RUSSIAN-CHINESE RELATIONS: PROSPECTS AND IMPLICATIONS

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• Keywords: CHINA-TAIWAN
• Keywords: CHINA
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• Document Number (FOIA) /ESDN (CREST): 0005526244
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• Document Creation Date: June 24, 2015
• Document Release Date: February 22, 2011
• Case Number: F-2010-00738
• Publication Date: September 1, 2000

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APPROVED FOR RELEASED
DATE: 02-07-2011
Russian- Chinese Relations:
Prospects and Implications
UPDATE
NIE 98-08 Russian-Chinese Relations:
Prospects and ImplicationsF ]August 1998
AUTH +R
VIA OFFICE PRODUCTION STAFF
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0578
NIE 2000-10C
September 2000
 Russian-Chinese Relations:
Prospects and Implications
This Estimate was approved for publication by the
National Foreign Intelligence Board under the
anthori y of the Director of Central Intelligence.
Prepared under the auspices of the National Intelli-
gence Officer for Russia and Eurasia and the
National Intelligence Officer for East Asia. Inquiries
may be directed to the NIO/EA
September 2000
TOP CRE
 Scope Note
Russian-Chinese Relations: Prospects and
Implications F-1
In August 1998 the Intelligence Community concluded in National
Intelligence Estimate 98-08, Russian-Chinese Relations: Prospects and
Implications, that over the next five years and possibly longer, the Russian-
Chinese relationship most likely:
? Would not deepen much beyond its current state.
? Would be subject to occasional friction.
? Would develop in a manner that is not particularly threatening for the
United States and might be stabilizing for Asia.
? Would involve certain aspects that are worrisome, notably Russian arms
sales to China.
Alternative scenarios involving an alliance with a defense commit-
ment between the two powers or a descent into sharp hostility were deemed
highly unlikely and unlikely, respectively.
This update looks out over three years and examines these key
questions:
? To what extent have the scope and pace of Russian-Chinese military
cooperation, including military-technical cooperation, increased
recently? What is the outlook for such military cooperation?
? Will it deepen much beyond its current state; if so, what are the causes?
? Will it develop in a manner that is particularly threatening for the United
States or that might be stabilizing for Asia?
? Will certain aspects that are worrisome, notably Russian arms sales to
China, increase? Why?
? How have other forms of cooperation between Russia and China devel-
oped that affect US interests?
TOOP RET
 lii undertaking this update we assume:
No major military conflict among China, Russia, and the United States.
? No systemic or regime change in China or Russia.
 Contents
Scope Note
Key Judgments
Discussion _ _
Introduction
Political Coordination
Regional Equities
Defense Cooperation
Arms Sales
Other Military Cooperation
Economic Limitations
Prospects for Future Relations
ussia-China Military Exchanges
Page
20
23
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Key Judgments
Russian-Chinese Relations: Prospects and
Implications F1
Over the past two years, Sino-Russian relations have deepened
more than we anticipated in our previous estimate. Russian arms sales to
China have grown-as we expected-and economic relations have
remained stagnant, but political cooperation against US interests has inten-
sified as a result of various US actions which Moscow and Beijing per-
ceived as contrary to their mutual interests.
We assess that over the next three years, and possibly longer, the
relationship will continue to develop unevenly and in certain instances
counter to US security interests.
Arms sales and technology transfer will keep growing, primarily because
Russian economic difficulties and Putin's emphasis on defense industries
will complement China's need for advanced military equipment and tech-
nology to support its longer term goal of regional preeminence and its
nearer term objective of building capabilities for regional contingencies.
These include a possible confrontation with Taiwan that may risk US
military involvement. China will have difficulty integrating some of the
new arms and technology, but on balance, we foresee gradual improve-
ments in Chinese capabilities to engage at increasing distances from its
shores.
? Economic relations will continue to move slowly in the near term. Putin
has tried to link arms sales to an expansion of commercial trade, but we
do not expect these efforts to succeed, given Moscow's need for the arms
sales and Beijing's limited interest in Russian exports. Ongoing negotia-
tions on large-scale infrastructure projects nonetheless offer potential for
some long-term expansion in trade relations, generally beyond the period
of this Estimate.
? Russia and China will continue to pursue good neighborly relations and
bilateral confidence-building measures, will in principle oppose the
regional or global domination of a single power, and will work coopera-
tivel y against US efforts they jointly perceive as evidence of "unilateral-
ism" or "Interventionism." This cooperation will be driven in part by their
insecurity over their respective domestic situations and suspicions that
perceived US pressure will fuel and exploit those situations.
5
TOP ,CRETF_
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 T? RET
Both Moscow and Beijing will maintain a grudging respect for US
power and influence and a calculation that constructive bilateral relations
with the United States are essential to their respective development and
reform programs. Accordingly, they probably will try to avoid confronting
Washington in ways that would jeopardize the advantages they derive from
engagement with the United States. Russian-Chinese political cooperation
will also be limited by significant differences, including historical mutual
suspicions, their respective concerns about each other's long-term threat
potential, divergence over sensitive geopolitical issues-most immediately
Russia's concern with China's rising power-and the preoccupation of
both leaderships with domestic priorities.
Whether and how Sino-Russian relations diverge from this base-
line over the next three years will depend heavily on three variables:
? Partin. The new Russian President has sent mixed signals regarding his
plans for the relationship with China. His efforts to link future arms
sales to greater commercial trade and military transparency on China's
part suggest an effort to enforce more reciprocity in the relationship. We
do not know at this early stage what impact Putin will have on the
partnership.
? NMD. A Russian decision to renegotiate the ABM treaty would disad-
vantage China and thus undermine Russian-Chinese cooperation against
the United States. Alternatively, if Moscow decides not to modify the
A BM treaty and the United States proceeds with NMD unilaterally,
Beijing and Moscow probably would increase their political cooperation
against Washington and might consider strengthening military and
technical cooperation to counter NMD.
? US Policy. Future political cooperation will be a function of the degree to
which Moscow and Beijing sustain their perception that Washington's
international behavior is directed against their interests, and their
changing calculation of whether they see their respective interests served
by accommodating or confronting the United States.
A combination of these variables-most especially a decision by
Putin to stand firm on the ABM, followed by a US decision to move ahead
on NMD-could produce even greater political convergence between
Moscow and Beijing than we have seen over the past two years. The two
sides might calculate that their common ground in opposing US policies
had grown, or that greater cooperation would not endanger the benefits
they respectively derive from relations with Washington. Under such
 TOP ECRETf
circumstances, Moscow probably would be more inclined to further relax
restrictions on arms and technology transfers to China, and Beijing proba-
bly would be similarly inclined to accommodate Russian demands for
greater commercial imports from Russia.
We assess that, in any scenario, the chances of Moscow and
Beijing reestablishing a formal alliance-especially one with a mutual
defense component-are low. Bitter memories of their failed alliance in the
1950s, deep-seated mutual suspicions, and the specter of potentially
serious political and economic repercussions remain powerful deterrents to
the formation of an anti-Western military pact.
We assess the prospects for a decline in relations are less likely
than growing cooperation. Nevertheless, the two sides could diverge over
such critical security interests as NMD or the desire to court the United
States, which could cause either to downgrade their partnership. Differ-
ences also could worsen over lagging economic relations or competition
for influence on the Korean Peninsula-particularly in the event of sudden
change- there---in the Russian Far East, or elsewhere in Asia. Nonetheless,
we assess that even in a scenario of divergence, the two sides would work
to limit bilateral friction, continue mutually advantageous arms sales
and military cooperation, and persist in common efforts to promote
multipolarity against perceived US unilateralism.
7
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 iscussion
Russian-Chinese Relations:
Prospects and Implications
introduction
Over the past two years, the Russia-China
relationship has become closer. The relation-
ship is somewhat more antagonistic to the
United States than the already important and
growing relationship we assessed in 1998.
Increasingly sophisticated arms sales and tech-
nology transfers continue to be the most tangi-
ble and closely watched component of the
relationship, but this aspect reflects a continu-
ing trend-not a new one. Economic ties have
not changed appreciably and continue to lag
behind other components of the relationship.
What has changed most is the political compo-
nent. Political convergence has heightened sub-
stantially, and if this trend continues, it could
significantly, affect other bilateral ties.
Outrage over the US approach to the March-
June 1999 Balkans crisis and the May 1999
accidental bombing of the PRC Embassy in
Belgrade.
? Opposition to the US intention, announced in
January 2000, to amend the ABM Treaty and
allow development of national missile
defenses. Both Russia and China saw the
announcement as accompanied by developing
US cooperation with Japan and others on the-
ater missile defenses.
Tensions with Washington during 1999 and
2000 over perceived US positions on Taiwan
and Chechnya. Both Moscow and Beijing
saw the advantage during recent top-level
meetings of supporting each other's respec-
tive stands on Chechnya and Taiwan.
Since our 1998 estimate, political coor-
dination has increased more than we antici-
pated, partly owing to the sharp bilateral
disputes each has had with Washington. Several
key events have encouraged convergence,
including:
? Anger over the December 1998 US decision
to launch air strikes against Baghdad over
objections by fellow perm-5 members Russia,
China, and France.
Suspicion about the April 1999 revised
NATO strategic concept expanding the geo-
graphic scope and justifications for use of
force, including "humanitarian intervention."
Russia and China have opted for closer
political cooperation against US interests in
these and other areas not only because they are
dissatisfied with US policies and the perceived
threat of US hegemonism. They also are inse-
cure over their own domestic situations and
suspect that the United States wants to fuel and
exploit that insecurity.
This political convergence has
? Russian Foreign Minister Ivanov urged PRC
President Jiang Zemin shortly after the
 Belgrade Embassy bombing to coordinate
actively and spearhead an international move-
ment to "stop" US policy-as they had done
earlier in Iraq.
? The two sides continue to coordinate-partic-
ularly in the UN Security Council-when
they perceive a US inclination to eschew con-
sultation in favor of unilateral action.
? Both countries have opposed US strategic
programs, including plans for ballistic missile
defenses, by explicitly linking continued sup-
port for various arms control regimes to US
observance of the ABM treaty.
We anticipate such coordination will
continue. Jiang,
during Russian President Putin's 17-19 July
2000 visit to Beijing, reportedly urged Putin to
conclude a "good neighbor and friendship"
framework agreement that in some respects
would help prevent the United States and the
West from disrupting ties between Moscow and
Beijing. The two parties have agreed to "con-
duct negotiations on preparations" for the
agreement. We have no evidence to substantiate
reports that some mutual defense commitments
are under consideration in the context of the
agreement. China in recent years has signed
friendship or framework agreements having no
known defense commitments with several
countries both in the region and abroad. China
and Russia have publicly insisted that the pro-
spective treaty, which could be ready for sign-
ing when Jiang visits Moscow in 2001, should
not he construed as a return to their former alli-
ance. Such an agreement probably would not
mention third countries specifically, but never-
theless would be likely to contain thinly-veiled
anti-US language.
Regional Equities
Both sides see common benefit in lim-
iting US political and economic influence in
East and Central Asia. Since 1998 they have
more closely coordinated opposition to US-
backed efforts, real or imagined, to extend US
influence along their perceived spheres of influ-
ence in Central Asia and the Western Pacific,
notably in or near areas viewed as sovereign
territory or at least a security preserve of China
(Taiwan, South China Sea) or Russia (Central
Asia, South Caucasus). In Central Asia, China
and Russia will step up diplomatic pressure to
draw Uzebkistan and possibly Mongolia into
the Shanghai Five Forum (Russia, China, Kaza-
khstan, Kyrgyzstan, and Tajikstan) for dual
purposes of further limiting the space of antire-
gime "terrorists" and minimizing US political
and economic interests in the region. Both will
also continue to view US military contacts in
the region as deliberately designed to displace
their influence.
Regarding Japan and Taiwan, China
will want Russian diplomatic support to main-
tain political pressure on these two important
US-backed regional actors, but Russia will be
reluctant to meet Chinese expectations. Mos-
cow will adhere to a one-China policy though it
gives much less attention than China to Japa-
nese-US efforts to improve defense cooperation
and does not appear nearly as unfavorably dis-
posed toward the overall US military presence
in the Western Pacific. Beijing, though initially
supportive of Russian involvement in the
ASEAN Regional Forum (ARF) and APEC,
may try to constrain a stronger Moscow role in
East Asian multilateral fora where China seeks
eventual primus inter pares status.
 In Korea, although their interests
appear complementary in terms of nudging
P'yongyang into the international arena to help
stabilize the region, Beijing probably will take
a more guarded approach to Russian diplomatic
overtures to North Korea over the longer term.
For now, China welcomes Russia's renewed
diplomatic activism on the Korean Peninsula,
principally for the shared objective of under-
mining the US rationale for deploying missile
defenses in response to threats from such so-
called "countries of concern" as North Korea.
But ultimately, China wishes to be the principal
"great power" player on the Peninsula. China,
for example, ignored Moscow's proposal to
expand the existing four-party US-China-
Koreas negotiating mechanism to include Rus-
sia and Japan, and Putin apparently is not push-
ing it. Some in the Chinese leadership have
voiced concern that as Korean reconciliation
proceeds, Russia ultimately will dilute or com-
plicate PRC influence in Northeast Asia.
Nor will coordination be particularly
strong elsewhere in Asia. In South Asia, Russia
and China probably will try to obtain additional
Indian backing in their pursuit of a multipolar
world. Countervailing Sino-Indian strategic
competition-including Chinese suspicion over
Russian arms sales to India-and traditional
enmity nevertheless will discourage a more for-
mal, tripartite arrangement such as that floated
by former Russian Premier Primakov. In the
Persian Gulf, Russia and China follow broadly
compatible policies, supporting both Iraq and
Iran against the United States though actual
coordination thus far has been limited.
Defense Cooperation
Russian arms sales to China have con-
tinued to grow over the past two years, as we
anticipated in our 1998 estimate. A
convergence of Russia's need for markets and
cash and China's quest for weapons to enhance
its capabilities for power projection will drive
what we anticipate will be sustained-if not
increased-Russian military sales to China
over the next three years. In pursuit of its goal
of regional preeminance, China will seek more
Russian equipment and other support as it
increases defense spending, pursues its military
modernization program, and emphasizes build-
ing a capability to deal with military contingen-
cies including Taiwan and US involvement in a
Taiwan conflict. President Putin is emphasizing
the importance of Russian defense industries
for the overall health of the Russian economy,
and those industries are urgently seeking export
markets. Putin thus far contends that profitable
sales to China, India, and others need not be
curtailed to court Western investment necessary
to rebuild his country's economy.
China will try to take advantage of
weapons and technology transfers to add to its
growing inventory of more modern weapons as
it seeks to develop a credible deterrent to Tai-
wan independence or US intervention in a
China-Taiwan confrontation-the mission
Beijing since 1996 has sought to address by
purchasing conventionally powered attack sub-
marines, cruise missile-equipped destroyers,
and more modern fighter aircraft. China's goal
over the next three years will continue to be to
acquire the capability to engage its adversaries
at increasing distances from its shores, and
11
T? CRE~
 Russian Arms Exports to China:
1998 to 2000
Since our 1998 Estimate, China has
received a wide variety of Russian arms,
including some of the most advanced
weapon systems Moscow offers for export. In
February 2000, Beijing received the first of
two Sovremennyy Class guided-missile
destroyers that is now equipped with Sun-
burn anti-ship cruise missiles, SA-N-7/Gad-
fly Naval SAM systems, and 8 KA-28/Helix
antisubmarine and search and rescue heli-
copters. The second destroyer which should
be delivered by early 2001, reportedly will
be equipped with the Football electronic
countermeasures package-the first export of
this equipment outside the former Soviet
Union. A Russian-made radar (Plank Shave
B) has been observed on at least one Chinese
Navy combatant (LUDA DD-163). Since
1998, the Chinese Navy also has received
two Project 636 kilo submarines with wake-
homing and wire-guided torpedoes.
China continues to improve its air
defense capability with purchases of Russian
weapons and military technology. In May
2000, China received its second regiment of
SA-15 SAMs, and in June it took delivery of a
command and control system for its SA-10
and SA-20 SAMs consisting of the Big Bird
battle management radars and group com-
mand posts. Beijing reportedly has approved
purchasing more SAM battalions-possibly
four SA-10 and four SA-20. In addition to
providing complete air defense systems, Rus-
sian designers are providing technical assis-
tance to China in the development of several
SAM systems including the HQ-9 long-range
SAM, the HQ-16 medium-range SAM, and
the HQ-17 short-range SAM systems.
Since 1998, China has signed a con-
tract for 40 Su-30MKK multirole fighters
worth more than $1.5 billion and begun
assembling Su-27 aircraft. Russia has
already begun flight testing the first batch of
Su-30MKK aircraft and could deliver a few
by the end of the year The Su-27 assembly
program has fallen behind schedule.
completed aircraft have been turned over to
the Chinese air force and two more were
reportedly on their way in late August 2000.
China plans to acquire advanced air-to-air
missiles for these aircraft and has expressed
interest in the long-burn AA-10 and AA-X-
12. However, negotiations may be tied to
progress on China's development of the PL-
12 AAMs. Russia is providing technical
assistance to these programs. Russia also is
providing technical assistance to China's
development of the KR-1 air-to-surface mis-
sile that is based on the AS-17 missile. In
addition to the aircraft sales and missile
development, China is using Russian compo-
nents, such as engines and radars, in several
of its aircraft programs, including the
F-8IIM, F-10 and Super-7.
 The first Russian export-model Sovremennyy firing an SS-N-22 anti-ship cruise missile (ASCM).
Since 1998, the Chinese Navy has received two Russian Project
636 Kilo submarines with wake-homing and wire-guided torpedoes.
acquisitions probably will continue to tilt
toward long-range theater strike capabilities,
and additional air, air defense, and naval weap-
ons and platforms. During the period of this
Estimate:
We assess that land-attack cruise missiles, the
Novator Alfa antiship cruise missile, Su-
30MKK precision strike fighters, equipped
with AS-17 anti-radar missiles and AA-X-12
active radar-guided air-to-air missiles, will
top Beijing's list of procurement priorities.
Purchases alone, however, are unlikely to
mean huge strides in capability for China.
The Intelligence Community assesses that
China has had difficulty integrating these
 A Chinese Su-27SK--note PLAAF markings on the tail.
weapon systems and that they so far have
only marginally improved China's ability to
counter US forces.
Future trends in Russian arms sales to
China will reflect in part how the NMD issue
plays out. According to our recent National
Intelligence Estimate on foreign responses to
US deployment of NMD, J signs are growing
that, if Russia and China decide to strongly
resist a US decision to deploy NMD, Moscow
would be willing to sell advanced missile tech-
nology to China to defeat missile defenses, and
Beijing would be interested in such collabora-
tion. Alternatively, the Estimate adds that pos-
sible antimissile defense cooperation could run
aground if Moscow disadvantages China by
agreeing to modify the ABM treaty, or if the
powers continue to differ in the relative impor-
tance they give to national missile defense
(more important to Russia) and theater missile
defense (more important to China).
(S//NF) There are other real and potential limits
to Russian arms sales to China. Beijing, as we
noted in our 1998 Estimate, will not limit its
search for weapons and technology to Russia.
Although China, to a large extent, is wedded to
Russian arms technology by tradition, prefer-
ence, price, doctrine, and the logic of technol-
ogy upgrades, China will "shop around" for the
best arms and technologies it can acquire. For
example, Beijing shops aggressively for such
equipment as engines and advanced avionics
for fighter aircraft upgrades
Russian President Putin's views
on the advantages and disadvantages of arming
China also will be a crucial factor in the devel-
opment of the military relationship. In early
1999, President Yeltsin promised to relax mili-
tary technology transfer restrictions. Putin,
however, has tried to condition sales of more
advanced technology both to increased access
1 ~NJF 2000 -0614J, Ibreign Responses to US National
Missile Defense Deployment July 2000.
 ~~
 to Chinese markets and to greater transparency
in Chinese military matters.
Putin's motivations for imposing such
conditions are unclear. He may perceive an
urgency on Beijing's part that gives Moscow
leverage and an opportunity to broaden the eco-
nomic benefits of the arms trade with China.
Beijing, however, is not without leverage, given
its sizable purchases of Russian arms and the
limited prospects for Moscow to find compara-
ble alternative arms markets. If a search for
leverage is primarily driving Putin, this lack of
alternatives for both countries suggests that
some accommodation on the issue of arms and
civilian commercial projects will be reached,
although some deals may be delayed and some
sensitive systems may be off limits.
Putin's demands for greater transpar-
ency in Chinese military doctrine and produc-
tion also suggest he may have more
fundamental doubts about China's long-term
intentions toward Russia. Accordingly, he may
be disinclined to automatically implement
Yeltsin's relaxation of the restrictions on arms
sales, or to approve the transfer of systems that
could pose a long-term threat to Russia itself.
Even this lack of trust,
however, is unlikely to substantially affect the
increase of military-technical cooperation in
tactical weapons. Key weapons systems that
TO EI
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 Other Military Cooperation
Notwithstanding the constraints, high-
have not been sold to China are largely strate-
gic, including long-range strategic bombers,
cruise -missile submarines, long-rangeland-
attack cruise missiles, and ballistic missiles.
level military contacts-many of them focused
on arms deals-have continued. Since mid-
1999 the PRC Central Military Commission
Vice Chairman, Gen. Zhang Wannian, has been
negotiating with Russian officials, particularly
Deputy Prime Minister Klebanov, on arms and
technology purchases. Other significant con-
tacts include a meeting between PRC Defense
Minister Chi Haotian and his Russian counter-
part in January 2000 to discuss joint exercises,
training, and military student exchanges. The
naval chiefs of the two sides exchanged visits
in 1999 to discuss PLA crew training on Sovre-
mennyy destroyers and arrangements for a
high-profile Russian Navy port call in Shanghai
in October 1999. In January 2000, the two sides
agreed to expand the number of PLA officers
training at Russian service academies: 130
were in attendance last year.
These high-level military contacts have been
accompanied over the past two years by often
strident mutual rhetoric directed against US
"hegemonism" and "power politics," suggesting
that common Russian-Chinese opposition to US
policy in the Balkans crisis and other disputes
may have reinforced the interest of both sides in
deepened defense ties. Key bilateral military
channels likely to expand further include the
Scientific-Technical Cooperation Commission,
the chief coordinating mechanism at present for
arms and technology deals. Additional areas for
possible expansion include the defense ministry
hotline, defense minister/general officer
exchanges, intelligence sharing, and in-country
advisers. Meanwhile, both sides will continue to
reduce the potential for border tensions by fos-
tering other confidence building measures and
routine forms of military interaction.
 TOP E1
TO E
 Economic cooperation has continued
to trail the political and military relationship
and has remained stagnant since our generally
negative assessment in 1998. According to offi-
cial Chinese statistics, overall trade volume has
declined to $6 billion or less during the past
three years, far from achieving the ambitious
goal the partners had of boosting two-way trade
to $20 billion this year (see chart on page 22).
This decline was attributable in part to the
Asian financial crisis--which decreased
demand and prices for many of the goods
traded-and then the ruble devaluation that cut
purchasing power in Russia and dropped
imports in 1999 to their lowest level since the
breakup of the union. In 1999, China was Rus-
sia's sixth-largest trading partner, while Russia
accounted for less than one percent of China's
exports and only five percent of China's
imports. Preliminary information suggests a
somewhat better performance for 2000-trade
at midyear exceeded $3.5 billion.
Russia still considers China one of its
most promising potential partners, while China
continues to pay lipservice to the importance of
civilian economic ties largely for strategic rea-
sons. Both Russian and Chinese officials have
expressed dismay, however, over their inability
to bring economic ties along at the pace that
has characterized the development of political
relations since the two sides inaugurated their
"strategic partnership" in 1996.
Several factors are likely to continue to
stifle trade growth and prevent the Russian-
Chinese economic relationship from reaching
its hoped-for potential. Such factors include
inadequate Russian mechanisms for accounts
20
 CRE1
Russian President Vladimir Putin shakes hands with
Jiang Zernin after exchanging joint declaration in July 2000.
settlement, insurance, and arbitration, ongoing
allegations of dumping, squabbling over the
quality and price of goods, and allegations that
Chinese traders in Russia face harassment and
discrimination. In addition, heavy taxes,
restrictive entry and residency requirements for
Chinese workers, and poor Russian payment
records are leading to a withdrawal of Chinese
trade and construction firms from Russia and
may accelerate a trend of declining Chinese
exports to Russia. _ln an attempt to address at
least some of these problems, China and Russia
in late 1999 set up a mediation system for bor-
der trade disputes, according to the Chinese
press.
? Russian-Chinese trade and other economic
ties also will hinge on the implementation of
WTO agreements. Such agreements, if imple-
mented, are likely to draw each side closer to
the West than to each other.
21
CRE'I_
 Trade With China
By Year
Billion. US $
By Commodity
Russian Imports, 1999
Percent
Chemicals, 2.5
Machinery/
equipment, 5.0
Metals/
minerals, 5.0 -i
Food/heverage/
tobacco, 21.5
Exports
Imports
Russian Exports, 1999
Wood/
Apparel/ leather/ paper, 10.0
- textiles, 62.0
Metals and their
- products, 27.5
Fertilizers/
chemicals, 25.0
Coa " ball
 'r RET
Russia's recently improved economic situa-
tion may overcome some of Beijing's concerns
about the ability of Russian firms to fulfill large
development contracts-a major stumbling-
block on earlier contract awards, including
China's Three Gorges Dam. Prospects are more
likely, however, for continued frustration on
such major projects as Beijing's "Great West-
ern Development Plan" to reduce disparities
between China's prosperous coastal. regions
and its interior provinces. Indeed, a key to
Beijing's strategy is to attract substantial for-
eign investment, and substandard Russian
involvement is an unlikely selling point.
Nonetheless, the two sides are laying
groundwork for the next decade by negotiating
other multibillion dollar long-term contracts to
build oil and gas pipelines and other major
infrastructure projects. Deliveries to the $2.5
billion nuclear plant Russia is building in China
under a 1993 agreement, for example, began
late last year but will be spread out over at least
the next five years. Similarly, planned oil and
gas pipelines to China-which Russia is count-
ing on to reduce its dependence on European
energy markets-will not be completed for at
least ten years. These deals eventually could
mean some $4 billion in annual Russian energy
exports to China at current prices, virtually
doubling current trade levels.
Prospects for Future Relations
We assess that over the next three
years, and possibly longer, the Russian-Chinese
relationship will continue to develop unevenly:
Russian sales of arms and technology to
China will continue to grow, their pace and
scope being driven primarily by China's need
for advanced military equipment and technol-
ogy, and Russia's need for sales abroad to
sustain its defense industries.
? Commercial trade relations will remain
largely stagnant. Economic realities and pri-
orities in both countries indicate that pros-
pects are limited for a significant pickup in
Russian-Chinese economic cooperation in the
next three years.
? Tactical convergence of Russian and Chinese
international political interests will continue,
prompted by mutual frustration with US poli-
cies and perceived US pressures against
them. We expect both Beijing and Moscow to
remain sensitive to each other's areas of pri-
mary interest, and to work to limit bilateral
friction and sustain good neighborly rela-
tions.
? At the same time, the closeness of their rela-
tionship will be limited by their residual his-
totical mistrust of each other, the respective
concerns they have about each other's long-
term threat potential-most immediately,
Russian concern over China's rising power-
and the central preoccupation of the two lead-
erships with domestic challenges.
Both sides are likely
to calculate that constructive relations with
Washington are essential to their respective
modernization and reform programs. Over the
next three years, they will attempt to avoid
directly provoking Washington in ways that
might be harmful to those programs by trigger-
ing such retaliatory US-sponsored actions as
 Leadership Transition
The recent leadership transition
Whether and how Russian-Chinese
relations diverge from this baseline over the
next three years depends largely on three key
variables that are external to the relationship
itself:
? Putin. The new Russian President is sending
mixed signals about his intentions for the
relationship with China. His visit to Beijing
in July 2000 suggested a readiness to con-
tinue pursuing a "strategic partnership"-as
part of his apparent interest in invigorating
Moscow's role on the global diplomatic
scene-but his efforts to link arms sales to
commercial trade and military transparency
suggest a more skeptical or mercenary
approach to the relationship than Yeltsin. We
do not know at this early stage what impact
Putin will have on the relationship.
? NMD. A decision in Moscow not to modify
the ABM Treaty, in conjunction with a US
decision to proceed with NMD, probably
would engender stronger Russian-Chinese
political collaboration against the US.
Although this would result mainly in intensi-
lied rhetorical attacks and anti-US activism in
the UN and other multilateral forums, Mos-
cow and Beijing also would consider
strengthening technical cooperation on mis-
sile defense. Alternatively, a Russian decision
to modify the ABM Treaty and facilitate US
NMD could isolate or alienate China, strain-
ing Russian-Chinese political ties. Any
in Russia and one expected in China dur-
ing 2002 will influence the direction of the
relationship.
? President Putin is an important new
variable in the bilateral equation. Sworn
into office in May 2000, he has not yet
articulated a definitive vision for con-
ducting Russian international affairs,
and he could attempt to drive the rela-
tionship with China in several ways.
Some of the overtures he has made to
Beijing suggest an eagerness to deepen
the relationship, while others indicate
skepticism or a desire to leverage
Beijing in ways Yeltsin did not. Putin's
decisions on the US NMD program and
modification of the ABM treaty will indi-
cate China's relative importance in his
foreign policy.
? Chinese leaders are in the midst of their
cyclical policy review process in the run-
up to prospective changes at the 16th
Party Congress in 2002. They probably
will adjust international priorities and
perspectives as a new generation of
leaders enters the stage. We assess, how-
ever, that new Chinese leaders-who are
less influenced by Russia's close ties to
China in the 1950s-will be much like
the previous generation in cautiously
deciding and implementing policy. In
any event, changes in policy toward Rus-
sia most likely will be cautious and grad-
ual, partially because Chinese leaders
themselves are uncertain about Putin's
agenda.
 T~P5S68E1
subsequent Chinese missile buildup-osten-
sibly directed at the US-also would appear
potentially threatening to Russia.
US Policy. Future Sino-Russian political
cooperation against Washington will be a
function of the degree to which Moscow and
Beijing sustain the perception that US poli-
cies are directed against their interests. If they
interpret subsequent US policies as further
evidence of growing "unilateralism" or
"interventionism," the convergence of their
diplomatic agendas probably would increase.
A combination of these variables could
produce greater political convergence in Rus-
sian-Chinese relations than we have seen over
the past two years, especially under conditions
where both powers perceived greater common
ground in opposing US policies, or calculated
that such cooperation would not endanger the
benefits of their respective bilateral relation-
ships with Washington. Such a scenario-
Could strengthen
the linkages between the political, military, and
economic components of the Sino-Russian
relationship. Moscow could relax even more of
its restrictions on arms and technology trans-
fers to China, and Beijing probably would be
inclined to accommodate Russian demands for
greater commercial export opportunities.
repercussions also have a powerful deterrent
effect. Neither side has a compelling rationale
to declare the United States as a full-blown
enemy, warranting formation of an anti-US
military pact, and we see little prospect of a
perceived commonality of security interests
sufficiently strong to create the basis for a mili-
tary alliance.
A Chinese decision to confront Taiwan
at the risk of engaging the United States mili-
tarily probably would have little effect on Rus-
sian-Chinese political or military cooperation
against the United States. Since the 1950s, even
during the period of the Sino-Soviet alliance,
Moscow has been reluctant to join Beijing in
confronting the United States militarily over
Taiwan. Russia probably would seek to keep a
low profile and limit its involvement. For the
Russians, Taiwan is a marginal issue. Moscow
probably would continue to adhere to its One
China policy and offer rhetorical support
but it also probably would press China to avoid
a crisis involving the United States (particularly
if Moscow perceived the crisis could escalate
and embroil Russia). Such a stance may irritate
China, but Beijing probably has low expecta-
tions of Russian support in a Taiwan conflict
scenario and thus would not be likely to derail
the relationship over the issue.
Although a greater political conver-
We assess that, in any scenario, the
chances of Moscow and Beijing reestablishing
a formal alliance-especially one with a
mutual defense component-are low. Bitter
memories of their failed alliance of the 1950s
and deeply rooted suspicions will strongly
discourage a replay, and the potentially serious
international political and economic
gence is perhaps more likely, there is also a dis-
tinct possibility that Russian-Chinese relations
will decline over the next three years and
beyond. Serious strains in the relationship
could result from:
A decision by Putin or a successor to down-
grade the Sino-Russian partnership or curtail
arm sales significantly to court the West, or to
25
T T~
 ref use any political support to China in a
cross-strait showdown involving the United
States.
? A perception by Beijing that China has been
disadvantaged strategically by US-Russian
negotiations on ABM treaty revisions that
enable deployment of a US national missile
defense and diminish the PRC strategic
deterrent.
? A conclusion by Moscow that China will
continue to systematically refuse to extend
favorable treatment to Russian interests in
awarding contracts for development
programs in Xinjiang and other western
provinces.
? Russian-Chinese competition for influence in
the newly fluid situation in the Korean Penin-
sula, ethnic tension in the Russian Far East,
state disintegration in Central Asia, or sup-
port for opposing sides in a South Asian con-
flict.
Even in this scenario, however, we
assess that both powers would work to limit
bilateral friction, pursue some mutually
advantageous arms sales and military coopera-
tion, and persist in common efforts to promote
multipolarity and oppose perceived US
unilateralism.
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36
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 Annex
)Zussia-China Military Exchanges
Sino-Russian military contact resumed shortly after Moscow and
Beijing reestablished normal political relations in the late 1980s. Negotia-
tions to sell Russian weapons to China were under way by 1991 .during
Beijing's international isolation for the Tiananmen Square massacre. Con-
sequent Russian training of Chinese personnel created the need for Chinese
officers conversant in Russian language and culture that probably prompted
Chinese attendance at Russian service academies by 1996. Border and
force reduction treaties respectively signed in 1996 and 1997 and the grow-
ing threat of instability in Central Asia prompted contact between law
enforcement authorities and military commanders along the Sino-Russian
border by 1998. By 1999, mutual estrangement from Washington per-
suaded both sides to elevate the public profile of their defense relationship
beginning with Zhang Wannian's June 1999 trip to Russia. Presently, nine
broad areas of bilateral military contact are known to exist:
Arms and Military Technology Purchases
Bilateral negotiations over Chinese purchase of Russian military
equipment are the most visible Sino-Russian defense channel. Since 1992,
they have occurred under the Military-Technical Cooperation Commission,
a subcommittee of the Russia-China Joint Intergovernmental Commission
that was established in 1992 and is co-chaired by the prime minister of
each country. Convening almost every year since 1992, the Military-Tech-
nical Commission engages the senior arms transfer negotiators of Russia
and China, who finalize the details of transfers discussed in lower level
meetings. The first commission meetings concluded the Su-27 fighter sale
to China, the first major post-1990 arms deal between the two countries.
The most recent meeting in August 1999 agreed on the Chinese purchase
of 40 Su-30 aircraft.
Gen. Liu Huaqing, who was then China's senior uniformed officer
and leading advocate of People's Liberation Army (PLA) force moderniza-
tion, led most of China's Military-Technical delegations from 1992 until
his retirement in early 1998. His Russian counterpart usually was the Dep-
uty Prime Minister responsible for Russia's military industrial complex.
Lower-level arms and technology transfer negotiations continued following
I,iu's retirement until the full commission reconvened in August 1999. At
37
TOP SE RET
 that time, Deputy Prime Minister Ilya Klebanov was hosted in Beijing by
1,iu's successor, Gen. Zhang Wannian, who himself had visited Moscow in
June.
Military Training
Russian training of Chinese personnel in both Russia and China
commenced shortly after weapons sales resumed and probably is a compo-
nent of most major weapons sales. Prospective Chinese Su-27 pilots
entered a six-month course at the Krasnodar Foreign Pilot Training Center
by February 1992. Russian trainers reportedly are still training Chinese Su-
27 pilots in China. Chinese crews have been training to operate Chinese-
purchased kilo submarines at the Kronshtadt Training Center near St.
Petersburg since at least 1995. Chinese crews also underwent several
months of training in Russia as part of the Sovemennyy purchase. As of
March 2000, Chinese students were attending Smolensk Army Air Defense
University, possibly to study Russian air defense strategy and SA-10 or
SA-20 operations. Training of Chinese crews to operate the SA-15 surface-
to-air missile system is ongoing at the Russian Air Defense Forces training
center at Orenburg.
Defense Minister/General Staff Meetings
These meetings, which usually negotiate bilateral military
exchanges, are not programmed but have been held at least annually since
1992. They can occur in tandem with presidential summits or military tech-
ncal discussions. For example, during the January 2000 defense minister
meeting in Moscow, Chinese Defense Minister Gen. Chi Haotian met with
his Russian counterpart and discussed holding bilateral exercises, expand-
ing military student exchanges, and exchanging military training observers.
He also met Deputy Prime Minister Klebanov and discussed ongoing and
potential Chinese arms purchases.
The Russian Defense Ministry installed a landline link to PLA
headquarters in Beijing in 1999 following the installation of a hotline
between the Chinese and Russian presidents. We do not know the specific
purpose of the voice-only link. It reportedly suffers from a lack of clarity
and therefore probably is not used extensively.
Service Chief Meetings
Occurring less frequently than Military Technical Cooperation
Commission or Defense Minister/General Staff Officer meetings, Service
Chief meetings normally discuss such direct service-to-service contacts as
naval port visits or Russian training of Chinese personnel at service train-
ing facilities. For example, the naval chiefs of both countries exchanged
38
TOP , E~
 visits in 1999 to arrange the Russian Navy's October 1999 port call in
Shanghai and Russia's training of Chinese crews for two Sovremennyy
destroyers purchased by Beijing.
Military Student Exchange
Russia was accepting up to a dozen Chinese students annually at
the General Staff Academy in 1996. By 1997, a comparable number of
Chinese officers were attending a three-year course at the Russian Naval
Academy. By 1999, 130 Chinese students were said to be attending Rus-
sian service academies, and in January 2000 the two countries agreed to
increase the number. Expanding Chinese attendance at Russia's service
academies probably is rectifying the dearth of Russian-speaking PLA offic-
ers that resulted from suspension of Sino-Russian relations between the
early 1960s and late 1980s.
Border Force Meetings
The 1996 agreement on border confidence-building measures and
the 1997 agreement to reduce border forces by Russia, China, Kazakhstan,
Kyrgyzstan, and Tajikstan prompted regular contact between Russian and
Chinese border forces and military units in border regions. Russian and
Chinese border control forces routinely cooperate to control illegal border
movements; the national border service heads of the two countries have
met at least once since the agreements were signed. Russian commanders
of the Siberian and Far Eastern Military Districts routinely meet with their
Chinese counterpart in the Shenyang Military Region. Military inspection
teams from both sides verify compliance with the force reductions speci-
fied by the 1997 agreement. Bilateral exercise notification presumably
occurs. We do not know whether hotlines for preventing unintentional
escalation exist.
"Shan hai Five" Forum
Negotiation and implementation of the 1996 confidence-building
and 1997 force-reduction agreements led to this five-party forum that pro-
motes economic exchange and cooperation in border control. The latter is
prompted by Islamic radicalism and weapons and narcotics trafficking
spilling over from Afghanistan. Shanghai Five summits between heads of
state, defense ministers, and law enforcement chiefs promote multilateral
cooperation in combating these threats. The forum is the only apparent
instance where senior Russian and Chinese security officials discuss
responding to mutual threats.
39
1 "" ,"~ CRET~
 Intelligence Exchange
Periodic contact between the military and intelligence services of
the two sides has occurred since relations resumed in 1989. For example,
Russian URU chief Korabel'nikov visited PLA intelligence chief Xiong
Guangkai in June 1999
40
T? CRE'l 40
 The National Intelligence Council
The National Intelligence Council (NIC) manages the Intelligence Community's estimative process,
incorporating the best available expertise inside and outside the government. It reports to the Director
of Central Intelligence in his capacity as head of the US Intelligence Community and speaks authorita-
tively on substantive issues for the Community as a whole.
Chairman
(concurrently Assistant Director of
Central Intelligence for Analysis
and Production)
Director, Senior Review,
Production, and Analysis
National Intelligence Officers
Africa
At-Large
Conventional Military Issues
East Asia
Economics & Global Issues
Europe
Latin America
Near East and South Asia
Russia and Eurasia
Science & Technology
Strategic & Nuclear Programs
Warning
Ellen Laipson
Robert Houdek
Stuart A. Cohen
John Landry
Robert Sutter
David Gordon
Barry F. Lowenkron
Fulton T. Armstrong
Vacant
George Kolt
Lawrence Gershwin
Robert D Walpole
Robert Vickers
 National Security Unauthorized Disclosure
Information Subject to Criminal Sanctions
Information available as of 20 September 2000 was used in
the preparation of this National Intelligence Estimate.
The following intelligence organizations participated
in the preparation of this Estimate:
The Central Intelligence Agency
The Defense Intelligence Agency
The National Security Agency
The Bureau of Intelligence and Research,
Department of State
The Director of Intelligence,
Department of Energy
also participating:
The Deputy Chief of Staff for Intelligence,
Department of the Army
The Director of Naval Intelligence,
Department of the Navy
The Assistant Chief of Staff; Intelligence,
Department of the Air Force
The Director of Intelligence,
Headquarters, Marine Corps
This Estimate was approved for publication by the
National Foreign Intelligence Board under the authority
of the Director of Central Intelligence.
Dissemination Control NOFORN (NF)
Abbreviations I'ROPIN (PR)
Dissemination and extraction of information
controlled by originator
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 TOP CRET