The Russia–China alliance: an alliance to ‘change’ the world order

In recent days, we have seen and heard statements from Chinese and Russian leaders proclaiming an alliance between the two countries that will change the current world order. Interestingly, this has coincided with the annual meeting of the Shanghai Cooperation Organisation (SCO), which this year is being held in the ancient capital of the Silk Road, Samarkand, in Uzbekistan. In the wake of events that are casting a shadow over the daily lives of Westerners – but mainly Europeans – our leaders have finally realised that globalisation does not mean relying on just two countries, and have begun, more than twenty years too late, to diversify their trade risks. If there are two countries likely to be affected by this decision, they are Russia and China.

By Miguel Ángel Temprano

15 September 2022 Reading time: 3.20 mins

Back in 280 BC, the Carthaginian general Hannibal demonstrated that military victories, on their own, are worth nothing unless they are accompanied by commercial successes. And yet the greatest emperor in history, in terms of territory conquered, the Mongol Genghis Khan, ended up with nothing more than a statue erected in the middle of nowhere, in the midst of the inhospitable Mongolian steppe.

This is undoubtedly something that the new Chinese ‘emperor’, Xi Jinping, is well aware of, and indeed, every Chinese leader has taken it to heart.

When Trump, in a manner typical only of a madman like himself, decided to ‘turn his back on the world’ by withdrawing from all economic treaties, the Chinese acted with the diligence of any shrewd businessman. They moved in to fill the void left by the Americans.

“Xi sought to fill the void left by Trump in the only way to gain influence: through trade”

The people of Madrid, particularly those who lived or worked in the city centre, will remember the Chinese leader’s visit to Spain. Xi did not travel alone, or with just a few advisers or ministers. Xi arrived with an entourage of executives who, during their stay in Madrid, filled every five-star hotel in the capital. And there are quite a few of them.

Xi did not bring a military entourage with him. They were not needed. Modern and enduring colonisation is that which takes place not with ‘boots’ on the ground – a military term defining the occupation of territory – but in business shoes.

I remember being in China shortly after Xi came to power and hearing him make a statement in which he declared that his aim for his five-year term was to enable 10 per cent of China’s poor population to join the middle class. Over the course of the following day, I met with three different people, and all three commented on how unprecedented these remarks were.

To achieve this, he launched an urban development plan unlike anything seen before or since, which led to the creation of more than 23 new cities – each with over 150,000 inhabitants – every year. The fact that this has created a property bubble is beside the point; what matters most is that he succeeded.

“Xi’s urban development plan has led to 25 per cent of its GDP coming from the construction sector”

But this was an internal objective; there was a far more important external one that had not been declared: the conquest of the world.

To this end, Xi embarked on a commercial expansion that went far beyond simply becoming the world’s factory – albeit with the complicity of the West, where we were happy to buy cheap goods. Lots of rubbish, few good ones, but all cheap.

Xi’s crusade targeted two continents: Africa and South America. Two continents characterised by the same three factors: a very high proportion of people living in poverty, vast mineral wealth and extremely high levels of corruption.

Xi’s expansion came about through the acquisition of companies and the relocation of low value-added work from Chinese factories to these countries.

The politicians were delighted. What more could they ask for from their new friends: they created jobs in abundance, even if they were poor-quality ones, and had no domestic regulations at home that would oblige them to comply with health and safety at work standards in third countries.

“The first ship to pass through the third lock at Panama was Chinese. Not even Torrijos could have imagined it.”

The situation reached such a point that when Panama opened its third lock, the honour of being the first to pass through it went to a Chinese cargo ship. Not even Omar Torrijos, the revolutionary general who ‘forced’ Carter to sign the treaty transferring the Canal, could have imagined such a thing. Above all, because to this day Panama remains a dollarised economy (the only coins minted in the official Panamanian currency are 1 Balboa coins; everything else is in US dollars).

Well, whilst that expansion was taking place, we in the West carried on looking just as bewildered as a cow watching a train go past. We realised what was happening, but we did nothing about it.

And then COVID struck, following on from the logistics crisis caused by a terrible misjudgement of the recovery, a longer-than-usual winter in Russia and a coal dispute between the Chinese and the Australians.

We realised this when we went to buy durable goods, such as household appliances or cars, and they wouldn’t even give us delivery dates. We discovered that Taiwan actually existed, not just as a subject we studied at school.

“The White House had already warned last November that the CIA was anticipating a Russian attack on Ukraine”

Around that time, and given that it was one of the consequences of China’s poor planning, another instance of negligence on the part of our politicians came to light: we were not only dependent on China, but also on Russia. And this lesson was harder to learn than the last – after all, delaying the purchase of a new car wasn’t really such a serious problem. We had to realise that by selling ‘our’ gas, the

Because the Russians were sending it to China rather than to us, the price of this soared, causing the cost of living to rise sharply.

And then, in early November, the CIA, via the White House, warned us that Putin was firmly intent on invading his neighbour, Ukraine. And that’s when, as the saying goes, ‘the roof came crashing down on us’.

We depended on everyone but ourselves. But, as it happens, our salvation will lie in our punishment.

Today, Europe remains an economic power. Obviously, we are no longer even a shadow of what we once were, but when viewed in perspective, our economic power has not actually declined; rather, global poverty – which is very widespread – has been reduced, which makes it seem as though we are less powerful.

Europe as a whole remains the world’s second-largest economy, behind the US and ahead of China, which means we are vital to the latter; indeed, if the US and Europe were to stop buying from China, its economy would grind to a halt. There is no substitute for either of these economies anywhere in the world.

For China, its largest customer is the US and its second-largest is Europe. The colonisation mentioned earlier is of no use whatsoever if you have no one to sell your manufactured goods to.

“It’s better to have a customer than a supplier”

Anyone reading this who is either a company director or a sales representative for that company will surely agree with me. In business, what really counts is not manufacturing a product but having someone to sell it to. If I have the customer, I’ll find someone to supply the product. But the other way round, there’s no guarantee of success.

Well, that is the situation in China. China will never voluntarily do without its main customer. It would not be able to survive. And let’s not forget that the Chinese Central Bank holds the world’s largest foreign exchange reserves, worth a staggering 3.2 trillion USD, the majority of which is in euros and dollars.

So why this eagerness to shout from the rooftops that China and Russia, through their alliance, are seeking to change the world order?

Well, each for very different reasons. The Russians because the present and future of their economy are disheartening. The present because, as well as being unable to sustain the war and suffering defeats on various fronts, their economy is literally in tatters across a number of sectors. And the future because Western sanctions will force them to sell their main commodity, oil, at a much lower price. Much cheaper either because the sanctions on the price of oil transported by ship take effect, or because they are forced to sell it to other countries such as Indonesia or India, which are already taking advantage of the situation to negotiate lower prices.

And the Chinese, because they’re keen to flex their muscles, but that’s as far as it goes. Xi is beginning his third five-year term in power with the economy at rock bottom and a ‘Zero-COVID’ policy that is wreaking havoc on it. The West isn’t going to let them get their hands on the state-of-the-art chip factories in Taiwan, and just in case, they’re already building their own – using Taiwanese technology.

Western companies have begun to diversify the manufacture of their products – thank goodness – into other countries such as India, which does not bode well for China’s future. And finally, factories in South America and Africa are still not operating at their expected capacity.

So, we have no choice but to say: At last, we in the West have reacted, and the Chinese have no choice but to swallow it. Despite all the fuss, the Chinese will not be able to stop selling to us, which is why this alliance is more propaganda than anything else.