(John Kemp is a Reuters market analyst. The views expressed are his own)
By John Kemp
LONDON, March 5 (Reuters) - China’s reaction to events in Ukraine will probably prove more important in the long run than the responses of the United States and the EU.
China’s response has been typically low key but the country’s leaders have provided quiet support for Russian intervention and resisted attempts by Washington and Brussels to isolate Moscow.
China’s top newspaper, which is often used to set out the official line of the country’s senior leaders, has criticised the West for remaining locked in a “Cold War mentality” against Russia in a contest for influence over Ukraine.
Russian President Vladimir Putin and Chinese President Xi Jinping have discussed the crisis by telephone and their positions are close, according to the Kremlin. China’s interpretation is not recorded but there is no reason to disbelieve the Russian characterisation.
For both Russia and China, their most important relationship is with the United States, which remains the dominant military and economic power in the world.
For all its relative decline, the United States is still the only country capable of projecting military force around the globe. It remains the most important financial and economic centre, and has unrivalled “soft power”, as well as a network of alliances spanning all continents.
But both countries’ relations with Washington are characterised by rivalry and competition as much as cooperation and mutual interest. Both countries have reasons to fear the intentions of Washington and its network of allies in Europe and Asia.
Russia fears the United States and EU will continue to expand the single market and NATO right up to its western border and refuse to recognise Russia’s self-declared “sphere of privileged interests” in the territories of the former Soviet Union.
As China has noted, Russophobia remains ingrained among large parts of the elite in the United States and Europe, complicating the relationship and encouraging western elites to confront rather than conciliate Russian interests.
For its part, China fears encirclement by the United States and its network of allies in East Asia.
China’s leaders have been pursuing a strategy of “peaceful rise” as the country tries to emerge as an economic, diplomatic and military superpower without jeopardising access to U.S. markets or triggering an arms race and new cold war.
But China’s growing military and economic power is leading to increasing rivalry and tension with the United States on a whole range of issues from the country’s territorial claims off its eastern and southern coasts and its self-proclaimed air defence identification zones to the development of an ocean-going navy, trade and human rights.
In most of these cases, the United States is tacitly backing neighbours with which China is embroiled in disputes - including Japan, South Korea, the Philippines and Vietnam.
In response, China’s navy has been training for a “short, sharp war to destroy Japanese forces in the East China Sea following what can only be an expected seizure of the Senkakus” the director of intelligence for the U.S. Pacific Fleet told a recent U.S. Navy conference.
Japan is most important U.S. ally in East Asia. The two countries are bound by a mutual defence treaty with large numbers of U.S. servicemen stationed on Okinawa. Any conflict would inevitably involve the United States in some form.
China’s “expansion into the blue waters are largely about countering the U.S. Pacific Fleet,” the intelligence director said in remarks reported in the Financial Times (“China training for short, sharp war, says senior U.S. naval officer” Feb 20).
“The People’s Liberation Army navy is going to sea to learn how to do naval warfare ... Make no mistake: the PRC navy is focused on war at sea, and sinking an opposing fleet.”
China has other economic and military vulnerabilities. The country’s relations with India remain strained by unresolved territorial disputes and competition for influence. Both China and the United States have tried to improve their relationships with Delhi to bolster their position in Asia.
China remains dependent on oil and gas from the Middle East, Africa and Australia, most of which arrive along long supply routes passing through choke points like the straits of Hormuz and Malacca, along sea lanes controlled by the U.S. Navy, creating another strategic vulnerability.
According to the ancient proverb, the enemy of my enemy is my friend. It encapsulates the basis for balance of power politics.
China and Russia are not enemies of the United States, but they are certainly not allies and are most definitely rivals in the contest for regional and global influence.
Both are relatively isolated diplomatically and need to develop new informal alliances to act as a counterweight to the United States.
Relations between the two countries have historically been strained. China’s communist leader Mao Zedong and Soviet leader Nikita Khrushchev famously fell out in the 1950s and 1960s, heralding a cold war between the two nations. Russia and China fought an undeclared border war in 1969.
China rejected Soviet attempts to claim leadership throughout the communist world. The two countries backed opposite sides throughout conflicts in Southeast Asia.
Displaying its own mastery of balance of power politics, the United States encouraged the split, switched its recognition from Taiwan to China, and backed China’s modernisation to help contain the influence of the Soviet Union.
But throughout history the balance of power has been based on a partial confluence of interests rather than mutual admiration. It is not necessary to like another country to find it a useful ally.
In its much diminished state, Russia no longer poses much threat to China. The power relationship is more nearly equal, if not actually tilted in Beijing’s favour.
Both sides now have reason to cultivate closer relationships with the other on both energy issues and wider geopolitical strategy.
Russia needs to diversify its gas export markets away from the EU. China needs to diversify its sources of gas and oil to improve its security situation.
The pipelines linking Russia with Europe have left both sides vulnerable. In effect a monopoly gas supplier is facing a monopoly gas buyer. So far, tensions have been managed fairly successfully (barring problems with transit countries). But there is mutual suspicion.
In the wake of the Ukraine crisis the EU’s efforts to reduce its dependence on Russian gas are likely to accelerate. In that context, Russia’s position as a supplier would be strengthened by developing other potential markets for its gas in Asia.
For its part, China currently relies on seaborne imports of oil and liquefied natural gas (LNG) which leaves it vulnerable to any disruption of its key supply routes. Pipeline imports from Russia would usefully diversify its transit options and give it more bargaining power with LNG exporters.
China and Russia have been negotiating for a decade over gas deliveries, unable to agree on pricing. By the end of last year, however, the two sides were reportedly close to agreement .
Events in Ukraine have underscored there is more at stake here than a few dollars in the cost of the gas deliveries.
It remains unclear whether the crisis, coupled with the disputes over China’s territorial claims, will persuade the two sides to show enough flexibility to reach an agreement.
More generally, Russia and China share convergent views on a range of topics, including opposing western intervention in the Middle East in Syria and strong distrust of western attempts to spread democracy by fomenting “colour revolutions”.
No one should be surprised if there is a new entente between Russia and China in the months and years ahead. (Editing by Keiron Henderson)