China’s Role in the Global Balance of Power
China has become one of the leading countries in the world over the past decade. It is one of the three most powerful world powers along with the United States and Russia. The entire global balance of power depends on its behavior in the international arena because all developed countries depend on the industry of this country. Therefore, both the United States and Russia are trying to take all possible measures in order not to worsen relations with the People’s Republic of China.
China’s position became especially important after the beginning of the geopolitical conflict in Ukraine. Can China be called an ally of Russia? Will it help in the confrontation with the world?
American entrepreneur Elon Musk is making a lot of efforts to establish cooperation with China. He believes that China is not just an important geopolitical ally for the United States, but also the most promising market in the world. American businessman Elon Musk says that the size of China’s economy in the near future will exceed the US economy by two to three times. “Now we are approaching a situation in which China’s economy presumably can exceed the American one by two or three times. It’s just another world,” Musk said.
Elon Musk’s companies have been trying to master the Chinese market for a long time. In January 2020, Tesla took a huge step to conquer the electric car market in this country by building its factory in Shanghai.
Complicated Trade Relations between Russia and China
In early March 2022, Bloomberg reported that trade relations between Russia and China had become complicated due to the situation in Ukraine. Buyers and creditors from China avoid the supply of coal, liquefied natural gas (LNG), and crude oil from Russia. According to the agency, this is due to the fear of Chinese companies being trapped in the sanctions trap.
As Bloomberg noted, referring to a report by the consulting company Capital Economics, for an average firm from China conducting operations abroad, access to the U.S. financial system is more promising than transactions with Russia. Among other things, we are talking about difficulties related to logistics, including payments based on the yuan. Analysts said this change in Russian-Chinese business relations is very important.
Russia and China: Different Interests and Priorities
It must be remembered that China has always been guided primarily by its own interests. This country is not looking for allies but partners. In a word, even having found points of some ideological contact, Russia and China remained very different. There are many differences between them, but the main thing is the huge inequality of opportunities for Russia. China is the only and irreplaceable partner without close cooperation with which its current isolation from the outside world will become close to absolute.
On the contrary, Russia is an important partner for China but not the only one or even the main one. Because of this, it is China that determines the content and pace of rapprochement, which does not need a political alliance with Russia. After all, such an alliance involves burdensome mutual obligations, which is extremely impractical.
Elon Musk’s Efforts to Establish Cooperation with China
According to Russian customs statistics, up to 85 percent of Russian exports to China account for mineral fuels, timber, seafood, or slag and ash. Russian exports of machinery and equipment account for about three percent. Other goods no more than two percent. In the future, the scale of China’s friendly penetration into the Far Eastern Russian regions will probably be determined by itself with minimal dependence on Russia’s opinion.
However, China most likely has no intention to carry out a friendly takeover of these regions. The absorption of the territory of a neighboring state, especially such a neglected one, is risky and costly, and the Chinese are cautious people. Therefore, they do not like unnecessary expenses, for example, on social infrastructure.
Tesla in China
Reuters notes that the $2 billion Tesla plant in China began delivering cars just 357 days after construction began, which is a record for global automakers in China. The plant will start with the production of 150,000 Model 3 sedans. Later, Tesla plans to increase production to 250,000 cars per year. This is taking into account the latest Model Y crossovers, which were introduced in March 2019.
The model is expected to go on sale in the summer of 2020. The factory in China became the first Tesla enterprise outside the United States. It is part of the company’s plan to strengthen its presence in the world’s largest automotive market, which should also help minimize the impact of the trade war between the United States and China. For Chinese buyers, the Model 3 will cost about $51,000.
Elon Musk announced that Tesla will open a design and engineering center in the world’s second-largest economy. He did not specify any deadlines. Tesla itself also confirmed that it would begin work on a production program for its Model Y crossover at its Shanghai Gigafactory plant.
Elon Musk has done a lot to strengthen the United States, first of all, through the creation of a real business connection between the American and Chinese automotive industries. Russian imports from China include sophisticated machines and mechanisms, boilers and reactors, electrical equipment, telephones, computers, and other industrial and household appliances, automobiles, optics, and measuring equipment.
The combined share of these high-value-added goods in Russian imports exceeds the same 85. The Russian-Chinese trade turnover hovers around $100 billion, and its structure, in fact, differs little from the structure of trade turnover between Russia and the EU.
China is not looking for allies, but partners to increase economic expansion and benefit. Russia, on the other hand, is seeking to maintain a balance between its relationship with China and its position in the global context. Both China and Russia continue to develop international relationships based on their unique priorities and goals.