New report: Xi and Putin by @HillmanJE

New report: Xi and Putin have entered into an unequal partnership that will become even more imbalanced in the future.

Disparity in China-Russia economic relations apparent across four dimensions of connectivity: trade, investment, people, and data. 1/X

Xi and Putin tout rising bilateral trade levels, a metric that emphasizes progress and partnership while masking how Russia has become more dependent on China. 2/X

Investment: Russia’s Belt and Road experience has been disappointing due to a risky business environment and weak market fundamentals.

And while both China and Russia are pursuing alternative payment systems, motivated in part by Western sanctions, Beijing is far ahead.

People-to-people ties have been expanding, but China’s sheer mass deepens Russia’s dependence in this area as well. Tourism is boon when things are going well, but also part of Beijing’s coercive economic toolkit (just ask South Korea).

Digital connections are necessitated by geography (7 of China’s major terrestrial cables run through Russia).

Also history: Russia was among Huawei’s first international markets.

But flows of data are limited by both government’s obsession with control over connectivity.

Looking toward 2030, China’s sheer mass, proximity, and willingness to economically coerce its partners could eventually compel Russia to look again to the West, where most of its trade remains despite its growing ties with China.

Meantime, the US should:

Avoid exaggerating the China-Russia partnership.
Exercise greater prudence on sanctions.
Lead an allied vision for economic development.

More in the report, which draws on work from others who have thought hard and written wisely about China & Russia.

Big thanks to: @AKendallTaylor, @DaveShullman, @AlexGabuev, @Julie_C_Smith, @jacobstokes, @Aligarciaherrer, @SpivakV, @ANKURsamirshah /end

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