China, Russia: Interests Converge in Regional Blocs
July 10, 2015 | 05:11 GMT
Summary
The
Shanghai Cooperation Organization (SCO) concluded a two-day meeting
July 10 in Ufa, Russia, just two days after the BRICS (Brazil, Russia,
India, China and South Africa) summit in the same city. These meetings
serve as a benchmark of evolving relations between China and Russia. The
SCO, beginning as a forum to settle newly created borders after the
dissolution of the Soviet Union, has expanded and redefined itself in
recent years. China has steered the organization toward an economic
grouping while Russia has emphasized the organization's political role
and pushed for greater security cooperation.
The
BRICS summit, however, is a much more recent invention. Beijing and
Moscow established the summit to take advantage of shifting global
economic and investment interest, hoping to appear as, if not become, an
alternative to the global financial architecture dominated by the U.S.
economy and dollar. Ultimately, both forums enable Russia and China to
promote their individual regional interests and their combined interest
in countering U.S. dominance in the international system.
Analysis
The
SCO emerged in 2001 as successor to the so-called Shanghai Five, which
comprised Russia, Kazakhstan, Kyrgyzstan, Tajikistan and China. The
earlier grouping was initially established to rectify the borders
between China and the new Central Asian states in the aftermath of the
collapse of the Soviet Union. But while China and Russia also used the
SCO to maintain a dialogue, contemplating their respective strategic
interests in Central Asia and the grouping's potential value, they had different visions from each other, a fact that stalled the SCO's development.
Russia
saw the group as a potential political and even security bloc, a way
for Moscow to guarantee regional security while maintaining its
interests in Central Asia. The group, Russia hoped, would also draw in
China to provide greater leverage in dealing with the United States.
China, too, wanted the grouping to strengthen Beijing's hand when
dealing with Washington, but it saw the SCO more as a potential economic
bloc, one that would help China take full advantage of the region's
natural resources. Moscow and Beijing's differences made any plans to
expand the SCO's purview or accept new members complex and compromise
slow.
Different Concepts
The diverging visions have their roots
in Russia and China's different national strategies. Russia believes
military might is the basis for national strength, power and influence.
Economics matter, but it is the ability to apply force where needed that
truly expresses power. When Moscow has an issue with a neighbor, it may
employ economic tools and political manipulation, but Russia has shown
that it is also willing to back up demands with force.
China,
by contrast, sees economics as power. For Beijing, military might rests
on a strong economic base, and global power stems as much from the
ability to shape global markets as it does from military force. Though
China is willing to sail its ships and fly its planes around disputed
islands, it is more adept at using its economic heft in disputes with
neighbors. In this way it has managed to shape the behavior of Taiwan,
the Philippines and even Japan by placing or removing barriers to trade.
These
different assessments of the nature of power shape Russia and China's
national strategies as well as their actions in the SCO and the BRICS
grouping. Both countries measure their strength by comparing themselves
to their neighbors and one another. Moreover, China-Russia relations
have a complex history of both conflict and cooperation. But they also
measure themselves against the single largest global power, the United
States. From China, U.S. power stems from its role as the center of
global trade and the dominance of the U.S. dollar. The United States'
military might is secondary. For Russia, the measure of power is
reversed — U.S. might is more important than its economic heft.
Groupings
where both countries are included, such as SCO or BRICS, enable Russia
and China to forward their basic regional interests but also serve to
counter U.S. economic, political and military power. With the crisis in
the eurozone, instability in Ukraine and disputes in the South China Sea, Moscow and Beijing see both a need and an opportunity to erode U.S. influence by building on their respective strengths through cooperation.
The
SCO is in the midst of another expansion to incorporate India and
Pakistan after years of keeping the two at arm's length. India has been
the most contentious addition because of Beijing's objections. China,
however, has come to see including India as a way of drawing the country
into a trading network centered on China while slowing the growth of
U.S.-India defense cooperation. Russia wants to avoid losing the Indian market for Russian arms
as well as to add India's 1.24 billion people to a regional grouping
that does not include the United States. The expanded SCO creates a
space in which U.S. economic power is diluted and in which the two most
populous nations in the world are included. It lays the rough framework
for a future economic space that could theoretically rival the heft of
the European Union or the United States, diminishing U.S. economic
leverage, such as sanctions and dollar-denominated oil trade, to influence Russian or Chinese behavior.
An Alternative Institution
In some ways, the BRICS summit serves a similar purpose. The BRICS as an organization
emerged in 2006 after China and Russia appropriated the acronym from a
2001 Goldman Sachs report. The report initially grouped Brazil, Russia,
India and China together as the top emerging, if not leading, economies
in their respective regions. In 2010, the BRIC members decided to
include South Africa as well, making it BRICS. Together, the BRICS make
up approximately 20 percent of global GDP. As a grouping, then, the
BRICS serve as a potential alternative to a U.S.-centric economic
system. Like the slow start of the SCO, the BRICS group has yet to
develop into a meaningful alliance. And whereas the SCO members are all
in the same geographic area, BRICS is more contrived and each is economically different.
The
last few years have shown the vulnerability of many developing nations'
currency and financial markets to fluctuations in Western financial
markets. The goal of the BRICS members, particularly China, is to help
balance these financial flows by providing financing without the
constraints of Western-led organizations such as the World Bank and
International Monetary Fund. In 2014, China formed the Asia Infrastructure Investment Bank to rival the World Bank, IMF and the U.S. and U.S.-allied Asia Development Bank.
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Capital Base of Development Banks
The
BRICS are signing the final documents to launch the BRICS New
Development Bank in July as well. The New Development Bank will have an
initial capitalization of $100 billion ($41 billion from China, $18
billion from Russia, India and Brazil, and $5 billion from South
Africa), though the initial capitalization will be $50 billion. The New
Development Bank will promote infrastructure and sustainable development
in emerging economies as well as their own through loans. Beijing sees
the BRICS bank as yet another tool,
along with Asian Infrastructure Investment Bank, to pick away at the
U.S.-dominated financial system. With its financial system relatively
isolated from the West because of sanctions, Moscow sees the development
of alternative institutions as imperative at this time.
Reflecting Changing Needs
The
gradual evolution of BRICS and SCO into more meaningful organizations
reflects the current positions of Russia and China, their relationship
to one another and their mutual relationship with the United States. The
sanctions on Russia, coupled with the low global oil prices, have
hampered the Russian economy. Russia has reached out to China as an
alternative market for Russia's energy exports. Russia is also using
Chinese credit agencies more, and Chinese investment is flooding into
Russia. Finally, Moscow is once again promoting a China-Russia bloc that
can pick away at U.S. hegemony.
China,
meanwhile, sees opportunities to exploit Russia's changing needs and
capabilities. The China-Russia energy negotiations have favored China's
terms. Moreover, China has long wanted to invest into its large neighbor
but has previously been blocked. With a weaker Russia, China can expand into their shared region of Central Asia. Like Moscow, Beijing too is interested in promoting the perception of a China-Russia bloc as a counter to the U.S.-led system.
The
SCO and BRICS organizations' evolving focus reflect each country's
changing needs. But while it appears as if Russia and China have found
common ground as a bloc and within these organizations, their underlying
perceptions of power and risk leave them constantly mistrustful of one
another. Russia resents China's economic investment as much as it
depends on it. China mistrusts Russia's military actions even though
they keep the United States distracted in Europe. But the common need to
counter the dominant United States is once again drawing China and
Russia into closer cooperation. Concrete progress in evolving the SCO
and BRICS is just one reflection of these priorities