How The “Russian Davos” Exposes Putin's Utter Dependence On China
The Spief, the political-economic forum dear to the Russian president, takes place this weekend in Saint Petersburg. The West will be absent, as the Kremlin increasingly appears beholden to Beijing.
PARIS — Dubbed the “Russian Davos,” the annual affair had become a favorite Vladimir Putin ritual in his hometown of Saint Petersburg. Every year in mid-June, the head of the Kremlin was proud to show off his native city and attract foreign investors. Spief, the forum orchestrated to rally all the Russian political-economic elite and seduce the world’s top brass, featured panels by day and parties by night.
Sixteen months after the beginning of the Kremlin’s “special military operation” in Ukraine, “it’s the end of the Spief”, says a European regular of the event. The forum is now a shadow of its former self. The “business” program pales into insignificance. But, above all, the guest list is looking bleak.
Without surprise, while the G7 just promised new sanctions against Moscow and the European Union is getting ready for an eleventh pack of measures, Western investors will be lacking in Saint Petersburg. But, for the first time ever, no Western journalist is allowed there.
Like others, Les Echos first received the organizers’ accreditation. Then the Kremlin came in behind: “hostile countries will be annulled,” said a high-level source. Of course, he’s talking about the accreditation cards, not the countries as such. But the Freudian slip reveals the current mood.
Excluded from the G8
The authorities’ message: Russia is not isolated. Spief must therefore welcome political leaders and businessmen coming from “friendly” countries. The guest of honor — which was France in 2018, with the presence of President Emmanuel Macron — is this year the United Arab Emirates. This “international” forum will be attended by African, Asian and South American guests. And maybe, like last year, by some from the Taliban.
But, in reality, there will not be many foreign delegations from the Global South, including among the BRICS members. Since he was excluded from the G8 and chose not to participate in the latest G20, it’s now officially Vladimir Putin’s preferred global arena.
On an almost permanent tour of the “Global South,” his Foreign Minister Sergey Lavrov has been criss-crossing African countries in particular.
RUSSIA, ST PETERSBURG - JUNE 13, 2023: People walk past a SPIEF Shop at the ExpoForum Convention and Exhibition Centre, a venue of the 2023 St Petersburg International Economic Forum scheduled for June 14-17.
“The deal of the century”
With the BRICS, Moscow wants to give itself an alternative to the “Western order” it denounces. Its main ally: China. When, last March, presidents Vladimir Putin and Xi Jinping met, they multiplied the “dear friends” and celebrated a “new era” between Moscow and Beijing.
Putin toasted a flagship project that is still hypothetical: “Power of Siberia 2”, the mirage gas pipeline that is to supply China’s powerful neighbor with some 50 billion m3 of Russian gas, originally destined for Europe. Vladimir Putin praised “the deal of the century”. At his side, Xi Jinping was more timid.
But it’s a fact: the economic partnership between the two old communist enemies, whose longstanding mutual distrust remains, is growing. In one year, all sectors combined, their trade has exploded, already reaching a record $190 billion (+30%) in 2022. The cooperation is coming true.
China has largely replaced Europe as the top market for Russian oil. The share of the yuan in Russian foreign trade currencies has soared from 0.5% to 16% in the span of a year. In the Russian Far East, special economic zones are being set up to welcome Chinese investors, who are also very much involved behind the scenes in the development of the “new trade route” to the North, in the Arctic.
Beijing in charge
It’s also more and more visible in the streets of Moscow, as well as in other big cities. Kia and Hyundai, Renault and Volkswagen are of course still omnipresent. But over the last months, Haval, Chery and Geely have made their presence clear. Chinese cars, manufactured in Russia or imported, now account for more than 40% of sales － against 7% in 2021.
Russia is becoming dependent on China.
According to experts, by 2025, they will represent about two thirds. Another sure sign: hotels are filling up with Chinese tourists. The lines of packed buses, a forgotten sight since Covid, are once again becoming part of the Russian urban landscape. In Moscow, as in Saint Petersburg.
The automotive industry, like other Russian industrial sectors, has to turn to China’s life-saving supply chains to make up for the damage caused by Western sanctions, maintain industrial production and satisfy the needs of a consumerist society.
In fact, Russia is becoming dependent on China. Vladimir Putin, who will parade this week at the Saint Petersburg forum, knows the relationship is unbalanced. Standing next to Xi Jinping in March, he admitted being “a little envious” of the efficiency of his powerful neighbor’s “leap forward”, of the system put into place to “develop its economy and strengthen the state”.
In Russia, Chinese businessmen are focusing above all on business, far from political theatrics. At the “Russian Davos”, barring any surprise, few will consider it useful to have made the trip.
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