The Emperor’s New Road: China and the Project of the Century

by Jonathan E. Hillman

  Moscow’s calculus will change if China becomes more threatening or the West becomes more welcoming.21 As China’s economic footprint grows, so will its security footprint. Sightings of Chinese military vehicles and construction in Afghanistan’s Wakhan Corridor, as well as a Chinese military base and border posts in nearby Tajikistan, show that this expansion is already under way, as Chapter 3 noted.22

  American policy makers could use these developments to stoke Russo-Sino competition, but they have been doing the opposite. “Moscow and Beijing share a common interest in weakening U.S. global influence and are actively cooperating in that regard,” the U.S. Defense Intelligence Agency concluded in a 2017 report.23 The Trump administration’s National Security Strategy singled out China and Russia as competitors that “challenge American power, influence, and interests, attempting to erode American security and prosperity.”24 These lines might win applause among some U.S. audiences, but they are also a rallying cry for China and Russia. There is nothing strategic about pushing U.S. competitors closer together through tough-sounding public statements.

  “Eurasian Union”

  Putin and Xi have also promised to “link” their signature economic visions. Putin’s vision is the Eurasian Economic Union (EAEU), which aims to integrate Russia and four former Soviet states in a single market for goods, services, capital, and labor.25 A “Eurasian Union” was first proposed by Kazakhstan’s President Nursultan Nazarbayev in 1994. Putin revived the idea with an op-ed written in 2011, when he was prime minister and planning his return to the presidency. The EAEU, he explained, was an opportunity to make the most of a common Soviet heritage and learn from the European Union’s mistakes.26 His pitch was intended to resonate with Russian nationalists hoping to forge a distinctive path between East and West.27 From the beginning, Putin’s conception of the EAEU was more about Russian politics than about regional economics.

  But like the BRI, the five-country EAEU has been less impressive in practice. Russia, Kazakhstan, and Belarus formed the initial grouping in 2014. In 2015, Armenia joined mainly for security assistance from Russia. Later that year, Kyrgyzstan joined and quickly regretted its decision, which required raising tariffs with countries outside the group, including China. In 2016, Kyrgyzstan’s exports dropped by 30 percent, imports dropped by 8 percent, and overall GDP dropped 2 percent.28 The most telling sign of the EAEU’s struggles is the lack of interest among other countries in joining. Russia has courted Tajikistan and Uzbekistan as well as Moldova, Georgia, and Ukraine. A few countries have signed on as observers, but as of 2019, none were taking serious steps toward full membership.

  Geography, however, demands that China deal with the EAEU. Three of the BRI’s six proposed economic corridors pass through it. The China-Mongolia-Russia Economic Corridor (CMREC) includes a route through China’s Manzhouli and Russia’s Zabaykalsk, cities on opposite sides of the border. While the China–Central Asia–West Asia Economic Corridor (CCWAEC) does not include Russia, it passes through EAEU members Kazakhstan and Kyrgyzstan en route to Iran and Turkey. The third corridor, the New Eurasian Land Bridge, connects China and the European Union, by way of Mongolia, Russia, and Belarus.29 These corridors are still in their infancy and need Russian-Chinese cooperation to grow.

  Economics aside, Putin and Xi have strong political incentives for casting their visions as complementary. In Xi’s opening remarks at the first Belt and Road Forum, he listed the EAEU first among policy initiatives with which the BRI had enhanced coordination.30 Putin reciprocated and listed the BRI first among “integration formats,” which he said could be combined to build “a larger Eurasian partnership.”31 Putin’s call for a larger or “greater” Eurasian partnership is an unsuccessful attempt to combine the EAEU and BRI into something of which Moscow would have greater control.32 The concept treats Russia and China as equals, despite their economic disparities. Xi has been happy to play along, because Putin’s rhetoric softens suspicions that the BRI is a tool for extending Chinese influence into Central Asia.

  Both leaders are critics of the Western-led economic order, and talk of “linking” the BRI and EAEU helps position them as leaders of an alternative approach. Xi made headlines at the 2017 annual meeting of the World Economic Forum, when he warned against protectionism and sounded like a bigger proponent of free trade and liberalization than some of his Western counterparts.33 Putin has made similar comments, including at the first Belt and Road Forum, when he pointed to “the crisis the globalization model finds itself in.”34 Neither has offered a coherent alternative, but their criticism of the status quo resonates with many developing countries.

  Putin and Xi’s shared narrative is clever and opportunistic. It appropriates Western language about globalization and stokes resentment in many of the places that have benefited from globalization the most. Even if it does not yet offer a solution, it presumes that any solution should be defined in contrast to the West, in essence defining the problem as the West. Their message is made louder by the West’s relative silence. With the United States and the European Union consumed with domestic challenges and relatively disengaged, Russia and China are attempting to lead a conversation about globalization.

  “Welcome to Russia”

  Despite this common cause, the China-Russia partnership still has an artificial flavor, supported more by leaders on high than by organic developments on the ground.35 Outside the Heihe airport is a massive bush shaped as two bears, a panda and a grizzly, holding hands. Closer to the city center, near duty-free shops that cater to Russian tourists, there is more greenery shaped as two large doves with state flags unfurling toward each other. In this awkward romance, state media even trumpet Chinese-Russian marriages as evidence that their partnership is succeeding.36

  In theory, Xi’s and Putin’s economic visions could be complementary. The BRI puts a greater emphasis on hard infrastructure, while the EAEU puts a greater emphasis on “soft” infrastructure, the rules and regulations that govern movement and commerce. Unnecessary paperwork, redundant checkpoints, and other frictions at the borders account for up to 30 percent of export value within the EAEU.37 There is no doubt that Asia, and particularly Central Asia, where China and Russia’s visions overlap, could use both hard and soft upgrades.

  But as I was beginning to appreciate, cooperation in third countries is unlikely to take off without addressing issues at their own border, where mistrust still rules.

  “How much longer?” I asked the guard. “Ten minutes? Thirty minutes?”

  “How many hours—that is the question. Do you want a translator?”

  “I don’t understand. I need to leave.”

  “We will get the translator. Sit here,” the guard said, pointing to a chair as he left the room.

  Given his concerns about security, it was an interesting choice. Facing a window, the chair offered a front-row view of the construction site. As I watched, the movement of yellow machines—trucks, a crane, an excavator—slowed. A few minutes later, a stream of workers filed out through the room behind me, a turnstile clicking as each walked through. It was lunch time.

  The translator, whom I will call Nadia, arrived about an hour later. She was accompanied by a local policeman, let us call him Dimitry, whose silent grin suggested that he was amused.

  NADIA: They say, you do not have permission to visit this place.

  ME: I asked to visit, and when they said no, I asked to leave. I didn’t know it was illegal to ask.

  NADIA: They say, even if you did not know the law before you broke it, you have still broken it.

  After some back-and-forth, I agreed to pay a small fine, the equivalent of fifteen dollars, to expedite the process. I stood up, took out my wallet, and prepared to leave the place like it was a restaurant that had served up a bad meal—except the waiters were carrying guns. They might appreciate a more generous tip, I thought. A hand descended on my shoulder.

  “First, the official report must be written,” the soldier explained. He began
slowly and painstakingly filling out the report by hand. A few paragraphs in, after making a spelling mistake, he ripped up the paper and started again.

  The longer the soldier worked on his opus, consulting my passport and Nadia every few minutes, the more visibly bored, and friendly, Dimitry became.

  DIMITRY: Where in the United States are you from?

  ME: Washington, DC.

  DIMITRY: I love the Washington Capitals. Ovechkin. Kuznetsov. Orlov. The best.

  ME: They are the best.

  I hadn’t followed the Capitals closely but knew those were the Russian players who led them to a Stanley Cup.

  DIMITRY (smiling): The best.

  Finally, the soldier picked up a stack of papers, tapped them neatly on the desk, and stood up.

  ME: Can we go now?

  NADIA: They say they need another document. Their colleague will bring it from the headquarters.

  ME: Do you have computers?

  DIMITRY: Welcome to Russia.

  Sweating, I checked my phone: two p.m.—four hours until the last ferry left from Blagoveshchensk. I planned to return to Heihe later that afternoon after visiting the bridge and walking around the city. My flight to the United States was leaving the next morning from Heihe, where I had left my suitcase.

  “Entrepreneurs of the Amur”

  Taking a quick trip between Russia and China sounds preposterous, but it is way of life for a dying breed of entrepreneurs. In 1992, China opened a free-trade zone to promote cross-border trade, and every morning, people from both sides make the journey across the river as part of a small but thriving suitcase trade. To avoid customs taxes, Chinese entrepreneurs in Russia often employ Russian citizens to hand deliver items. In downtown Blagoveshchensk, a bronze statue of a man carrying an oversized suitcase in one hand and another on his shoulder was built in the 1990s to commemorate the suitcase traders. “For the hard work and optimism of the entrepreneurs of the Amur,” its inscription reads.

  The Amur’s new entrepreneurs are not so different. Earlier that morning, in Heihe, I watched a stream of young Russian men file out of a duty-free shop and stagger toward the ferry terminal with overpacked nylon duffle bags in both hands. Behind the terminal, a Ferris wheel juts into the sky, an attempt to keep visitors a bit longer. A truck pulled around the back of the ferry terminal, and men rushed to transfer its bags onto the ferry before we pulled away. Other than a few gray Russian patrol boats doing their rounds, the river was empty.

  The ferry ride takes only ten minutes, but bureaucracy stretches the journey closer to two hours. After buying a ticket and clearing customs, passengers wait for the next boat. Chinese and Russian passengers are grouped separately. Whether for efficiency or something else, the segregation felt odd for these “most trustworthy strategic partners.” It was enforced by signs and halfhearted staffing. I was directed to join the Russians.

  In the winter, the ferries are replaced by pontoon bridges, a floating design that dates back to 480 BC, when Xerxes marched his Persian army across the modern-day Dardanelles. The bridges are limited in the weight they can hold and must be set up seasonally. These limitations are strengths for anyone uncertain about the value of stronger links. The pontoon bridges are also inexpensive and can be easily removed. When the new bridge between the two cities is finished, it will be a more permanent fixture.

  Separated by just over one thousand meters, the Chinese and Russian sides of the bridge are different worlds. A day earlier, on the Chinese side of the bridge, my driver parked on the bank of the river alongside the construction site. A civilian guard emerged from a small shack. We shook hands, and he gave an approving nod after I asked to take a photo. I walked down to the water’s edge. In contrast, Russian security is so restrictive that locals often travel to China to fish the same river. Before leaving, I asked to take the guard’s picture. He smiled and agreed. My interest in the bridge was not a threat but a compliment validating its importance.

  Touted as symbols of cooperation, transport links also reveal the limits of China and Russia’s partnership. There are only four active railway crossings between Russia and China.38 The United States–Canada border is roughly twice as long but has more than six times as many railway crossings.39 The first Russia-China railway bridge, linking Tongjiang in China with Nizhneleninskoye in Russia, has proceeded in starts and fits.40 Construction on the Chinese side was completed in 2016 and outpaced the Russian side, which was not finished until 2019. Until then, satellite images showed a structure stretching from Chinese territory and ending part way over the river. China was waiting for Russia to meet it halfway.

  Far Eastern Promises

  Well before the BRI, Chinese and Russian officials announced hundreds of joint projects with great fanfare but little follow-through. In 2009, Presidents Hu Jintao and Dmitri Medvedev released a list of 205 joint projects.41 By 2015, only 19 projects were under way.42 Part of the problem is that failed proposals are often repackaged as new offerings in the hope that foreign investors will see merit when domestic investors, including the government, did not. The list of challenges deterring foreign investors from the Far East is long: corruption, weak property rights, small market size, and poor infrastructure. In 2017, it attracted only 2 percent of China’s foreign direct investment into Russia.43

  China towers over Russia demographically, and nowhere is this more apparent than in the Far East. The Far East encompasses nearly a third of Russia’s land but barely 5 percent of its population. In contrast, China’s Northeast is overbrimming with labor and short on land. The population of China’s Heilongjiang province alone outnumbers Russia’s entire Far East by more than six-fold.

  Russian officials have pointed to these disparities to stoke fears about migration. As Putin warned in 2000, “If in the near future we do not make real efforts, then even the primordially Russian population in several decades will speak mainly in Japanese, Chinese, and Korean languages.”44 The Russian government has even offered free plots of land to entice more Russians to settle the Far East, and it requires foreign investors to employ Russian citizens.45

  But a Chinese migrant wave will not be washing across Russia’s borders anytime soon.46 Most Chinese, like most Russians, prefer living in Russia’s western cities, where more jobs are available. Declining wages in Russia are another deterrent, especially when average salaries can be higher in China.47 The same conditions that deter Russians from the Far East also limit its attractiveness to Chinese.

  China’s and Russia’s biggest moves have been in the energy sector.48 China is the world’s largest energy importer, and Russia is one of the world’s largest owners and producers of oil and natural gas. China’s hunger for resources aligns with Russia’s need for investment, and their shared energy interests have been advanced through several multidecade deals. In 2010, their first major joint infrastructure project, an oil pipeline from Skovorodino in Russia to Daqing in China, was completed.

  In 2014, after a decade of negotiations, Gazprom and China National Petroleum Corporation struck a thirty-year, $400 billion agreement for natural gas. A new pipeline, the Power of Siberia, stretches three thousand kilometers from gas fields in eastern Serbia to the Chinese border at Heihe. It is Russia’s most expensive project since Soviet times. Constructing roughly two kilometers each day, workers braved subzero temperatures, and even bears, to ensure its completion in 2019.49

  Russian policy makers touted the new pipeline as evidence of their options. “Barack Obama should give up the policy of isolating Russia: it won’t work,” said Alexei Pushkov, head of the Russian Duma’s foreign affairs committee, after the deal was concluded.50 China, however, took advantage of Russia’s lack of alternatives and drove a hard bargain on the price of gas and the pipeline’s route.51 Nor will Russia enjoy the leverage that it does over smaller states that rely on its energy exports. The opposite is more likely: China has more options for purchasing energy than Russia has options for selling it.

  Farther north, China al
so wants Russia’s help in providing access to the Arctic.52 In 2018, China released its first official Arctic policy, which reiterated the claim that China was a “near-Arctic power.” It has proposed building a “Polar Silk Road” from China, through the Arctic, to northern Europe. China is willing to pay. The China National Petroleum Corporation (CNPC) and China’s Silk Road Fund have stakes in Russia’s Yamal liquid-natural-gas project, which started operations in December 2017. Cooperation could extend to building a port in Arkhangelsk, on the White Sea, and a railway from the port to central Russia. Commercial transport through the Arctic is not likely to become profitable for decades, raising suspicions about military motives.53

  Trade policy is another avenue for integration, but China and Russia’s recent efforts have been as much show as substance. In 2015, the conclusion of negotiations for the U.S.-led Trans-Pacific Partnership galvanized them to pursue their own trade deal.54 Three years later, China and the EAEU signed a trade and cooperation agreement that improves customs and trade procedures.55 One Russian official called it “a major step towards the alignment of the EAEU and China’s Belt and Road Initiative,” but it does not lower tariffs.56 The EAEU’s defensive interests stand in the way of any deeper, more meaningful economic arrangement. China would be its largest trading partner, by far, and EAEU policy makers want to limit the impact of more Chinese exports on their domestic industries.

  A considerably more ambitious approach would be establishing a free-trade area under the Shanghai Cooperation Organization (SCO). The SCO began with a focus on border disputes and security issues, but it has taken on a broader mandate and greater economic focus in recent years. Both Russian and Chinese officials have mentioned the SCO as a preferred mechanism for coordinating the EAEU and the BRI, and the organization’s 2015 development strategy mentions “developing common approaches to the Silk Road Economic Belt Initiative” among its goals.57 But the EAEU and SCO members do not overlap neatly, with the latter including a number of additional states. When Pakistan and India, two countries with high tariffs and political tensions, joined the SCO in 2017, a free-trade zone became even more unlikely.