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Published on Aug 1, 2013 in Newsletter

China Newsletter – August 2013

China’s Relationship with Russia 

The relationship between China and Russia has been a rocky road. At times Sino-Soviet relations were thought to be unbreakable, as both nations shared similar internal social aims and international objectives. At other times there’s been open conflict between both nations. Understanding the historical perspectives between Russia and China will help put their present relationship into focus.

Historical Perspectives

The first reported conflict between the two nations dates back to the 1680s when Russia and China, sharing a common border in the north, clashed. Prior to this time both countries had little contact. The Russians established a Siberian presence, largely through the efforts of Russian adventurers who occupied and claimed the Siberian forests. In about 1640 Siberian Cossacks entered and settled in the Amur River basin, the southernmost portion of the Siberian Pacific, an area historically claimed by the Manchus. 2 At this same time the Manchus were conquering China and, in 1644, they finally succeeded. Their conquest put an end to the Ming Dynasty and established the Qing Dynasty. The Qing Dynasty would be China’s last dynasty, extending its rule over China until 1911.

The Manchus quickly had problems with their newly conquered land, as warlords again appeared throughout China and civil governance proved to be a difficult task. Subsequently, the Manchus all but ignored the Russians’ Amur Basin settlements until the 1680s. At that time a series of conflicts occurred in which the Russians lost a number of battles to the militarily superior Manchus. Subsequently, the Russians signed the Treaty of Nerchinsk in 1689 and agreed to leave the area. As a result, China ended up with the Amur Basin. 1

By the mid-1800s the world had changed. China’s economy, thanks to open conflict with foreigners in the First and Second Opium Wars, was no longer the world powerhouse it once was. In addition, China had failed to modernize its military and industrialize. It now lagged behind other nations militarily as well as economically. Consequently foreign governments, knowing that China was militarily no longer a threat, started imposing their national agendas on China. For example, as a result of the military conflict in the Second Opium War, Russia took the left bank of the Amur River from China and, in 1860, founded a major Pacific Ocean port on this newly-acquired land. 4 By 1911, China had descended from a once great nation to a military and economically impotent country.

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The Chinese people had finally had enough of the Qing Dynasty and wanted a change. Permitting foreigners the freedom to travel throughout the country as well as have access to an increasing number of their ports, along with the loss of Hong Kong in the First Opium War and the loss of the Amur Basin in the Second Opium War, proved too much for Chinese citizens to endure. In addition, China’s forced payment of substantial war reparations to the very Westerners who had invaded their land was almost inconceivable to an increasingly nationalistic populace. In the revolt that followed, dynastic rule by an emperor came to an end and the Republic of China was established. 2

Six years later, in 1917, Russia had its own revolution when the communist group called the Bolsheviks took over Moscow in what was known as the October Revolution. This caused a civil war between the anti-communist White forces and the Bolshevik Red Army. Five years later, in 1922, the Soviet Union was established.

Shortly after the formation of the Soviet Union, the Russians provided support to a Chinese faction in Mainland China known as the Kuomintang. China was in a state of turmoil at this time and there were a number of competing groups vying for power. One of these groups was the Kuomintang, who itself had an alliance with a small group, the Chinese Communist Party (CPC). The Kuomintang would eventually go on to seize power in China in 1928. Following the Kuomintang’s victory, the Soviet Union and China, for the first time, formally established diplomatic ties. However, this relationship was rocky from the start and the two countries fought a series of border conflicts for the next decade until Japan’s invasion of China. Uniting against a common enemy, both countries ceased hospitalities between themselves to stem Japanese advances. Joseph Stalin, leader of the Soviet Union at the time, and Chiang Kai-Shek, leader of the Kuomintang, joined forces to fight Imperial Japan. However, their alliance proved to be short-lived. Once the war was over both countries again resumed hostilities. In addition, China after World War II was involved in its own civil war between Chiang Kai-shek’s Kuomintang and Mao Zedong’s Chinese Communist Party. Finally, in 1949 the CPC emerged victorious and the People’s Republic of China (PRC) was established. A short time later both the Soviet Union and China signed an alliance. 2

The Soviet Union, following the establishment of the PRC, acted as China’s big brother. Governing a country was new to Mao and he relied heavily on the Soviets to teach him what he should be doing, both economically and militarily. Soviet design, equipment, and skilled labor was provided to help industrialize and modernize the PRC. But this help fell far below China’s expectations. 5

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After the death of Joseph Stalin in 1953, Nikita Khrushchev assumed power. It wasn’t long before both communist countries were at odds with one another and competing for control over other communist states and foreign communist movements. In addition, China had developed a profound distrust of Moscow. China felt that Moscow had gone soft and abandoned many of the ideologies that originally brought them together. In essence, they felt the Soviets were becoming more westernized.

One of the reasons for this was that Khrushchev, in 1959, held a summit with President Dwight Eisenhower after he became alarmed at what he was seeing in China. The Chinese government, at the time, was showing increasing ideological inflexibility, especially in regards to the West. Khrushchev was not in agreement with this and viewed China’s rigid focus on its stated ideology, particularly regarding the West, as a scenario that could eventually lead to war. As a result, he sought to appease the West. Subsequently, Russia reneged on its promise to help China develop nuclear weapons and also refused to support China in its border dispute with India, a country that was friendly to the Soviets. These events offended Mao, who saw the Soviets becoming increasingly conciliatory towards Western powers. The Soviets, moreover, with the specter of nuclear war in the background, sought to become less radical and wanted to engage in balanced confrontations with the West, such as in Berlin, in order to avoid the outbreak of war. For Mao, who was losing favor within China, the softening of Moscow’s position with the West was politically opportune. Consequently, criticizing and distancing himself from the Soviets had the political advantage of allowing him to portray his rivals as agents of a foreign power and nationalizing sentiment behind his leadership. 5

In 1962, relations between the two countries got even worse when Mao criticized Khrushchev for backing down in the Cuban missile crisis, stating that Khrushchev was moving from adventurism to capitalism. In addition, according to Richard Wertz, a Sinologist, Russia openly supported India in its brief war with China and relations between Russia and China, as well as China’s relationship with Warsaw pact countries, went into the deep freeze. Relations between both countries didn’t improve when, several years later, in 1967 during China’s Cultural Revolution, the Red Guards besieged the Soviet Embassy in Beijing.

At this time all the past conflicts and perceived inequities were on the table for China to bring up with Russia. There was no love lost between the two countries. The Chinese wanted to go back and address past treaties and agreements, including the existing Sino-Soviet border which was forced on a weakened Qing Dynasty by Czarist Russia. The Soviets flatly refused to discuss this, and other issues, and the tension between the two countries escalated to an even higher level. In 1968 the Soviets increased troop deployments along the Chinese border and, a year later, there was a brief border conflict between both nations.

The following year Mao realized that he was being besieged from all sides, both domestically and internationally. He was outwardly confrontational with the world’s two superpowers, United States and the Soviet Union, and he also had a great deal of internal dissent among the Chinese people, unhappy with the economy and the government’s ability to improve their living standards. If he was to politically survive, Mao needed to find a solution. Deciding that the Soviet Union was China’s greatest threat, because of their geographical proximity and strength of their military, he decided to establish relations with the Soviet’s superpower rival, the United States. In July 1971 Henry Kissinger secretly visited Beijing and, the following year, President Richard Nixon met with Mao in China. Not to be outdone, the Soviets soon after had their own summit with President Nixon thus creating a triangular relationship between the three countries. Subsequent to Nixon’s meeting with Mao, China ceased direct support for revolutionary groups in other countries and, the following year, supported a negotiated end to the Vietnam War. China found itself changing ideologically, something which it earlier accused the Soviets of. 5

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With the death of Mao Zedong in 1976, and the eventual succession of Deng Xiaoping, China’s new leadership cared less about anti-revisionism and more about the economy. As a consequence, tensions between the two countries lessened. However, they didn’t go away. In 1979 China invaded Vietnam, one of the Soviet’s only allies in the region. Three years later China, fearing that the Soviets were plotting to encircle China, actively supported the anti-Soviet Mujehadeen when the Soviets were at war in Afghanistan. This helped thwart the Soviet invasion and also had the ancillary effect of weakening the Soviet system in later years. 2, 5 It wasn’t until 1982, after Brezhnev made a reconciliation speech to China, that the two nations began to restore diplomatic ties.

When Mikhail Gorbachev became President of the USSR in 1985, he worked hard to patch his country’s rift with China. He reduced Soviet garrisons along the Sino-Soviet border and in Mongolia, withdrew from Afghanistan, dropped the border-demarcation matter, which had been a thorn in both

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countries side since 1969, and resumed trade. In 1989 Gorbachev visited China to try and further bridge the gap between both countries. The Soviet leader also discussed with the Chinese leadership his plan for domestically instituting political reform within his country. The Chinese privately considered such a plan foolish. Instead, they considered it essential to first institute economic reformation prior to instituting political reformation. In 1991 Communist Party rule came to an end with the collapse of the Soviet Union and the formation of the Russian Federation. In contrast, when Deng Xiaoping came to power in 1978 he first instated a slate of economic reforms without weakening Communist Party Rule. With the demise of the Soviet Union, and the formation of the Russian Federation, relations between the two countries became cordial and have remained so ever since. 2, 5

Partners in Trade

China is currently Russia’s largest trading partner. In 2012, the two-way trade between both countries amounted to $88.2 billion. But for both countries this trade is about a quarter of that conducted with Europe, as China’s bilateral trade with the European Union totaled $546 billion in 2012 and Russia’s $394 billion. However, both countries have set a target of $100 billion in two-way trade by 2015 and $200 billion by 2020. 8 Presently, Sino-Russian cooperation is mainly focused on the energy sector as China is the world’s biggest consumer of energy and a convenient export destination for Russia’s abundant oil and gas supplies. Russia’s minister of Economic Development and Foreign Relations, Victor Kalashnikov indicates that 70% of Russian exports to China are raw materials such as oil, gold, and timber. China’s exports, in turn, are primarily automobiles and chemicals. 8

In 2006 Moscow and Beijing agreed to build gas pipelines from Western Siberia to China, with a planned annual capacity of 38 billion cubic meters. But pricing negotiations between the two sides is delaying construction. Moscow wants to charge Beijing the same prices it gets from European buyers, but China wants to negotiate down that price. In trying to put pressure on Moscow to lower the pricing, China began importing gas from Kazakhstan, Turkmenistan, and Uzbekistan. China forecasts that it will import 60 billion cubic meters of gas from the region by 2015. 3, 6

In the past, both Russia and China cooperated on the global sale of arms. Since the 1990s China has been a major buyer of Russian arms, purchasing a peak of $4 billion in 2005. In 2012 China purchased $2.1 billion in Russian weaponry and is likely to purchase more sophisticated weapons, such as the Amur submarine, Su-35 fighter jet, and the S-400 anti-aircraft weapon system from Moscow. However, last year both sides shifted from cooperation in global arms sales to going in their own direction. China, the world’s second biggest arms importer, became one of the world’s five biggest exporters with a 5% market share. Although this is small when compared to Russia’s 26% share, it was a significant jump from its 2% market share in 2007. In addition, almost half of China’s arms sales go to Pakistan, which doesn’t buy Russian weaponry as Russia sells arms to Pakistan’s geopolitical rival, India.6

The Future

The importance that each side attributes to their relationship is best demonstrated by the fact that newly appointed Chinese President Xi Jinping chose Russia as his first official visit abroad and Vladimir Putin chose China as his first official visit abroad when he was re-elected Russian president last year.

The Chinese economy has been an economic juggernaut, growing at double digit rates for three decades and averaging 7.8% GDP growth in 2012. In addition, China is transforming itself from being the world’s factory to the main motor of global growth. Russia’s economy, in contrast, grew 3.5% in 2012 and is stagnant today. In the future, Russia wants to increase its energy shipments to China so as to be less dependent on Europe. Moscow’s goal is to double its present 15 million-ton annual oil delivery to China and provide China with 70 billion cubic meters of gas annually within the next 30 years. 7 Moving in that direction, Russia’s Rosneft agreed to triple its oil deliveries to China from 300,000 barrels per day to 1 million barrels per day making Russian oil exports to China as big as China’s current imports from Saudi Arabia. This will make China more dependent on Russia for its energy supply while allowing Russia to diversify and become less reliant on the European Union. Moreover, according to Kristina Sandklef of East Capital, it’s important to note that the majority of these energy supplies will come from Eastern Siberia and the Russian Far East, and the pipelines from these areas are not always connected to pipelines heading west. In fact, construction on gas pipelines is proceeding on the Eastern route rather than the Western route into China via the Altai, which will make it harder for Russia to be a “swing supplier” between China or Europe. To the Russian market, this means that oil and gas reserves located in the Eastern part of the country will be sold to China and generate revenues to Russian companies with operations in that area. For China, Russian energy contracts are helping to secure the country’s future economic growth, which is dependent on energy supplies from abroad. China has acknowledged that energy security is the main driver of its foreign policy.9





Alan Refkin               David Dodge

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