Sino-Russian cooperation under US and European sanctions: Chinese car brands flood into the Russian market

Syue Fuzhun ORCID: 0000-0002-2622-7516 PhD in History Postgraduate student; Department of Theory and History of International Relations; Patrice Lumumba Peoples' Friendship University of Russia 117198, Russia, Moscow region, Moscow, Magellan str., 29 xuefurong111@gmail.com

Introduction

Against the background of economic sanctions imposed on Russia by Western countries, a power vacuum has emerged in the Russian automobile market. Chinese brand automobiles have accurately identified and quickly seized this opportunity, successfully entering and expanding their market share in Russia^[1]. This initiative not only enhances China's influence in the global automobile industry, but also further consolidates the strategic partnership between China and Russia. At the same time, from a geopolitical perspective, this economic behavior also strengthens the political and economic cooperation between China and Russia in the face of Western pressure.

The research in this paper not only enriches the application of realism theory in the field of international relations, but also provides new perspectives and ideas for understanding the motives and strategic choices of state behavior in the complex and changing international environment. Through an in-depth analysis of the dynamics of Chinese branded automobiles' entry into the Russian market, it reveals the multiple economic, political and security considerations behind state behavior and how these factors interact and influence the process of Chinese cooperation.

This paper will elaborate on the dynamics of Chinese branded automobiles' entry into the Russian market, the implementation process and the multidimensional impact it has had. Through the historical analysis method and the combination of quantitative and qualitative research, it will analyze relevant data and information to further gain a comprehensive understanding of the actual situation of China-Russia cooperation and the future development trend. It is hoped that the research in this paper can provide useful references and insights for understanding state behavior and international relations.

Theoretical framework

Based on the theoretical framework of realism, this paper takes the entry of Chinese branded automobiles into the Russian market as the object of study, and probes deeply into the motivation behind this transnational market strategy, the implementation process and its multidimensional impact. Realist theory emphasizes that the main behavior of states in international relations is based on the pursuit of power and interests. Within this theoretical framework, this paper argues that the transnational market strategy of Chinese branded automobiles is not only a pursuit of economic interests, but also a flexible response to national interests and changes in the pattern of international relations.

In exploring the successful entry of Chinese car brands into the Russian market, Kenneth Waltz's neorealist theory provides an important theoretical foundation. In his Theory of International Politics, Waltz provides an in-depth analysis of how states define their actions and strategies through the pursuit of their own survival and power in an anarchic international system^[1]. This theoretical framework not only allows us to understand the strategic behaviour of Chinese auto brands in the context of broader international political and economic changes, but also reveals that this action is not only a pursuit of economic interests, but also a proactive adaptation and tactical layout of the balance of power in the shifting international relations. Particularly in the context of the sanctions imposed on Russia by the West, this transnational market strategy of Chinese automobile brands demonstrates the complexity of economic co-operation and political interactions between states, as well as the importance of safeguarding national interests and enhancing international status in a multi-polar international system.

Secondly, according to Degtyarev and Khudyakova's analyses, the concept of the balance of power provides insights into understanding the co-operative relationship between Russia and China^[2]. This co-operation is not only based on the economic interests of both sides, but also reflects the strategic consideration of seeking a more balanced position in the global political and economic landscape. By exploring the historical background and practical process of Sino-Russian economic cooperation, we can see that the deepening of Sino-Russian cooperation has not only helped the two countries to cope with external pressures, but is also a reflection of the two countries' search for greater influence on the global stage. Like the entry of Chinese automobile brands into the Russian market, the close cooperation between China and Russia is a strategic response to the changes in the international political economy, reflecting the core value of realist theory in explaining international relations.

Therefore, when analyzing the background, motivations and impact of Chinese automobile brands entering the Russian market, we need to pay attention not only to economic factors, but also to have a deep understanding of the significance of this behavior in the international political and economic landscape. By combining realist theory and an in-depth historical and current analysis of Sino-Russian cooperation, this paper aims to provide a comprehensive perspective to better understand the dynamics of Sino-Russian cooperation in the current international system and its potential impact on the global political-economic landscape.

Historical background of Sino-Russian cooperation

China has been endeavouring to promote the development of the international political and economic order in a more equitable and reasonable direction. On the economic front, China actively participates in global economic governance, supports multilateral trade and opposes unilateralism and trade protection. In the political sphere, China advocates the democratisation of international relations and stresses equality and respect among countries.

In their co-authored book, Evgeny Grachikov, a renowned Russian international relations scholar, and Xu Haiyan^[3], an expert at the Chinese Academy of Social Sciences, shed light on China's relationship with international organisations and pointed out that China wants to play a more important role in the international arena, especially in the global competition with the United States. This shift reflects the evolution of China's role in the international system from marginalised participant to active player and even leader.In his article, Evgeny Grachikov provides an in-depth look at the diplomatic strategies, theories and practices of New China over the past 70 years of its existence^[4]. It elaborates on Xi Jinping's view of global governance, especially the idea of a community of human destiny. It provides a theoretical basis for China's actions in international organisations. This perspective emphasises China's contribution to the establishment of a more equitable and rational international political and economic order.

Evgeny Grachikov, in his research with Chinese scholar Zhou Xiaoyu, discusses how China's stance on the Russian-Ukrainian conflict clearly reflects the prioritisation of its foreign policy in full service of its national interests^[5]. It reveals China's diplomatic considerations in safeguarding its core interests, promoting peaceful development and achieving a balance between national security and development. China has skilfully balanced its national interests in its relations with Russia and Ukraine, in which relations with Russia are mainly based on global strategic considerations. This reflects the flexibility of China's foreign policy and its positive response to the complexity of international relations.

The historical background of Sino-Russian cooperation can be traced back to the early 1990s, when the Soviet Union disintegrated and Russia became an independent country supplement. During this period, the Russian economy faced great challenges and was in urgent need of external support and cooperation to promote economic recovery and development. At the same time, China was actively promoting its reform and opening-up policy, accelerating the pace of economic development and seeking to establish economic cooperation with other countries^[6]. Against this background, China and Russia have begun to gradually strengthen their economic cooperation. The two sides recognize that they have strong economic complementarities, with Russia possessing rich energy and raw material resources and China having a huge market and labor resources. This complementarity provides a good basis for economic cooperation between the two countries.

With the strengthening of political relations between the two countries, China-Russia economic cooperation has been further promoted. On June 5, 2019, the heads of state of China and Russia decided to elevate the relationship between the two countries to the "China-Russia Comprehensive Strategic Collaborative Partnership in the New Era".On March 21, 2023, the two heads of state decided to upgrade the bilateral relationship to the "China-Russia Comprehensive Strategic Partnership of Cooperation in the New Era"^[7]. The two heads of state jointly signed the "Joint Statement of the People's Republic of China and the Russian Federation on Deepening the Comprehensive Strategic Partnership of Cooperation in the New Era"and the "Joint Statement of the President of the People's Republic of China and the President of the Russian Federation" and the Joint Statement of the Russian Federation on the Development Plan of the Key Directions of China-Russia Economic Cooperation before 2030^[8].

Leaders of the two countries have exchanged frequent visits and signed a series of important cooperation documents, providing political guarantee and policy support for economic cooperation. At the same time, the two countries have also established a number of economic cooperation mechanisms and platforms, such as the mechanism of regular meetings between the Chinese and Russian prime ministers and the China-Russia Sub-Committee on Economic and Trade Cooperation, which facilitates the cooperation between enterprises of both sides.

In recent years, China and Russia have launched extensive cooperation in trade, investment, energy, science and technology. Trade cooperation has always been one of the key areas of China-Russia economic cooperation^[9]. The trade volume between the two countries has been growing and the trade structure has been gradually optimized, shifting from energy and raw materials to more diversified products. Investment cooperation has also made remarkable progress, with enterprises from both sides setting up a number of internationally influential projects in each other's countries, involving energy, minerals, agriculture, manufacturing and other fields.

After decades of development, China-Russia economic cooperation has achieved remarkable results. The bilateral trade volume increased from US$5.86 billion in 1992 to US$7.66 billion in 1993, and China gradually became Russia's second largest trading partner. Although the economic and trade relations between the two countries suffered setbacks due to capital shortages and tariff increases from 1994 to 1998, and the trade volume fell sharply, it gradually recovered since 1999 and ushered in rapid growth. By 2008, China-Russia trade volume had exceeded US$50 billion. It reached a peak of US$110.757 billion in 2019. Although it fell slightly in 2020, it still remained at a high level of US$107.76 billion, showing the strong resilience and broad prospects of China-Russia economic cooperation^[10].

In 2023, China and Russia not only achieved and exceeded the trade targets set by the two heads of state ahead of schedule, but also pushed the annual trade volume to more than US$240 billion. This significant trade growth further consolidated China's position as Russia's most important trading partner. China and Russia have in-depth and steady cooperation in many key areas such as energy, aerospace and technology. In addition, with the increasing optimization of trade settlement and logistics channels, the pragmatic cooperation between the two countries is not only solid in foundation, but also high in value and strong in complementarity. This cooperation model provides strong support and impetus for the development and revitalization of both sides^[11].

This process fully demonstrates the deepening of China-Russia economic complementarity and political mutual trust, as well as the determination of both sides to jointly respond to challenges and seize opportunities. At one end, Russia's entry into China's geo-economic orbit is an inevitable consequence of the logic of the international market. China needs large amounts of natural resources, and Russia is a major supplier of these resources. On the other hand, the Ukrainian crisis has made Russia more aware of the importance of diversifying its trading partners, and China's stability and reliability have made Russia more inclined to strengthen its economic cooperation with China^[12]. Russia is an important partner for China in solving all the central logistics problems in the west. In addition, Russia controls the logistics of goods between China and Europe and has the ability to utilize its resources to fully satisfy China's demand for Middle Eastern oil^[13]. At the same time, Moscow sees China and its continued demand for Russian energy and commodities as Russia's best chance for economic recovery after the epidemic^[14]. Overall, the historical background of Sino-Russian economic cooperation is based on a combination of factors such as economic complementarities between the two countries, strengthened political relations, and changes in the global economic situation. In the past decades, Sino-Russian economic cooperation has achieved remarkable results and made significant contributions to the economic development and international status of the two countries.

Chinese car brands are flooding the Russian market

Li Jianmin, a researcher at the Chinese Academy of Social Sciences, in his article, criticized the more than 100 rounds of sanctions launched by the West against Russia since the Ukrainian crisis in 2014. The characteristics of the sanctions are long-term and normalized^[15]. Sanctions from the West have not only interrupted Russia's economic cooperation with the West, but have also put the development of its automotive industry in jeopardy. Comprehensive communication between regions of the Russian Federation has also been severely hampered by the lack of developed automobile production and a competitive automobile market. To add insult to injury, all of Russia's automotive companies have been hit by sanctions, with a large number of Western automotive companies choosing to leave the country. "Leading automakers such as BMW, Renault, Hyundai, Toyota and Ford have announced the temporary closure of their plants in Russia, while others such as Audi, Porsche and General Motors have stopped supplying cars to Russia^[16]." This series of withdrawals and supply stoppages has left the Russian automobile market in unprecedented distress.

For European and American brands, leaving is not a simple decision. Brands need to weigh various factors and choose the most appropriate way of exit. Some brands chose to be decisive and simply closed all their stores in Russia. Others opted for a more moderate approach, such as looking for a local buyer and a smooth transition of assets and business. Of course, there are also brands that choose to continue operating with local partners to minimize risk^[17].

When these brands left, the Russian market was inevitably shaken. For consumers who were loyal to these brands, their choices suddenly became limited, and for the Russian economy as a whole, it was certainly a blow. Job losses, supply chain disruptions, and the reshaping of the market's competitive landscape are just some of the many chain reactions brought about by this wave of exits^[18].

The move creates a significant power vacuum within the Russian automotive industry at a time when European and American car brands are pulling out of the Russian market due to political pressure and economic volatility. Seeing an opportunity to expand their presence in the Russian market, Chinese automakers have flocked to enter the Russian market, filling the void left by Western automakers. According to statistics from the China Association of Automobile Manufacturers, Russia has become China's largest export market for automobiles. Chinese automobile companies currently account for 36% of the new car market, and this proportion has continued to grow in recent years, from 4% at the end of 2020 to nearly 10% at the beginning of 2022. At the same time, in 2023, Russia established the China Association of Automobile Manufacturers, which is composed of Chinese automobile importers and top brands, marking the gradual increase in the international influence of China's automobile industry^[19].

As more and more Chinese auto brands enter the Russian market, Russian auto consumers are gradually accepting and recognizing Chinese cars. This trend not only highlights the strength and ambition of Chinese automakers, but also brings new hope for the recovery of the Russian auto market..." According to statistics, as of October 2023, the number of brands of Chinese automakers in Russia has increased to 41^[20]. The number of dealers has increased to 3,550, with plans to increase further in the coming years^[21].

This growth trend is expected to continue for some time to come as Chinese automakers continue to improve their competitiveness in terms of product quality, technological innovation and marketing. Meanwhile, as more and more Chinese auto brands enter the Russian market, Russian auto consumers are beginning to gradually accept and recognize Chinese cars. This not only helps to enhance the brand image and market share of Chinese automobiles, but also lays the foundation for in-depth cooperation between China and Russia in the automotive field. Against the backdrop of the withdrawal of Western automakers from Russia and sanctions, Russia has significantly increased its imports of Chinese automobiles, helping China become the world's largest auto exporter^[22].

"Experts from AUTOSTAT, a leading analytical organization in the field of statistics and analysis of the Russian automotive industry, have published a forecast of new car sales in 2024. They believe that in the new year sales on the Russian automotive market will be higher than last year's sales. The experts believe that under the pessimistic scenario of development, the market volume is still estimated at 1 million units (-6% by 2023). In the basic forecast, experts predict 18% growth of the market in 2024 to 1.25 million new passenger car sales. In the optimistic scenario, this figure is 1.4 million copies (+32%), but experts do not exclude higher results. So, in either case, the Russian automobile market will keep growing^[23]." This growth trend offers great market opportunities and room for growth for Chinese automakers.

Before Western sanctions, Russia and China had hot cooperation at the governmental level and less frequent civil interactions. After the Ukraine crisis, full cooperation with China is the best choice for Russia in the face of pressure from the West^[24] . Chinese brands were able to enter the Russian market smoothly and steadily, also with the support and permission of the Russian government, and at the same time is a microcosm of the deepening of the bilateral strategic partnership between Russia and China. This not only reflects the strength and competitiveness of China's automobile industry, but also Russia's recognition of Chinese products and attention to the Chinese market.

The close cooperation that China and Russia have established in a number of areas is based not only on economic interests, but also reflects the willingness of both sides to support each other in international politics, especially in the context of confronting Western pressures^[25] . The deepening of this strategic partnership with the entry of Chinese branded cars into the Russian market will also help both sides to create a more favorable balance of power in the evolution of the international order.

The success of Chinese automakers in the Russian market is not only in line with China's national interests, but also lays a solid foundation for deeper cooperation between China and Russia in the automotive sector. This not only helps to enhance the status and influence of Chinese automobile brands in the global market, but also brings new hope for the recovery and development of the Russian automobile market^[26].

At the same time, the performance of Chinese automakers in the Russian market further verifies the applicability of realism theory in the changes of international political and economic patterns. By accurately grasping the international situation and market changes, the interests of enterprises and the country are maximized. This not only provides useful insights for China's development in the global automobile industry, but also provides lessons and references for other industries to expand in the international market.

Conclusion

With the deepening of cooperation between China and Russia in recent years, especially the steady growth in the field of trade cooperation, the foundation has been laid for the entry of Chinese automobiles into the Russian market after the imposition of sanctions by the West. Against the background of economic sanctions imposed on Russia by the West, a power vacuum has emerged in the Russian automobile market. Chinese branded automobiles accurately identified and quickly seized this opportunity to successfully enter and expand their market share in Russia. This move not only enhanced China's influence in the global automotive industry, but also further consolidated the strategic partnership between China and Russia. The growth of Chinese automobile sales in the Russian market reflects the gradual acceptance and recognition of Chinese products by Russian consumers, and is the inevitable result of the continued and stable development of the Sino-Russian strategic partnership over the years. The close cooperation between China and Russia in the economic field and the successful performance of Chinese automakers in the Russian market not only meet China's national interests, but also lay a solid foundation for in-depth cooperation between the two countries in the automotive field, bringing new hope for the recovery and development of the Russian automotive market. This transnational market strategy is not only based on the pursuit of national interests and economic autonomy, but also a flexible response to changes in the international political and economic landscape. From a geopolitical perspective, this economic behavior also strengthens the confidence of China and Russia in political and economic cooperation in the face of Western pressure. The deep and comprehensive cooperation between China and Russia has contributed to the stabilization of world power relations and injected energy into the maintenance of world peace.