Economic partnership

The 2001-2004 economic partnership with some political and security aspects

China and Russia signed a “Treaty of Good-Neighborliness and Friendly Cooperation” on July 16, 2001.

Although the treaty included nothing new except re-emphasizing their “strategic partnership,” it laid a legal foundation for the two countries to strengthen their security-oriented cooperation. The treaty stated that both countries were committed to “upholding the global strategic balance and maintenance of security…to strengthening the role of the United Nations in the maintenance of peace and development”. These commitments implied a common strategic stand in opposing US missile defense systems and the Kosovo intervention.

The 2001 Russia-China treaty covers five important areas of cooperation:

  • Joint actions to offset a perceived US hegemony
  • Demarcation of the two countries’ long-disputed 4,300 km border
  • Arms sales and technology transfers
  • Energy and raw materials supply
  • The rise of militant Islam in Central Asia

The treaty comes on the heels of another important security arrangement involving these two countries: On June 14, 2001, Russia, China, and four Central Asian states announced the creation of the Shanghai Cooperation Organization (SCO), an arrangement ostensibly aimed at confronting Islamic radical fundamentalism and promoting economic development.

The desire to counter the US global supremacy and the West’s pressure on both countries furnished much of the impetus for a friendship treaty between Russia and China as well as the creation of the SCO.

Both Russia and China are concerned about Muslim radical movements in their territories and around their borders. Since the 1970s, the Turkic Muslim Uighurs in the Western Chinese province of Xinjiang, have been conducting a violent struggle for independence. Stability in Xinjiang is important to China. It is seen as a test case of central control, relevant to Beijing’s grip over Tibet and Inner Mongolia.

Russia is in a similar position as it entered the seventh year of conflict in Chechnya. Radical Muslim penetration of other North Caucasus autonomous republics, such as Dagestan, is increasing, as evidenced by non-Chechen participation in terrorist activities in Russia.

Russia finds its options limited: to face the instability in Central Asia on its own or to bring in China as a partner. Beijing viewed Central Asia, with its weak governments and rich natural resources–especially oil and gas–as its future natural sphere of influence. The recent institutionalization of the SCO demonstrates that Moscow and Beijing hope to be the real decision makers in Central Asia. The signing of the Russia-China Treaty of Friendship, on the heels of the creation of the Shanghai Cooperation Organization, portends the establishment of a strategic partnership that could influence the future of Eurasia and East Asia for decades to come.

China, Russia sign five-point joint statement

Chinese President Hu Jintao and his Russian counterpart Dmitry Medvedev signed the Five-Point Joint Statement, in June 2009.


–  the boundary demarcation completed and ratified

–  the Russian side reiterated that Taiwan and Tibet are inalienable parts of the Chinese territory

–  the Chinese side backed Russia’s efforts in maintaining peace and stability in the region of Caucasus.


–  the two leaders agreed to oppose global trade protectionism

–  the IMF quota formula shall be reviewed and the reform schemes of the World Bank be completed

–  the importance of reforming the global financial system

–  the draft plan of the China-Russia investment cooperation.


–  two presidents are satisfied with the mutual humanities cooperation  

–  the emphasis on the cooperation in prevention and control of acute infectious diseases


 – the basic principles of international law should be cemented and the core functions of the United Nations be reinforced

–  support to the SCO in carrying out active dialogues with other nations 

–  the BRIC countries and the China-Russia-India tri-partizan mechanisms will have a broad future

–  the support for the Treaty on the Non-proliferation of Nuclear Weapons

–  both parties support each other and strengthen coordination within the framework of multilateral organizations in the Asia-Pacific region, like APEC, the East Asia Forum, ACD, and the CICA

–  China and Russia work with Central Asian countries both bilaterally and within the SCO framework


The terrorist attack of September 11, 2001 in New York changed the world political framework and also influenced Sino-Russian relations in the early 2000s.

Both Russia and China supported the US “War on Terror” soon after the 9/11 event and both adjusted their threat perceptions regarding the United States.

This calibration decelerated the security cooperation in their bilateral relations emphasizing instead the feature of “economic partnership”. Sino-Russian economic cooperation and trade volume had not moved alongside the increased security-oriented cooperation. The total trade volume in 1999 was $5.7 billion, which was even less than that in 1992 ($5.8 billion). Although the 1998 financial crisis was one of the key reasons for the sudden fall in bilateral trade in 1999, the low level of bilateral trade through the earlier 1990s reflected divergent economic interests between them.

Putin’s first priority in the 2000s turned to domestic development, including economic growth and regional stability. Fortunately for Putin, high oil and gas prices allowed him to maintain high economic growth for the two terms of his presidency until the 2008 finance crisis.

The major headache for Putin in the early 2000s was Chechen conflict and related terrorist attacks. In international affairs, Putin adopted a “multi-vectored” foreign policy, aimed at developing relations with all countries, including the US. After September 11, this similar experience of terrorism moved Putin closer to the US, although threats from the West may never have disappeared in Putin’s mind. Anyway, the common interest in counterterrorism diverted Putin’s threat perceptions regarding the West.

China’s threat perception regarding the United States also changed, although not as much as Russia’s. Since the 1995–1996 Taiwan-crisis, this issue has been the major obstacle in US–China relations. The Kosovo war heightened Chinese leaders’ suspicions and even fears of the US policy toward Taiwan in the future. Soon after the 9/ 11 attacks, China voiced its support for US fight against terrorists. China voted for the anti-terrorism resolutions in the UN Security Council, which granted the US a mandate to conduct military action in Afghanistan. China helped the United States freeze financial transactions of terrorist suspects in Chinese banks.

Nevertheless, China’s support for the US War on Terror did not change Chinese leaders’ threat perception of the United States, especially on the Taiwan issue. Unlike Chechnya and the related terrorist activities for Russia, the Taiwan issue is in a different category than global terrorism. While Putin might share a similar feeling against terrorism with the US, Chinese leaders were more concerned over what the US would do after its victory over terrorism. The superior US military capabilities shown in both the Kosovo War and in the anti-terrorism campaign deepened Chinese leaders’ threat perceptions regarding the US. Therefore, China started to increase its defense budget after the Taiwan crisis and continued to do so in the whole 2000s and beyond to modernize its military capabilities.

The temporary divergent threat perceptions between Russia and China led to a temporary “aloof” status in their security partnership, although the 1996 strategic partnership statement mentioned that both countries would coordinate in security affairs.

However, Sino-Russian trade increased dramatically after Putin came to power.

In 2000, bilateral trade was US$ 8 billion, which rose to US$ 21.2 billion in 2004 and continued to grow through the most of the 2000s. During Putin’s 2001 visit to Beijing the two states signed an agreement to conduct a feasibility study for the construction of a 1,700 km oil pipeline and to give the Russian gas monopoly Gazprom permission to construct a gas pipeline in China.

This agreement was a breakthrough for Russian–Chinese energy cooperation in the early 2000s. Even though China had a huge demand for oil and gas, Russia had seemed reluctant to start the pipeline construction with China. In 2003 Russia finally decided to build two pipelines to both China’s Daqing province in Northeast China and Russia’s Pacific port of Nakhodka, which can provide oil to China and other Asian markets, including Japan and Korea. A major reason for the rapid growth of bilateral trade and economic cooperation is Putin’s “authoritarian” control of energy sectors during his presidency. The central administration started to regain control over the disposition of natural resources.

The energy deals as well as the increasing trade volume in the whole 2000s indicated gradually converging economic interests between Russia and China. In this sense one can categorize the “partnership” between the two as an “economic partnership” in the 2000s till the outburst of worldwide finance crisis in 2008.

Soon after the US initiated its war in Iraq in 2003, Russia and China started to reclaim their lost threat perception convergence regarding the United States.

Russia joined France and Germany in the Security Council to block US attempts to seek authorization from the UN for its war with Iraq. In 2004 NATO admitted seven countries, including three former Soviet Baltic states, Estonia, Latvia, and Lithuania, as new members after the 1997 enlargement. Russia furiously opposed such an enlargement, which led to the termination of the short honeymoon between Russia and the United States after 9/11.

Russia, therefore, started its “hard balancing” against US threat, especially regarding the Ballistic Missile Defense (BMD) systems in the 2010s. The end of the short rapprochement between Russia and the United States injected new momentum into the Sino-Russian partnership. The two states started again to strengthen their security-oriented cooperation.