Asean
Russia’s partnership with China a matter of necessity
Author: Natasha Kuhrt, KCL
On 22 March, during his first visit to Russia since assuming the Chinese presidency, Xi Jinping and Russian president Vladimir Putin spoke about deepening the two countries’ strategic partnership.
Chinese and Russian officials also signed 30 agreements on cooperation in the areas of energy, trade, technology and military exchange.
There is little doubt that Russia’s partnership with China is an essential component of Putin’s foreign policy. But it is a partnership born out of necessity, rather than choice. Sergey Karaganov, a former presidential advisor to Putin, recently noted that the Russian public mind and most of the elite still view China’s rise as a threat rather than an opportunity. Underlying this attitude is what Karagonov refers to as a ‘hidden — and often overt — expectation’ that China will not be able to develop as expediently and quickly as it has done in the past for too much longer.
So why is the partnership necessary for Russia? First, it is necessary at the symbolic level — partnering up with a rising China acts as a kind of force multiplier. Russia on its own could conceivably be seen as an emerging power, but this is still debatable, and even Russians are ambivalent about using the term. Ivan Krastev, a prominent commentator, suggests instead that Russia is not a classical emerging power, but ‘an ageing power experiencing temporary growth’. Others already speak of a ‘post-BRIC’ Russia.
There is of course no such doubt about China’s status. The Obama administration’s ‘pivot’ to the Asia Pacific is largely seen as a move to counter China’s increasing clout in the region.
The ‘pivot’ poses a dilemma for Russia. While it is not a key Asia Pacific actor for now, Russia’s relationship with China will play an important role in shaping its outlook in future. China is Russia’s biggest economic partner in the region, a prized energy customer and a purchaser of Russian weapons in large quantities. Bilateral trade between the two countries is also increasing at an exponential rate, rising from around US$8 billion in 2000 to over US$80 billion in 2011. But while China is now one of Russia’s biggest trading partners, the reverse is not true. And from Russia’s perspective, the EU is still a far more significant trading partner, accounting for at least half of Russia’s trade. Again, this raises the question of why Russia’s relationship with China is deemed to be of such importance.
The answer is that China and Russia share ‘neighbourhoods’ in some of the most crucial arenas for Russian economic and security interests: Central Asia and the Russian Far East (which borders China). China is a key economic partner for many administrative regions (oblasts) in the Russian Far East, particularly the Amur oblast and the Jewish Autonomous oblast — at one point, trade with China made up more than 90 per cent of Amur’s total trade turnover.
Furthermore, given Russia’s strained relations with the United States and Europe in the final months of the Medvedev administration and the first part of Putin’s third term, Russia’s relatively friendly relationship with China, at both the regional and global level, is proof of the partnership’s enduring strength. Indeed, China has come to occupy an ever more significant position in Russian foreign policy as a whole.
For instance, China forms a key part of Russia’s energy strategy, which is premised on a diversification of energy exports away from Europe, as highlighted by Gazprom’s recent 30-year gas deal with the China National Petroleum Corporation. Outgoing Chinese president Hu Jintao also met Putin on the sidelines of the 2012 APEC Summit to reiterate the need to expand bilateral energy cooperation. But Russia risks becoming over-dependent on China in the energy sphere and, indeed, on energy exports as a whole. During his incumbency, Medvedev tried to redirect Russia’s economic and trade relations away from an emphasis on energy exports, in part due to the reliance of elites on the lucrative rents these exports produce, but was unable to do this.
There are additional indications that Russia is wary of relying too heavily on its partnership with China, both economically and politically. Russia’s 2013 Foreign Policy Concept places greater emphasis on the role of multilateral regional forums in the Asia Pacific. A Russian think tank close to the President also recently noted that Russian interests cannot be ‘fully harmonised either with the United States or with … Chinese ambitions‘. In essence, these signals imply that Russia does not want to be seen as constraining China, but nor does it want to be seen as accommodating its rise.
Natasha Kuhrt is a Lecturer at the Department of War Studies, King’s College London.
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Russia’s partnership with China a matter of necessity
Asean
ASEAN weathering the COVID-19 typhoon
Author: Sandra Seno-Alday, Sydney University
The roughly 20 typhoons that hit Southeast Asia each year pale in comparison to the impact on the region of COVID-19 — a storm of a very different sort striking not just Southeast Asia but the world.
Just how badly is the COVID-19 typhoon thrashing the region? And what might the post-crisis recovery and reconstruction look like? To answer these questions, it is necessary to investigate the strengths and vulnerabilities of Southeast Asia’s pre-COVID-19 economic infrastructure.
Understanding the structure of the region’s economic house requires going back to 1967, when Southeast Asian countries decided to pledge friendship to one another under the ASEAN framework. While other integrated regions such as NAFTA and the European Union have aggressively broken down trade barriers and significantly boosted intra-regional trade, ASEAN regional economic integration has chugged along slower.
Southeast Asian countries have not viewed trade between each other as a top priority. The trade agreements in the region have been forged around suggestions for ASEAN countries to lower tariffs on intra-regional trade to within a certain range and across limited industries. This has lowered but not eliminated barriers to intra-regional trade. Consequently, a relatively significant share of Southeast Asian trade is with countries outside the region. This active extra-regional engagement has resulted in ASEAN countries’ successful integration into global value chain networks.
A historically outward-facing region, in 2010 around 75 per cent of Southeast Asian commodity imports and exports came from countries outside of ASEAN. This share of extra-regional trade nudged closer to 80 per cent in 2018. This indicates that ASEAN’s global value chain network embeddedness has deepened over time.
Around 40 per cent of ASEAN’s extra-regional trade is with the rest of Asia. From 2010 to 2018 Southeast Asian countries forged major trade relationships with four Asian countries: China, Japan, South Korea and India. Outside Asia, the United States is the region’s major trading partner. ASEAN’s trade focus on Asia’s largest markets is not surprising. Countries tend to establish trade relationships with large, geographically close, and culturally similar markets.
Fostering deep relationships with a few large markets, however, is a double-edged sword. While it has allowed ASEAN to benefit from integration in global value chains, it has also resulted in increased vulnerability to the shocks affecting its network connections.
ASEAN’s participation in global value chains has allowed it to transition from a net regional importer in 1990 to a net regional exporter in 2018. But the region’s deep embeddedness in a small and tightly-coupled network cluster of extra-regional global value chain partners has exposed it to disruption to any and all of its external partners. By contrast, ASEAN’s intra-regional trade network structure is much more loosely-coupled: a consequence of persistent intra-regional trade barriers and thus lower intra-regional trade intensity.
In the pre-COVID-19 period, ASEAN built for itself an economic house held up by just five extra-regional markets, while doing less to expand and diversify its intra-regional trade network. The data shows that ASEAN trade became increasingly concentrated in these few external markets between 2010 and 2018.
This dependence on a handful of markets does not bode well for risk and crisis management. All of the region’s major trading partners have been significantly affected by COVID-19 and this in turn is blowing the ASEAN economic house down.
What are the ways forward? The immediate task at hand is to get a better picture of the region’s position in global value chain networks and to get on top of managing its network risk exposure. Already there are red flags around the region’s food security arising from its position in food value chains. It is critical to look for ways to introduce flexibility into existing supply chains for greater agility in responding to crises.
It is also an opportune time for ASEAN to harness the technology transfer gains of global value chain participation and invest in innovation-driven diversification of products and markets. The region’s embeddedness in global value chain networks certainly places it in a strong position to readily access large export markets not just in Asia but also Europe and the Americas.
Over the longer term, ASEAN is faced with the question of whether it should seriously look…
Markets
Tiger Trade Launches SGX Trading, Meeting Demand from Asian Investors
Access to the Singapore Exchange (SGX) adds to Tiger Brokers’ current menu of stock exchanges, such as the New York Stock Exchange (NYSE) and the Nasdaq Stock Market (NASDAQ), the world’s two largest stock exchanges, as well as the Hong Kong Stock Exchange (HKEX).
SINGAPORE (ACN Newswire) – Tiger Trade, a one-stop mobile and online trading application by Tiger Brokers, has launched access to the Singapore Exchange (SGX).
(more…)Asean
Can Asia maintain growth with an ever ageing population ?
To boost productivity in the future, Asian governments will have to implement well-targeted structural reforms today.
Asia has been the world champion of economic growth for decades, and this year will be no exception. According to the latest International Monetary Fund Regional Economic Outlook(REO), the Asia-Pacific region’s GDP is projected to increase by 5.5% in 2017 and 5.4% in 2018. (more…)
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