Is impossible possible? (part 2)
Weekend essay, February 13, 2022
I stopped my previous essay on the following thesis: Putin and Xi lead their countries differently and in different directions. Pursuing the same goal, the retention of personal power, they differ significantly in how they see the ideal structure of the state, how they see their economies and their place in the world, and how the state should incentivize accelerated economic growth. The two leaders have no common principles and values, and they cannot share recipes for solving apparently identical problems.
But it would be wrong to say that Putin and Xi have nothing in common. Both leaders are unhappy with America’s position and role in today’s world. Both suffer from their “political inferiority” because the United States openly calls the two countries’ political regimes authoritarian. Putin and Xi see America as a threat to the political stability of their countries, but for different reasons. For Putin, America is a “hard power.” It is a country whose political leadership wants to destroy Russia as it is today and take control of its political system and natural resources. For Xi, America is a “soft power” that threatens to destroy the ideological hoops entangling Chinese society. And in this—in confronting America and American influence in the world—Putin and Xi are ready to join forces; here they are prepared to act together.
The enemy of my enemy is my friend.
But having a common enemy does not mean that the members of this alliance have a common strategy and tactics. In its way, each side sees the objectives of the struggle against the common enemy, and each side has its arsenal. For China today, the main challenge is America’s technological dominance, which is based on the size of its economy and its powerful scientific and educational potential. Beijing’s strategic goal is to make China technologically independent from America, but it is impossible to isolate the Chinese economy from America and its achievements. Therefore, the desire to overtake the U.S. and become a leader in the economy and technology does not mean that China is looking to break its existing relations with its opponent.
The Chinese authorities understand that the development of the Chinese economy relies on exports to developed countries, including the United States, in the first place. Breaking relations with the U.S. is not China’s goal; moreover, it is unacceptable for China. Beijing needs access to the U.S. market to export Chinese goods. Beijing needs an influx of U.S. direct investment, the condition of which is the obligatory transfer of advanced technology to Chinese companies. Beijing needs access to the U.S. capital market to raise financial resources and take over promising technology companies. Beijing needs access to U.S. universities to educate students and gain access to cutting-edge research.
In all of this, Xi cannot get support from Putin. A minimal number of sectors in the Russian economy have accumulated technological potential that could be useful to China: Space, aviation, and the nuclear industry. But Beijing does not always manage to get access to them. For example, China for years hoped that Russia would help it equip its army with modern weapons. Still, Putin flatly forbade negotiations on the supply of the latest aircraft, tanks, and missile systems. On the one hand, Putin remembers the armed conflict between the two countries in March 1969 and “just in case” wants to have an advantage in the quality of armaments. On the other hand, the Russian President understands that as soon as China receives the latest Russian products, it will start copying them, as it does not want to be dependent on Russian service and Russian components.
But in the nuclear power sector, China has achieved a gradual transfer of knowledge and technology from Russia. In 2007, China launched the first stage of the Tianwan nuclear power plant (units 1 and 2) designed and built by Rosatom. But the continuation of this project involves the expanding participation of Chinese companies. For example, the Jiangsu Nuclear Power Corporation (JNPC) became the general contractor to construct the second stage (power units 3 and 4). The Russian side designed the nuclear island, while the Chinese side designed the non-nuclear island. Chinese companies carried out construction, installation, and the commissioning of works under the technical supervision of Russian specialists. The share of Chinese companies in the total cost of the contract for the second stage exceeded 30%. Two years ago, China began building the fifth and sixth units at the Tianwan NPP according to its own design.
A vivid indicator of the relative level of technology development in the two countries is the share of machinery and equipment in trade between them: Their share in Russian exports does not exceed 5%. In contrast, in Chinese exports, it is close to 60%. China considers Russia a market for its goods but categorically refuses to transfer its technologies to Russian companies or establish joint ventures for fear of competition. The only technological project in which Russia and China agreed on cooperation was the collaborative design of a wide-body long-range aircraft (CR929), positioned as a competitor to Boeing and Airbus. Initially, each country tried to implement such a project independently. Still, China lacked the knowledge and technology to do so, while Russia faced Western sanctions, which put an end to the possibility of creating a competitive aircraft without imported components.
In 2016, during a visit to Beijing, Vladimir Putin signed with Xi Jinping an agreement to implement the project on a parity basis, agreeing to contribute $10 billion each. Initial plans envisioned that the first flight of the new aircraft would take place in 2023, with deliveries to consumers beginning in 2025/26. It quickly became clear that the two sides had different visions on the project: China wanted to create an aircraft for the domestic market, while Russia wanted to compete in the global market. Russian specialists suspected China of wanting access to Russian technology to create a Chinese aircraft that would be exported subsequently. Chinese specialists accused the Russians of hiding development results. These disputes led to a complete halt in mid-2020, but after discussions between Putin and Xi on crucial issues, movement resumed. In September 2021, it was announced that all disputes between the parties were over and that the first flight would take place in 2025, with mass production in 2028/2029.
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While agreeing that America is their common enemy, Putin and Xi see the battlefield differently. The Chinese leader’s goal of making China the most significant economic power, with technological independence to compete with the U.S., does not inspire Vladimir Putin. He can do little to support his partner in friendship against America. Moreover, since 2014, after the Western sanctions were imposed on Russia, Putin has promoted the idea of Russia’s technological independence. The government erects barriers to the use of imported goods in many sectors and spends billions of dollars to subsidize the production of domestic alternatives that appear to be more costly and less efficient, lacking competition.
There are few prospects for scientific and technological cooperation between Russia and China. The volume of research funding in Russia is not growing; collaboration between Russian scientists and foreign centers is increasingly reduced; moreover, scientists who worked under contracts with foreign customers or partners are regularly prosecuted in Russia. Russian universities exist separately from research centers and are not among the world’s leading universities, unlike Chinese universities: Three Chinese universities are in the top 100 in the world, and eight more are in the second hundred, while the best Russian university (Moscow State University) ranks 324th, and two top technical universities are in the middle of the fifth hundred.
Xi and Putin know all this. Xi recognizes that Russia cannot help China reach its goals and, at the same time, doesn’t want Russia to emerge as a strong economic power, being afraid of the potential competitor.
Putin knows Russia’s weaknesses as well. But this doesn’t discourage him from fighting with America. However, for the Russian President, the battle with America is in a very different dimension.
To be continued