistan economically and militarily.

Without saying, Russia is cautious of Chinese movement, because Tajikistan is a member of the Collective Security Treaty Organization, and concluded the agreement of extending the period of lending the military base to Russian forces until 2042. In Tajikistan base, more than 5,000 Russian militaries are now stationed(16). Nonetheless, there is a high possibility that Tajikistan will approach to China economically and militarily. If such a case will happen, cooperation between China and Russia per se will be necessary to review. Never forget that even now Russia is forced to follow China in military affairs. On 5 August, 2017, the UN Security Council unanimously decided the resolution, No. 2371, in which UN members were prohibited to import coals, iron ore, and marine products from North Korea as the additional sanctions. Although Russia was in a critical position against this resolution, Russia had no choice but to approve of it, because China had decided to vote for it (Novaya Gazeta, No. 96, 2017).

Secondly, it is necessary to notice that Chinese investors, who are prior to economy, have reckoning up the pros and cons with “cool” judgement. As shown in “3. Concerning cooperation with oil and gas resources,” paying attention to the negotiations on cooperation between China and Russia, not coming to pass, we notice that Chinese investors are taking a cautious approach to investment in Russia. They are taking precaution to the influence of sanctions against Russia by the West, and to friction of the West against the access to Russia in spite of sanctions. There is even an opinion that China is about to lose passion to cooperate with and invest in Russia in the field of energy(17). Although cooperation between China and Russia in the field of finance in this paper is not considered, this cooperation is also going no further than doing in partial. Therefore, the judgement that cooperation between China and Russia is deepening further straightforwardly is wrong. The future of Chinese economy will have an influence upon both of the fist and the second issues, and make cooperation between China and Russia all the more difficult to solve.

At the end of this paper, the Japanese response to the status quo and problems of cooperation between China and Russia should be discussed. The point is the historical perspective. The Japanese government should examine the response historically, understanding the Chinese thought and Russian peculiarity in history. My book, titled Lessons of One Hundred Years after Russian Revolution, was published in 2017 through the Kindle Publishing in Japanese. I hope that many readers who are familiar with Japanese will read it and consider this issue. I myself will argue it in future.

 

 

 

 

(1) See Reshaping Eurasian Space: Common Perspectives from China, Russia and Kazakhstan Think Tanks [2017] RDCY Research Report Series No, 25, p. 14.

(2) See Alicia Campi (2014) Transforming Mongolia-Russia-China Relations: The Dushanbe Trilateral Summit, The Asia-Pacific Journal, Vol. 12, No. 1.

(3) See B. Otgonsuren (2015) Mongolia-China-Russia Economic Corridor: Infrastructure Cooperation, Erina Report, No. 127, p. 6.

(4) See Stefano Pozzebon (2014) Mongolia Has to Change its Railroads to Account for an 85 Millimeter Difference in Track Spacing, http://www.businessinsider.com/mongolia-extends-trans-border-railway-to-china-russia-2014-10/

(5) http://new.ia-centr.ru/publications/kitayskaya-finansovaya-petlya-zatyagivaetsya-na-bishkeke/

(6) http://www.ng.ru/economics/2016-04-25/1_knr.html/

(7) There is another information that the total volume of oil supply will amount to 325 million tons. The Annual Report of Rosneft in 2013 did not refer to any volume of the transaction.

(8) Subsequently at the period of summer in 2016 the estimated amount of the investment had lowered to 44.3 billion dollars because of a weak ruble.

(9) It seems that average price of the export amounted to 230 dollars per 1,000 cubic meters.

(10) It was said that Kogas wanted to conclude the final contract of this project in 2012, however, Gazprom was negative to it, because going through North Korea might cause trouble as well as the Ukraine case. As a result, it seemed that the project had suffered a setback. As a matter of fact, in May, 2015, this project surfaced as one of conciliatory measures to North Korea at the meeting of Putin and Xi Jinping.

(11) See Parag Khanna (2016) Connectography: Mapping the Future of Global Civilization, Random House, p. 183.

(12) See Stephanie Pezard, Abbie Tingstad, Kristin Van Abel, & Scott Stephenson (2017) Maintaining Arctic Cooperation with Russia: Planning for Regional Change in the Far North, p. Summary ⅺ.

(13) See Marlene Laruelle (2014) Russia’s Arctic Strategies and the Future of the Far North, M.E. Sharpe, pp. 119-120.

(14) See Khanna, p. 252.

(15) See Charles Clover (2016) Black Wind, White Snow, Yale University Press, p. 298.

(16) The number of Russian stationed solders in Syria amounted to 4,000. Russia stations each 3,500 solders in Abkhazia and South Ossetia. She also stations 3,300 solders in Armenia, 1,500 in Coastal Dniester, and 500 in Kyrgyz (Vedomosti, 28 Aug., 2017).

(17) See Camilla Sørensen & Elaterina Klimenko (2017) “Emerging Chinese-Russian cooperation in the Arctic: Possibilities and constraints,” SIPRI Policy Paper No. 46, p. 33.