Is China (Over) Reliant/Dependent on Russian Natural Resources and Commodities

Right off the bat, it is important to state that this article doesn’t cover China and Russia’s trade relationship in general, there is already a post about just that which can be accessed by clicking HERE.

Instead, our (apparently simple) goal revolves around tackling two questions:

1. Is China reliant or even dependent on Russian natural resources and commodities?
2. Is China over-reliant/dependent on them?

When it comes to the first question, answering it is not just “apparently” simple, as the answer is a matter of simple logic more so than quantitative analysis.

Simply put:

1. Is China the world’s #1 consumer of natural resources and commodities? Yes. It has been just that for an extended period of time, it still holds this proverbial title and while a slowdown is indeed apparent, it is difficult to envision a future in which China isn’t the number one game in town when it comes to acquiring commodities and consuming resources or at the very least one of the major players
2. Is Russia one of the world’s top energy producers and commodity sellers? Once again, the answer is (obviously) yes. This is such a well-known fact that Russia’s economy has actually been relatively heavily criticized for relying too much on energy and commodity sales rather than nurturing entrepreneurship so as to approach the market with higher value-added products. In many respects, this can be considered a similarity to the economies of lesser developed nations, definitely one of Russia’s major issues

The conclusion and subsequent answer to our first question is therefore fairly straightforward: when the world’s top consumer of resources and commodities meets the world’s top producer, it is obvious that a strong relationship will be built upon this. As such, yes, of course China ended up relying on Russian energy and commodities to a significant degree.

Moving on to question number two, however: is China over-reliant on Russia for these needs?

It is a perfectly natural question given the major debates that are taking place over in the European Union in light of the over-reliance of many European nations on Russian resources, especially natural gas. This leads to a let’s call it binomial predicament:

1. Russia has significant leverage over the countries in question, it would be difficult to imagine what would happen to many nations of Russia would end up deciding to cut off natural gas supplies to Europe during winter. While it is true that we can also view the situation from a different angle and realize that Russia is just as dependent on these exports as some European nations are o the imports (as such, it is ridiculously unlikely that Russia would actually cut natural gas supplies for example, not because it is magnanimous but because it wouldn’t be in its best interest to do so) but still, the situation is hardly ideal
2. Many European nations adopting a geopolitical attitude toward Russia that might be perceived as a form of duplicity. For example Germany criticizing Russia for its attitude toward Ukraine or other regions of interest for the European Union but on the other hand, signing additional pipeline deals with none other than Russia. Needless to say, non-European NATO trading partners such as especially the United States are less than thrilled in light of how much money is spent by NATO members so as to deter none other than Russia

… is China equally at risk?

Yes… but also no and in reality, closer to no at this point in time.

While the idea of being reliant to a significant degree on Russia is hardly something a nation aspires to and while (as mentioned on other occasions) the relationship between China and Russia is anything but immune from controversy due to issues such as Siberia-related ones, it is a partnership one can consider unavoidable at this point in time.

In many instances, for obvious geopolitical reasons, China ends up being Russia’s partner of last resort or Russia ends up being China’s partner of last resort. It isn’t just mutual interests that align in one case or another that drives the two close(r) together, it is also the fact that for political reasons, there are frequently just not that many alternatives.

Furthermore, there is also the historical component. It is difficult not to observe that relationships between resource-rich nations such as Russia and production-oriented nations such as China have been built time and time again throughout history, simply because this level of complementarity is difficult to say no to. This is also a key strategic predicament over in Europe, as from a historical perspective, a relationship between the resource-rich Russia and the production-oriented Germany seems more obvious that one between Germany and another production-oriented country.

To avoid turning this blog post into a novel, a few observations are in order:

1. Yes, of course China is reliant on Russia’s natural resources and commodities
2. In an ideal world, perhaps China would indeed want more diversification on certain fronts, to the detriment of Russia
3. However, the political issues that exist over in the European Union when it comes to building relationships with Russia (obvious forces that push against just that) are not present in China. On the contrary, as explained previously, the two nations are frequently pushed together by external factors
4. When it comes to anything from economic to historical perspectives, the two economies can be considered complementary, so it shouldn’t surprise anyone that close ties have existed and will continue to exist
5. Finally and as a bit of a contrarian argument, don’t make the mistake of perceiving the China-Russia relationship as an economic or geopolitical love story, especially the latter