 Good morning everybody, my name is Philip Shetler-Jones from the World Economic Forum. Thank you very much for joining us. We're here to talk about the Russia-China relationship and get a sense about what's changed, what's new, and what's going to happen next. I'm joined, and I'm very grateful to welcome Professor Jiang Zui from the Chinese Academy of Social Sciences, where he's a senior research fellow, and also a distinguished professor at Shanghai University. Alexander Gabyev from Carnegie Moscow to give him a full title, Chair in the Russia in Asia Program from the Carnegie Moscow Center. So I'm going to ask a couple of questions to the panelists. And then after about 15 minutes, I'd like to turn the floor over to questions. So please get your questions ready. But if I could start with Alexander and just ask if you could first give us an idea about what's happened recently and what's really deeper driving the changes in the relationship. Because we had a very symbolic reminder of the importance of the relationship just last week, where there was a very large-scale military exercise. You probably noticed involving something like 300,000 troops, 36,000 tanks, air, maritime, land operations between China, the Russian Federation, and Mongolia. And it was actually, if I'm correct, the first time since these exercises were going where a country which is not an ally or a country from the former Soviet Union has joined the exercise. So this sounds like a pretty significant development. Can you start by telling us what's driving this change? I would add to that that China used to be one of the target countries of this exercise. Because the contingency planning of this strategic command, Command East, was always partly about the US and its allies mainly about China. And that symbolically at least stopped. And the Russians say to China, hey, China, we are not afraid of you anymore. We don't look at you as a primarily security threat in the Far East. And we even invite you to develop interoperability. So you might think whether Russians are naive, not to think that long-term this relationship can be more rocky. And they have some contingency planning against potential threat from China and vice versa. But I think it's going into that direction. Just stepping back and answering to your question and trying to be very quick. If geopolitics is something like a dating app, like a Tinder, I think that Russia and China have natural reasons to swipe each other the same direction all the time for free particular reasons. One, they share a very long continent of water which takes a lot of resources to defend. And since both countries see each other's national security priorities elsewhere, they don't want to go back to the 1960s, 1970s, the years of confrontation, where they invested a lot of money and people and personnel and weaponry to defend this border. So once the relationship warmed up and the opportunity presented to sort of the territorial issue, they demilitarized the border. And when elsewhere, Russia is obsessed with NATO. Russia is involved in the Middle East. Russia is very nervous about the developments in Central Asia. China is obsessed with South China Sea, Taiwan, Japan, the Klang Plateau. So their priorities lie elsewhere. Why would you invest millions? So the bottom line is that we don't want to be with each other all the time, but the confrontation is just too costly and two countries want to avoid that at any cost. Point number one. Point number two, mutual compatibility of the economies. Russia, by and large, is a huge oil and gas tanks with some metals and sophisticated manufacturing in nuclear power plants, sophisticated weapons industry, but that's it. China is a natural market for Russia. And Russia is ideally placed between two large consumers of its export items. If you look at the structure of Russia's trade with Europe and with China, it's absolutely similar structure. Russia actually sells more machine to China than it sells to Europe. But the volumes are different, because Russia has traditionally been oriented towards the West, where the pipeline and the infrastructure exists, and which is very close proximity. Point number three, these are political setups in both countries. China is a socialist democracy with Chinese characteristics. Russia is a democracy by constitution, but in fact, both political systems are different from democracies in the West. And they have a lot of overlapping interests. Like, NGO law in this country was written with huge intake from the Russian experience. Russia is very interested in Golden Shield project, like the cyber wall that defends Chinese internet from hostile influences overseas. So here you have a lot of overlaps, and these are the fundamentals. What's changed was Russia's confrontation with the West after annexation of Crimea and the sanctions that were imposed on Russia. So if Russia looked for new markets, sources of capital and sources of technology, it cannot go to its traditional partners, because they are part of the sanctioned regime. Many developed nations in the East, in this part of the world, like Japan and South Korea, are US treaty allies. Where do you go? So China is the only place to go. And Russia did a pretty sophisticated by Russian standards, of course, interagency net assessment of the risks associated with China, and discovered that actually many of those risks that China thought, oh, China is going to invade into Siberia because of the demographics. They discovered that Chinese population is going down. The workforce is going down. The wages are going up. So the economic incentive to go to Russia are decreasing. And after the ruble devaluation, they are decreasing to zero. So we have huge influx of Chinese to Russia now. But these are tourists. And all the permanent workers from China are actually going back because there are much more labor opportunities here in China. Weapon reverse engineering, that used to happen a decade ago. Right now, China is so sophisticated and so advanced that in 10, 15 years time, they don't want to copy Russian technology. So it's either that Russia sells it now or it sells it never because China will be there on their own. And the list goes on. But the Russians discover that, yes, there are some risks. But right now, we have no other choice as to open up to China. And for China, that's also a strategic opportunity to have this secure periphery on the north, have access to resources, and have Russian voice in the international organizations. And last point, there was Trump going simultaneously after the two. So that drives it to much closer together, probably sometimes closer than they both want in natural circumstances. Thank you very much, Alex. You started to give us some of the motives as well from the Chinese perspective. So on that one, I'd like to turn to Professor Jiang and ask if we consider the ups and downs historically in the relationship, some periods very close in the 1950s and then a kind of a less close period and then after the Cold War, relations changed completely because of the events and the end of the Soviet Union. So from your point of view, what is the driving factors behind this recent warming up of the relationship? Thank you very much. As you know, I would say any country's foreign policy is closely related to its traditional culture. And China's foreign policy is also closely related to its traditional culture. And according to Chinese culture, we say a neighbor is more important than a distant relative. So if you are my neighbor, then you are more important than my uncle in Shanghai or in any other places, OK? So China would say it's very important for me to have a good neighbor, OK? So this is a kind of a cultural perspective. And as my colleague mentioned just now, that yes, these two countries or the former Soviet Union had some difficult times. As I still remember when I was a boy, I heard there was a war between us on the island called Tsengpao Island. At that time, I was quite a kid. But I still remember. Some pictures, cartoons, Chinese people's liberation now fought against the Soviet troops. But we realized that this kind of history was bad for Russia and for us. So we need to have cooperation. And well, as you know, China wants to make friends with everybody, including the US. But the US is happy to make enemies in the past, Japan, and in Europe, and now China. So the US feels very relaxed, very proud to have an enemy. So then Russia and China say, well, we can make friends. And also, that's good. And of course, as you know, that the Chinese economy needs all kinds of resources. And Russia is so close to China. So we don't need to spend lots of money on transporting resources from far away. So it's very convenient for China and Russia to have cooperation. So I would say it's quite logical. And regarding your question about the current military exercise, as you know, the two sides have built the so-called comprehensive strategic partnership. What does that mean? Strategic partnership, comprehensive. That means we are going to have cooperation in every field, not only energy resources. And we also have these kinds of ties in the field of people to people's changes, politics, and the military. So why not? And now, so I guess some of you were here just now, 10 minutes ago. You heard the two hawkish US congressmen. So since we have a common enemy, well, why not should we join hands together? Thank you very much, Professor Jay. This kind of description is very helpful and very much disputed and debated, I think, at the moment. Enemy, ally. Some people argue that there is an alliance, or maybe not by name or treaty, but a de facto alliance being created. Other people are thinking about the need for that relationship to be broken up or split, to prevent a potential alliance. So what do you hear? And sometimes you think people really don't understand. What are people getting wrong about the relationship and what it's going towards and what it can become? Alex, can I start with you? I think that we are still using this 20th century lens. And when we talk alliance, we look at Warsaw Pact or at NATO as a model, which is wrong probably for 21st century relationship between great powers. All the fundamentals I mentioned in the Tinder of geopolitics I think are there and will be there for foreseeable future. What I think is that both countries military see themselves as fully capable to protect the motherland and to do missions outside of relative borders, like what China is doing in South China Sea, what Russia is doing now in Syria. Russia doesn't need massive Chinese help in Syria. China doesn't need Russia to be engaged in the South China Sea. We can take care of our own things. What we definitely don't want to do is to give each other type of Article 5 security guarantees if Russian plane was recently shut down in Syria and Russian military blames Israel. If Russia is hypothetical, very unlike this scenario, Russia is way smarter than that, to launch a counter offensive and shut down some Israeli fighter jets. And then there is a military confrontation which involves the US. China will have to declare war to the US in order to do what exactly to protect Russia's interests because it was so stupid to be involved in Syrian conflict in the first place. If Chinese naval vessels collide with Vietnamese naval vessels over the oil rig in the South China Sea, Russia would have to declare war to Vietnam, which it doesn't want to because Vietnam is an important strategic partner. So both countries don't want to give each other these type of security guarantees. They don't need to do that at all. But what they see is that there's a level of interoperability when they operate in places like Central Asia or probably Korean Peninsula. That's the two theaters where I see some potential for interoperability. And then cyber operations and doing something like foreign policy ran a very good piece on how the Chinese intelligence got into the communication of CIA agents here. And there is a line that the Chinese intelligence shared this information with the Russians and that probably less to some capture of CIA intelligence assets inside Russia. So we're going to see that level of cooperation on cyber and probably simultaneously and coordinated operations in new domains, but not traditional type of Article 5 alliance. Last point, NATO alliance or US alliance in China in Asia Pacific involve a hierarchy. Though everybody is nominally equal in NATO, if you talk like Slovenia and the US, everybody knows who is the master in the alliance, who is in the driving seat. So that question would arise if Russia and China are to four military alliance. We don't want to be in this hierarchy relationship. We don't want to talk who is Goga, who is Didi, who is the elder brother, who is the younger brother. So this helps to maintain at least nominal or symbolic equality in the relationship. Thank you very much, Alex. Well, based on my humble knowledge of English language, my understanding of the word alliance can be understood more or less like military alliances. Okay, in Chinese we call it the German and in English you say alliance. Well, let me tell you that China wants to make a partnership not alliance. So I don't know if some of you can understand Chinese. We say jiemen, not jieban, not jiemen. Well, it's beautiful Chinese language, phonetic transcription, sounds very nice. Jiemen and jieban, okay. So China wants to seek partnership not military alliances. Why? Well, we believe that nowadays, particularly how many years, more than 20 years after the end of the Cold War, military alliances is not good for maintaining world peace. Some military alliances, well, like NATO, has bombed Libya, Kosovo, and many other places. So China does not want to make military alliance with Russia to bomb anywhere. We just want to maintain peace. We want to create a partnership. As I said, comprehensive strategic partnership. That's good for maintaining world peace. Thank you, and thank you both very much. Now I'd like to open up a little bit to the audience for questions. So if you have a question, raise your hand. A microphone will come to you. And if you could just mention your name, your affiliation, and then try and keep the question short so that we can get through as many as possible. I think the first one is here on the right. Thank you. Thanks. Jonathan Tepperman, Editor-in-Chief of Foreign Policy. Curious how long-lasting you think this new warm relationship can be. The conventional wisdom in Washington has long been that yes, China and Russia may find reason to cooperate in the short term, but that the structural differences between the countries as well as their core interests are so different with China being a growing country, Russia being a dying country, et cetera, et cetera, that any relationship can't last very long. And a related second part to the question, is there an opportunity still for an American leader, maybe not this one, to do a Nixon and pull China back towards the United States and away from Russia as Nixon did in the 70s? Thank you. Professor Jiang, would you like to take a shot at that? Well, I'm not a kind of fortune teller, but I believe based on my humble knowledge of international relations, I would say China's relationship with Russia can last long and long. Of course, there is some kind of, how would you say, different understandings. Well, I would say this marriage will last long and long. And regarding your second question, well, I don't want to use your words, pull back China into its orbit, but I would like to point out that somebody, some of your colleagues say they should be G2, right? To America, G2. But as Chinese say, G2 is not possible. US and China cannot govern the world. I have a stupid idea. Probably the US, China, Russia, and the EU can join hands to deal with so many global issues. Of course, that's not easy. I don't know if the US is willing to join hands with China, Russia, and the EU to deal with global governance to push forward the global governance and to deal with these global issues. So please ask your president, can you agree to join hands with China, Russia, and the EU to deal with global issues? Thank you. Thank you. Thank you. Alex, what do you say about the idea that America could break Russia away in this sense? I think that on the first one, I don't see that many structural differences, frankly. I think that they are overhyped and people are still living in the past knowledge of, oh, Russians are so afraid of Chinese hordes, which are gonna take on Siberia and the Far East, which is not happening at all. Like all the factual based study that we do at Carnegie Endowment show exactly reverse. Russians have trouble to attract Chinese investment and Chinese labor into the Far East and they're just scratching their heads and trying to make the case for Chinese investors where they say, oh, no, Africa is actually much more attractive than you, Russia. So that's the new reality, frankly. On issues like Central Asia, there is a current division of labor where China is the dominant economic presence and Russia provides security there. I think that's unstable and China will play more visible security role, but Russia learns there is an internal debate which is right now starting in Russia and Russia thinks that, okay, if there is about burden sharing, we probably cannot police the region for 20, 30 years to come. And if China will step in and do something meaningful while respecting our formal alliances with Kazakhstan and Tajikistan and Kyrgyzstan, why not? So I think that's manageable. The flashpoints could arrive if you have a big domestic upheaval either here or in Russia. If you have a democratic transition in Russia which ultra-liberal pro-Western government, which says, oh, China is a shameful authoritarian dictatorship, we shouldn't be partners with that, right? Or here there is an upheaval with a more open and democratic setup if you read the writings of Chinese nationalists, like the very famous book, Tungguo Bogao Xing, Unhappy China, there is a lot about Russia. I don't see that two opportunities on the horizon for the foreseeable future at all. So as it's for now, I think it's pretty stable. When we talk about pulling China back in or Russia back in, I don't think that's possible with the current setup. And frankly, I think that the US should probably spend more time in thinking of how to manage the competition between great powers in 21st century in the age of relative US decline that it's primacy gonna be challenged and how do we not shoot at each other and compete in a more peaceful way than to think that I can pull somebody back and then Pax Americana will continue for indefinite times. Thank you very much. Do we have another question? I think there was a question, thank you sir. So Ken Polerman, I work for a startup that has interest in both of your countries and I'd like to see peace prevail. In terms of the US, no question, we have a blowhard president who's very unpopular. My question is if we use the Tinder analogy again, didn't you swipe right a little too fast here and that the underlying fundamentals of the relationship were a lot stronger than the rhetoric coming out of just one man? Alex, when are you starting with that one? As everything about Russia and China with the media culture and please, friends from the media, don't take it as an offense, I would be very cautious and careful about believing 100% of what the official narrative in the media says. Russia and China have natural interests in portraying and promoting this relationship way beyond than the actual reality is. So if we look at the economic front, as I mentioned, Russian have real troubles in attracting a lot of private Chinese investors to Russia and there are a lot of structural issues where Russia has to work on being just more attractive to four Chinese investors, for example, and it will take a lot of time. Though Russia is doing that because it has no other way of sanctions which will last forever with cats that passed last year and with the domestic situation in the US and particularly that Russia continues to do the scrupals and some election interference in the US but it's gonna take a lot of time but it's gonna be fixed. So again, don't necessarily believe the official narrative 100% but there is truth to the basic assumption of growing partnership. Another question here, please. Hi, this is a slightly off topic but this is for Professor Zhang. Do you think that a similar partnership could be formed between your other neighbor from the South, India, and or are they fundamentally too different and cannot be compared between the two countries? Well, regarding the China's relationship with India, I would say on the whole it's improving. Look at the dangerous incident before the brick summit in Xiaoman, okay? That was last year. And in the end of the day, the two sides found a peaceful solution. So that's good. That's a very good encouraging sign. And of course, bilateral relationship is always a two-way street like the husband and wife. Well, if you want to maintain good marriage, both the husband and wife need to do something. So I believe that India and China will improve our relationship well sooner or later. And because we are neighbors, okay? Of course we need to do something like people-to-people exchanges. It takes me almost one day for me to go out for a brick sink tank summit. Well, we are neighbors. Why it's difficult for me to get a visa to travel from this place to in such a short distance, okay? So I think we can do something. We can put aside this kind of broad dispute and we do something in economic field and people-to-people exchanges. And I know that some of your colleagues complain all the time, I look at our trade imbalance, which is not sustainable for India. But you know, the Chinese market is more competitive, okay? So if you want to sell to China, you need to be more competitive. So I hope that your products will be more competitive on the Chinese market, okay? And let me say the following point. I will say, which is very important. Now, when you are hungry, you can eat anything, bread, noodle, rice, dumplings, pizza. Now, but when you are not hungry, you will choose what you want to eat. And in the past, 30 years, 40 years ago, China was hungry for foreign capital. So any capital, no matter this foreign enterprise was polluting or not, we wanted it. But now China said, well, we are going to choose some of the best foreign capital. So that means the Chinese market is becoming more and more selective and more competitive. So you cannot say this kind of change is discrimination against the foreign enterprises, okay? Look at my hometown. My hometown is in the south of Jiangsu province, near Shanghai. It's called the land of fish and rice and in the sky, there is heaven and on the land, there is my hometown, okay? Suzhou and Hangzhou. But when I was quite young at that time, 30 years ago, 40 years ago, my hometown introduced foreign enterprises which polluted lots of rivers and all the fish died. But can you go to my hometown to set up this kind of pollution factory? No, definitely not. So you cannot say, oh, you are discriminating me. No, this is not the case. We are going to, we're going to choose some of the best foreign enterprises. That's not discrimination. So I hope India can try to think about how you can become more sexy, more attractive to us so we can buy more products from you. Do you want to add anything on that one or should we have one last? I think we have time for one last fast question. Has anybody got a quick question? Okay. Well, I just want to ask you for a very quick summing up on both sides, a short description of how good the relationship could be in 10 years from now. What could it look like if it goes as well as it possibly could from the interest that you described as driving it? Could start with Alex. For me, that's an asymmetrical partnership where it's mutually beneficial but increasingly asymmetrical where China is going up, Russia is staying flat and Russia needs China much more than the other way around because Russia is an international sanctions regime and China is not still. The, I think, sophistication of Chinese diplomacy in Chinese state is that it's not showing Russia this symmetry. It's treating it as an equal. If you compare that to the way the West is treating Russia, at least that's the Russian public perception and narrative, talking about human right record or corruption or elections in Russia. Definitely, Russia is much more comfortable in talking to China. So I think at this high level political diable with stick, we probably will see some more robust military cooperation particularly in joint development of some weapons systems, cyber domain, and maybe even space. And then we will have growing number of Chinese companies doing business in Russia and growing market share for Chinese goods. Right now, China has grown its participation in the Russian economy for roughly 12% around crime annexation to roughly 18% now. So it's growing fast and we'll see probably 25% of trade in the coming 10 years. That's my hunch. Thank you. Well, several years ago, Chinese President Xi Jinping talked to President Obama in California. Let's build the so-called Xinxing Dao Guangxi, new type of partnership between major powers. This is quite famous. Everybody knows that. But the US says, no, no, no, no, what's that? So the US does not want to accept this kind of imitation. Okay? Now what's the nature of this kind of new partnership? Means no confrontation, only cooperation. So between Russia and China, no confrontation, only cooperation. So I would say this kind of partnership will last longer and longer. Thank you very much and thank you to the audience for your excellent questions. Join me in thanking Professor Zhueng and Alex for a lovely panel. Thanks very much.