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Putin trip to Beijing signals troubled partnership

- - Tuesday, October 25, 2011

KIEV — Russian Prime Minister Vladimir Putin's recent visit to Beijing followed disclosure of a crackdown on Chinese spying and produced signs that Russia is now becoming the junior partner in its relationship with China, with fewer areas of agreement or cooperation, according to analysts in Moscow and Beijing.

Russia's concerns with China begin with a fall-off in arms exports. Beginning in the 1990s, Russia enjoyed a brisk trade with China in sales of arms and defense technology, at the time a lifeline of badly needed revenue.

Sukhoi Su-27SK and Su-30MKK fighter jets, surface combatant warships and the effective Almaz-Antei S-300 air- and missile-defense systems sold to Beijing were major moneymakers for Moscow.

In recent years, however, Beijing's purchases dwindled to a few specialized technologies — mainly fighter-jet engines, helicopters and air-defense systems.

"These are the only remaining systems that the Chinese have not yet been able to illegally copy," said a Moscow-based analyst who consults with Russian and EU national defense industry policymakers.

Now Mr. Putin wants to make it clear that defense technology from Russia must be purchased by China and not stolen, the analyst said.

As if to send home the message, just prior to Mr. Putin's visit, the Russian government arrested a Moscow-based Chinese national, Tun Shenyun. Mr. Tun was identified as a Ministry of State Security (MSS) spy operating under cover as a translator assisting visiting Chinese delegations.

The MSS is China's massive foreign intelligence, domestic surveillance, cyber-attack and industrial espionage agency that today operates far more pervasively and aggressively than did Mr. Putin's Soviet-era employer, the KGB.

By the admission of Chinese Communist Party and MSS officials, the number of MSS agents operating abroad who are assigned to either steal valuable information on defense technology or to keep track of and harass Chinese dissidents who have left their country tallies in the tens of thousands.

Mr. Tun was charged with attempting to "purchase [classified] documents on the S-300 from Russian citizens," according to the Russian Federal Security Service.

This attempt, the Moscow-based analyst said, "stems from a Chinese obsession with trying to discern the differences between the system used by the Russian armed forces and the less-capable export variants sold to Beijing."

A senior radar design engineer in Kiev familiar with the version of the S-300 sold to China said in an interview that "the [Chinese] S-300s are not limited in the way you normally think of the nominal differences between a domestic and export model — the models for China are more like a 'sawed-off' variant, and there are significant limitations in the range and size of their engagement envelopes."

Mr. Tun's case — along with another case involving sales of classified documents to Chinese intelligence officers by a staff member of one of Russia's major defense-technology institutes, the St. Petersburg-based Baltic State Technical University Voyenmekh — were only recently disclosed in the Russian press. However, their arrests took place more than a year ago, suggesting the timing of these announcements was intentional.

"Putin, being a former KGB man himself, wants to use these espionage cases to send the message that Russia is not happy with China," said the Moscow analyst. "He is not happy about these attempts to steal Russian defense technology. He is not happy about the illegal, pirated copies of Russian fighter jets that China is constructing, and he is not happy about the lack of a deal for China to purchase natural gas from Russia that had been expected."

Russia now says it is looking to China as a "modernization partner," but meaning of that is not clear.

NATO diplomats and other Western observers said they are struck by the vague nature of what it is that this supposedly new Russian-Chinese initiative is all about.

"Modernize? But modernize what?" asked one diplomat watching the visit unfold in Beijing,

It appears Russia is seeking help from China for high-technology investment because Moscow cannot afford the high costs of industrial base equipment to transform its industry. In the past, the two states sought a two-way exchange of modernization know-how.

China now leads in technology advancement, while more than 70 percent of Russian exports to China are raw materials, such as rare-earth metals, timber and paper products.

Machine-building equipment and other manufacturing machinery make up just 5 percent of exports.

In contrast, more than 50 percent of Chinese exports to Russia are machined or technology-based products.

"The reason for this imbalance is easy to see," said a Russian industry analyst attending a defense-technology show in Beijing. "The degree to which Chinese industry receives state support and the speed at which they drive innovation is something Russia can only dream about."

In the past five years, Beijing made "race-to-the-moon" levels of investment in innovation, building 126 "science cities."

Russia is committed to developing one: the Skolkovo complex outside of Moscow billed as a Russian analog to California's Silicon Valley.

Experts say the troubled partnership will likely worsen. A recent report from the Stockholm International Peace Research Institute predicted that defense exports to China will continue to decline and that distrust between the two nations will increase.

"There are strategic planners in Beijing and Moscow who view the other side as the ultimate strategic threat in the long term," the report concludes. "In both countries, strategic planners warn that the present competition could escalate to a more pointed rivalry, entirely undermining the notion of a strategic partnership."