Andriy Honcharuk*: Eurasian Integration Projects of Russia and China: Comparative Analysis


Foreign policy doctrine and foreign economic efforts are based on ideological principles. At the moment, it makes no sense to consider in detail the ideology of Russia's foreign policy, since its aggressive imperial nature is already understood by the international community due to  actions of the Russian Federation against Ukraine, first of all, the annexation of the Ukrainian Crimea. Moreover, the words of the leadership of Russia and their actions not only diverge, but often contradict each other.

China's official doctrine is not only clearly articulated by the leadership of the People’s Republic of China, it is being implemented before the very eyes of the whole world. The report of Mr.Xi Jinping at the 19th Congress of the Communist Party of China clearly reads:

"China will unceasingly pursue an independent, peaceful foreign policy, respect for the right of peoples of all countries to choose their own path of development, defend equality and justice in international relations, oppose the imposition of somebody’s will on others, against interference in the internal affairs of other countries, against infringement of the weak by strong".

This is the foreign policy that the People's Republic of China implements at the international arena. The events of recent years do not give any reason to doubt the intentions declared by China. On the other hand, peacefulness does not mean weakness. The report of Xi Jinping at the 19th Congress of the Communist Party of China admits it quite frankly:

"China will in no way sacrifice the interests of other countries for the sake of its own development, and under no circumstances will abandon its legitimate rights and interests. Let no one have the illusion that China can "swallow" bitterness of the infringement of its interests. "

At the same time, it should be remembered by experts who misuse unjustified theses on "Chinese threat" or "Chinese expansion", that Mr.Xi Jinping emphasized:

"Chinese national defence has got a defensive character. Our development does not pose a threat to any nation. Whatever the level of development China would reach, it will never claim the position of the hegemon and will never pursue a policy of expansion".

Following the statement by the President of the People’s Republic of China at the World Economic Forum in Davos, Switzerland, it became clear that the Chinese leadership is now ready to consider the People’s Republic of China as a global economy generator and regulator of globalization processes. It would be feasible to mention that Mr. Xi Jinping, leader of the People’s Republic of China presented in Astana, Kazakhstan, in 2013, his initiative of establishing the Economic Belt of the New Silk Road. According to the plan of the Chinese leader, this initiative should improve the global economy, provide the world with new mechanisms and tools for further development. It should be noted that One Belt - One Road is not a project or a programme, but rather a proposal of the Celestial Empire to the countries of the continent to construct a new historical process of infrastructure, investment, and socio-economic modernization of the present world order.

The emergence of the Xi Jinping initiative proves the completion of the "Deng Xiaoping era," characterized by the desire of China to be as far as possible from the world problems. Today the People’s Republic of China is becoming a leading global power that recognizes its economic weight in the world. This situation dramatically changes the logic and structure of China's relations with its neighbours, but does not reject the principles and mechanisms of cooperation.

The 19th Congress of the Communist Party of China supported the initiative of the President of the People’s Republic of China Xi Jinping, - One Belt - One Way, - and formulated the mechanisms for its implementation. These principles are the foundation of the foreign policy of China at the present stage:

"Relying on the implementation of the One Belt - One Road initiative, guided by the principles of "joint consultations"," joint implementation", and "joint usage", it is necessary to strengthen and renew open cooperation, to form a general architecture of openness, which provides mutually beneficial land and sea interaction within the country and abroad".

Today, the Russian EurAsEC project and China’s One Belt - One Road initiative have already entered into direct competition. Both projects envisage certain economic and political structuring around, on the one hand, Moscow, and on the other - Beijing.

It should be pointed out that the possibilities of the EurAsEC are quite limited due to their own specific features as an international organization. Unlike the formally non-institutionalized "One Belt - One Road," EurAsEC is a deeply bureaucratized institution that requires from participants long-term harmonization of positions on each issue.

The competitiveness of EurAsEC is limited by the low degree of diversification of economies of its member-states, as well as by a small share of domestic trade (9%).

Besides, EurAsEC financial capabilities are considerably lower than those of China. The authorized capital of the Eurasian Development Bank (the main financial institution of the Eurasian Economic Community) is US $ 7 billion. The authorized capital of Beijing Asian Infrastructure Investment Bank (ABI) is US$ 100 billion. It is worth adding US$ 40 billion of the Silk Road Fund of the People's Republic of China. Thus, financial capabilities of Beijing exceed 20 times the potential of Moscow. In addition, it reads about finances declared by the Russian side, which, in practice, often are found to be extant only on paper.

The People's Republic of China and the Russian Federation are now the countries whose political and economic presence is the greatest in Central Asia. Russia maintains rather close humanitarian ties with the countries of the region and maintains a significant military presence in Central Asia, which is confirmed by the military bases of the Russian Federation in Tajikistan and Kyrgyzstan, as well as the membership of Kazakhstan, Kyrgyzstan, and Tajikistan in the Collective Security Treaty Organization.

It is obvious that Central Asia still remains for Moscow an area of extraordinary geopolitical importance, hence the Russian leadership did not spare resources to consolidate its influence in the region. Taking into account the precedent of the annexation of the Crimea, it remains not clear how far Moscow can go in the matter of advancing its own interests in the Central Asia, and how long and how coherently the countries of Central Asia themselves would resist Russia's geopolitical appetites.

 It should be noted that Russia, proclaiming itself successor to the USSR, behaves in the former Soviet Union in such a way as if the CIS countries are a zone of its interests and unconditional influence. At the same time, the centripetal vector has only intensified during the years of independence, which is also reflected in Central Asia.

According to Russian experts, in today's conditions, Central Asia is becoming a region where various integration projects co-exist efficiently complementing each other. The establishment of EurAsEC is intended to partially restrict the expansion of Chinese goods at the Russian market, to provide the opportunity to launch their own industrialization programmes. It is no coincidence that EurAsEC structures are quite lukewarm about the idea of a full-fledged free trade area with China. Moscow calls for a concerted position of the EurAsEC countries as for economic cooperation with the People's Republic of China and aspires to act as a "united front".

Beijing successfully makes a mess of this "front", staking on bilateral economic cooperation. Accordingly, the subjectivity of the Central Asian countries is growing, which cannot be considered any longer the objects of colonization, they are actively developing their own agenda and tend to multi-vector policy.

The strong side of China's economic policy in Central Asia, besides a flexible bilateral interaction and a substantial financial resource, is the ability of Beijing to offer a wide range of cooperation areas. Relative weakness of industry and the resource nature of the economies of the Central Asian countries create a "natural" basis for economic cooperation with China.

If we proceed from the current long-term trend, Russia in the Central Asia is a "leaving state". It is replaced by China, whose economic and, consequently, political influence in the region is steadily increasing.

Russian experts point out that the strengthening of the Chinese presence in Central Asia and the implementation of the One Belt - One Road initiative by Beijing contributes to the inflow of investments to the Central Asian countries and the development of transport-logistics infrastructure of the region. However, Moscow is worried that Beijing is focusing on structuring the regional space around its own economic development, and its policy in Central Asia leads to blurring the Russian integration project in Eurasia.

 Since 2014, the China-Russia confrontation in Central Asia has undergone significant changes. In particular, cooperation of the countries controlling oil and gas resources in the region with Beijing has increased. As China has increasingly consolidated its position in the region on the basis of interaction in the oil and gas sector, the position of the former industry monopolist, Moscow, has increasingly weakened. Over the past few years, Turkmenistan, Kazakhstan, and Uzbekistan have succeeded in significantly diversifying the gas supply network to the Chinese markets bypassing Russia, thus achieving the desired transit independence from Moscow.

China plays the role of the most important economic partner of the countries of Central Asia and is the main importer of oil and gas from Turkmenistan and Kazakhstan. Moreover, energy relations with China have practically provided Turkmenistan with protection from active interference in the internal affairs of the country on the part of Moscow. The factor of Beijing's presence at the energy sector of Turkmenistan, with a large number of contracts for billions of dollars for supplying Turkmenistan gas to China, actually ties the hands of the Russian leadership in this sphere.

As of 2016, China provided Central Asian countries with about US $ 30 billion of loans. In particular, Kazakhstan - more than US$13.5 billion, Turkmenistan - more than US$12.4 billion, Uzbekistan - more than US$2.2 billion, Tajikistan - more than US$1.7 billion, and Kyrgyzstan - more than US$1.1 billion. Credits are preferential: the interest rate is 1.5-3% with the term of up to 20 years with a grace period.

Chinese loans are largely helping to establish an infrastructure between Central Asia and the People's Republic of China, since this region was isolated from the transportation system of China in the Soviet time. Currently, Beijing concentrates efforts on the establishment and reconstruction of facilities (logistics centres, highways, and railways), which allow to increase trade turnover with the region. This approach is in line with the national interests of the Central Asian countries, which are able to diversify their ties with the outside world, which were previously limited due to obsolete Soviet infrastructure.

China promotes the Central Asian countries in solving the strategic tasks of the economy, but unlike the IMF, it does not put forward requirements for reforming the economy and the political system. For instance, Beijing has financed the construction of South-North power transmission lines in Kyrgyzstan and similar power transmission lines in Tajikistan, which allowed these countries to establish national energy systems fragmented after the collapse of the USSR. Such projects, certainly, contribute to strengthening the stability of the Central Asian countries.

Since 2015, Beijing has received railroad access to Iran through Central Asia. For the medium-term, it is expected that Chinese efforts will focus on the creation of another railway corridor with access to the Fergana Valley (Uzbekistan), which is the most populous area of the Central Asia. In particular, it is planned to build a railway linking China, Kyrgyzstan, and Uzbekistan.

Chinese entrepreneurs have great experience in attracting funds to the economies of Central Asian countries and have learned how to maneuver in a rather complicated local investment climate. It was also important for Beijing to expand the network of roads and railways for the export of its own products to the Central Asia and Europe.

Therefore, in general, China is a much more attractive economic partner for the Central Asian countries than Russia: unlike Moscow, Beijing not only offers more favourable conditions for cooperation, but does not require unconditional political integration to consolidate economic relations.

An important role in further deepening cooperation between China and the Central Asian countries will be played by the gradual substitution of leading elites within the region. As the political figures brought up at the Soviet time are withdrawn from practice, and a new generation emerges, the attitude towards Russia will change: from now on, Moscow will be seen not from the standpoint of traditional systemic subordination to the "centre", but in the context of recent aggressive and unpredictable actions of Russia.

The current situation in Russia has already had a negative impact on Central Asia as a source of a large number of labour migrants to the north. Loss of jobs and the growth of racial intolerance within Russia to workers from Central Asia has already significantly influenced Russia's negative perception as a possible platform for improving their own economic situation. Thus, the elites of the Central Asian countries, taking into account all the variety of challenges and threats from any interaction with Russia, found themselves in a situation of looking for ways out of Russian control, which now only brings about a growing national and potentially military aggression.

The establishment of the Shanghai Cooperation Organization has become a turning point in the relations of the Central Asian countries with the Celestial Empire, because this region is the place where the interests of global players are crossed. It is important to remember that four out of the five Central Asian countries (Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan), as well as Russia and China, have become the founding members of the SCO. However, even with its name, the organization emphasizes China's decisive role in its formation.

An important component of the rapprochement of the Central Asian countries with China is the positive image of the Chinese model of building "socialism with Chinese specifics." This model has caused a resonant interest on the part of the national elites of the Central Asia with its flexibility and unconventional character, with clear prospects for further evolution.

Meanwhile, China consistently pursues a policy of involving Central Asian countries in its own integration project. The fifth Forum for China-Central Asia Cooperation was held last August, in the city of Lianyungang (Jiangsu province, People’s Republic of China). The main theme of this year event was "the construction of the Silk Road Cooperation Bridge and the joint promotion of peaceful development and prosperity". The forum was attended by representatives of the central authorities of the People's Republic of China, the governor of Jiangsu Province, Vice-Premiers of Uzbekistan and Tajikistan, as well as more than 200 representatives of ministries and agencies, business and academic circles. It is important to note that such events are regular and are held in different provinces of China, which creates a permanent platform for cooperation at the regional level.

In addition to active formation of the loyalty of the elites of the Central Asian countries, Beijing has, in recent years, pursued a policy of large-scale involvement of local youth in studying in the Celestial Empire. The number of students from Central Asian countries studying in the People’s Republic of China grows year after year. For instance, 13 thousand Kazakhs studied in China in 2016. This is still two times less than in Russia, but it is an important trend.

China's government is now considering the possibility of turning Xinjiang into an educational centre focused on the Central Asia. If Beijing succeeds in humanitarian sphere, China's "soft power" will significantly increase its influence on the region with alteration of generations.

On 14-15 May, 2008 Beijing hosted the High-Level Forum on International Cooperation "Belt and the Road", which was attended by about 1200 persons. China has given this event a significance of the main international event of this year. The international support for the Chinese strategy of One Belt - One Road was clearly outlined during the Forum. Their delegations were sent by more than 100 states, including Ukraine. The top level leaders (presidents and prime ministers) were 29 persons (Presidents of Argentina, Belarus, Chile, the Czech Republic, Indonesia, Kazakhstan, Kenya, Laos, Philippines, the Russian Federation, Switzerland, Turkey, Uzbekistan, Vietnam, the Premiers of: Cambodia, Ethiopia, Fiji, Greece, Hungary, Italy, Malaysia, Mongolia, Pakistan, Poland, Serbia, Spain, Sri Lanka, Secretary of State of Myanmar and others). The Forum was attended by the UN Secretary General A. Guterres, the President of the World Bank J. Kim, and Managing Director of the International Monetary Fund Ch. Lagarde. The composition and status of the Forum participants actually coincided with the G-20 Summit in Hangzhou, China, in September, 2016. Delegations from the United States and Japan attended the Forum (although not of the highest level).

The high-level summit has not only demonstrated significant achievements in the implementation of the Chinese initiative, such as the formation of a financial base, identification of the main routes and areas of cooperation, creation of basic components of the new "silk" diplomacy. The summit also highlighted some problems. In addition to the openly negative attitude of India to the Chinese initiative and the cautious positions of the USA and Japan, there are also disguised fears of some countries, in particular, those of Central Asia.

In spite of the benefits and clear advantages of cooperation with China, the political elites of the Central Asian countries are not interested in shaping the political and economic dependence on Beijing. A deterrent factor is the objective need for developing production economy of their own.

The Ukrainian delegation under the leadership of the First Vice-Prime Minister for Economic Development and Trade of Ukraine Mr.Stepan Kubiv, saw participation in the Beijing Forum as a chance and an opportunity to tell participants about the potential of Ukraine to implement the Belt and the Road.

The high-level forum gave impetus to the processes of strengthening ties between China and its partners, as it was evidenced by numerous examples of international cooperation at a multilateral and bilateral level. More than 70 countries and international organizations have signed agreements with China on cooperation in the framework of the Belt and Road initiative.

 It is worthwhile to note that a document on Ukraine's accession to the Chinese initiative One Belt - One Road was finally signed on 6 December, in Kyiv during the Third Session of the Commission on Cooperation between the Governments of Ukraine and China.

It should be emphasized that, according to the leader of the People's Republic of China, Xi Jinping, the Belt and the Road initiative as the project of the century will only be implemented if it is supported on a global scale. It is obvious that the Beijing Forum is only the first major event to achieve this goal. The President of the People’s Republic of China Mr. Xi Jinping announced that the Second Forum will be held in 2019, and its holding will become regular in the future.

 China, offering its concept, not only simply strives to make roads and railways, and considers routes for the transportation of goods. It seeks to establish an area of economic interaction and development for the countries participating in the project. China is trying to use the globalization and present interdependence of the countries of the world in order to find a balance of interests for each participant in the project and make it universal. This is a new interpretation of globalization, an attempt by China to lead and determine the course of the process, which is already called "globalization 2.0."

Therefore, the forum in Beijing especially emphasized that China at the end of last year had already secured support for its Belt and Road initiative in the UN and brought it in full conformity with the goals of the United Nations global development until 2030, besides, China is guided by the principles of the WTO in China's trade policy and its plans for liberalizing economic relations within the Silk Road.

The President of the People’s Republic of China Xi Jinping focused in his speech mostly on new plans for financial support of that Chinese initiative, and they attracted most of the attention. Priority among such projects will be given to scientific and technological exchanges, as well as the establishment of joint scientific and technological parks. China plans to invest totally US $ 124 billion in the establishment of the new Silk Road over the next few years. First of all, this is additional 100 billion yuan (about US$14.5 billion) for the Silk Road Fund, which is financing this initiative. At present, the Fund has already supported 15 projects worth 50 billion yuan. 60 billion yuan is promised as China's assistance to developing countries over the next three years. In addition, the Chinese leader has promised that Chinese business and financial institutions will invest another 300 billion yuan of investment in the Belt and Road projects. Besides, two leading banks of the People's Republic of China - the Chinese Development Bank and Export-Import Bank - will create special funds for crediting projects under the Belt and Road Initiative for another 250 billion yuan and 130 billion yuan respectively.

It should be pointed out that, according to Western analysts, China's total investment in the implementation of the Belt and the Road initiative in the coming decades may amount to US$ 1 trillion.

At the May Forum, China signed business contracts and trade agreements with more than 30 countries and began to consult on the issue of signing free trade agreements with those countries. The outcome of the Forum in the practical terms can be considered the success of Georgia, which during that event signed an agreement with the People's Republic of China on free trade, completing bilateral negotiations in record time. Moldova also signed a memorandum on the start of identical negotiations during the forum.

In recent years, China's leadership has paid much attention to developing an updated doctrine of peaceful coexistence, transformed to modern world conditions and the international legal field. Its basic features are non-interference in internal affairs, respect for the choice of peoples of the social system and developmental methods, equality and mutual benefit, the solution of problematic situations by political means, and promotion of good-neighbourly relations. In recent years, this policy has been supplemented with a thesis on "harmonization" of both social relations and international interaction.

The positive direction of the Chinese partnership policy has been supported by the political elites of the countries of Central and Eastern Europe.

In 2012, China and the countries of Central and Eastern Europe (CEE) took a joint decision (on the initiative of the Chinese side) to launch the 16 + 1 cooperation format. The motives of the leadership of the countries of Central and Eastern Europe are also purely pragmatic and determined by the economic interests of the countries.

The new format of interaction aims at enhancing the efficiency of cooperation of the People’s Republic of China with the European Union. In addition, Beijing is counting on improving its image in Europe for further economic expansion. China is steadily developing the "16 + 1" format, introducing its institutionalization, forming a specific development programme, within which a special credit line of US$10 billion  was established. Beijing will continue to use the "16 + 1" format to spread its political and economic presence in the Central and Eastern Europe.

In this sense, the "16 + 1" format is directly related to Ukraine, which should join the Chinese initiative on the European side. China had no reservations as for the EU-Ukraine Association Agreement, it has repeatedly declared Ukraine's perception of Ukraine as an "important country in Europe" and stressed the importance of Ukraine joining the New Silk Road. In addition, the level of development of the countries Central and Eastern Europe is much closer to the Ukrainian than the economies of the old Europe.

According to Chinese analysts, the "16 + 1" format is the most promising for the project to establish the economic belts of the New Silk Road and to carry out major infrastructure projects in Europe. The Chinese side proposed to European partners to move on to more concrete cooperation and create a special platform for this purpose. It is suggested to conclude agreements at the local level, to expand cooperation at the level of medium and small businesses. Coordination issues will focus on trade and investment, but not on politics. However, the strengthening of mutual understanding remains the most important goal. Because of this, special attention will be paid to the fact that the 16 + 1 format does not conflict with China's relations with the EU, in general, and the leading European countries, in particular. Beijing emphasizes that cooperation in the 16 + 1 format complements and strengthens the strategic partnership between China and the EU, as it is fixed in the China-EU 2020 Action Plan.

The 6th Summit of the 16 + 1 format was held at the end of last November in Budapest, at which the Prime Minister of the State Council of the People's Republic of China Lee Ketsiang announced new Chinese investments in the countries of the Central and Eastern Europe in the amount of US $3 billion. The Chinese side plans to expand its presence in the Central and Eastern Europe in such areas as trade, investments, transport, infrastructure, industry, energy, agriculture. In order to deepen integration, the mechanism is introduced for the first time for the exchange of officials between the governments of the People's Republic of China and the countries of the Central and Eastern Europe.

The establishment of the Committee on cooperation in the field of commercial law is scheduled within the framework of the Business Council of the People’s Republic of China – Central and Eastern Europe. The Committee will facilitate the establishment of mechanisms for public administration and improvement of mutual understanding in business matters. Simplification of the process of financing of economic projects will be facilitated by the establishment of the 16 + 1 Interbank Association for which China has allocated 2 billion euros.

An important component of cooperation in the "16 + 1" format is the railway connection. A new impetus has been given to the construction of the Belgrade-Budapest railway, for which a joint China-Serbia-Hungary group has been established. In order to develop container transportation, the Chinese plan to establish a network of new logistics centres in the Central and Eastern Europe.

 Information on the "success" of the Russia-China strategic partnership looks somewhat controversial against this background. As early as in 2014, the establishment of the Eurasian Moscow-Beijing high-speed transport corridor was announced, the first section of which was to become the Moscow-Kazan main line. The total cost of the project was estimated at US $ 245 billion, while the first portion of 770 km was evaluated at US$ 15.6 billion.

The Chinese have repeatedly confirmed their readiness to implement the project, made their share of the financing and provided long-term crediting from the Chinese Development Bank. It was expected that the first train will run along the railway in 2020. Instead, the leadership of the Russian Railways announced last November the postponement of the deadlines for 2022-2023.

 Most experts are skeptical as for the possibility of implementing even the first part of the project, not to mention the entire corridor, which should be put into effect in 2035. The main questions remain: how to combine Russian technological level with Chinese technologies, whether Russian enterprises are ready to build the necessary corridor infrastructure and what should be loaded into containers from Moscow to Beijing. There is nothing even to be said about passenger traffic.

It is worth mentioning that the Russian media covered the 6th summit of "16 + 1" in a limited and negative way, since the growing role of China in the Central and Eastern Europe automatically reduces the influence of Russia on the countries of the former socialist camp. Russia yields its place and role to China, which is on the upswing, in the region of the Central and Eastern Europe the same as in the Central Asia.

The conclusion is obvious: Russia's integration projects do not meet the national interests of the countries at which they are aimed, and therefore predictably lose to China's proposals, which is positioning itself in a right way, correctly presents its assistance, and is ready for fruitful, mutually beneficial cooperation both in Asia and in Europe.


* Information about the author:

Andriy Z. Honcharuk – Senior Research Fellow, National Institute of Strategic Studies of Ukraine.

The article is prepared on the basis of address at the International Conference "Russia and China: Current Situation and Development Prospects".

11.02.2018 21:00:00