by Mister Unknown

When Sino-Russian collaboration is discussed in the media – be it western, Russian, or Chinese – the most-often discussed areas of cooperation are energy (e.g. the big gas deal last year), defense (e.g. Russian arms sales & joint exercises), and more recently, the new Silk Road as part of the Eurasian integration effort. It’s perfectly understandable that these are the focus items in the press, since they’re the “big wins” with big dollar amounts and lots of photo ops/media sensationalism attached to them. However, there are other potential areas of near-future collaboration that are relatively smaller in scale, but would be just as strategically significant and mutually beneficial. Three such potential paths for cooperation come to mind right away: joint use of space launch facilities, shipbuilding, and industrial robotics/internet of things.

1. Space launch facilities

There have been recent discussions of very ambitious Sino-Russian collaboration in space, including the possibility of a joint lunar base. It’s great to see that both sides are thinking big and long-term, but there are short-term arrangements that would yield immediate benefits, and pave the way for further joint space exploration. One such short-term win would be for China to allow Russian access to the Wenchang Satellite Launch Center on Hainan Island, which completed construction in 2014. Wenchang is located significantly closer to the equator than Russia’s other commonly used cosmodromes, be it Plesetsk, Vostochny, or Baikonur. This geographical advantage would allow Russian rockets launched from Wenchang to have significantly greater payload and fuel efficiency. In return for the use of Chinese facilities, China could seek a usage fee, or a discount on RD-180 rocket engines if that purchase goes through. Since both sides already established a precedent on joint facilities use for Beidou and GLONASS ground stations, this would be a logical next step.

2. Shipbuilding

The recent Mistral debacle has shown that France is a politically unreliable defense partner for Russia. This is a potential opportunity for China to step in as an alternative supplier. China is in the process of developing its own Type 075 LHA. At an estimated 30-40 thousand tons, the Type 075 has a bigger displacement than what the Russian Navy originally had in mind with the Mistral purchase, but it will no doubt enhance the Russian Navy’s ability for rapid amphibious deployment and fulfill its operational needs. Russia could order one or two Type 075s for quick deployment, and acquire a co-production license for indigenous construction and customization. An alternative model for collaboration is for Russia to help finalize the design of the Type 075, as it did for the design of the PLAN’s Type 054A class frigates – arguably the most successful frigate design in the PLAN to date, then acquire the co-production rights in return, and start indigenous production (with Chinese supplying parts as needed). There is no doubt that Russia could design and build its own LHA eventually, but China’s Type 075 could offer a faster path towards a Mistral alternative. For China, in addition to the incremental revenue for its shipyards, becoming a supplier to a first-rate military force – especially a supplier of big ticket naval items – would be a huge prestige boost to its defense industry, and open the door for further defense collaboration.

Beyond the immediate benefits to both sides, such a project (along with others) would pave the way for a new model of Sino-Russian defense cooperation. In the past, the cooperation model consists largely of one-way export of arms and technology from Russia to China. As the PLA & the PRC’s defense industry continues to modernize and close the gap with the US & Russia, this existing model will inevitably become less appropriate between the two partners. A new model of defense cooperation should focus on joint R&D2-way technology sharing, and institutional exchange. There are signs of this happening in the form of a joint helicopter development project & more frequent joint exercises; shipbuilding is yet another area to implement this new model.

3. Industrial robotics and IoT

Industrial automation and Internet of Things (IoT) adoption is by far the most high-impact area for collaboration. Both countries are facing demographic problems that could potentially hinder their long-term economic development. China’s population is nearing its peak, and will soon go into decline – not a bad thing given the resource & environmental pressures it’s facing – but this will result in a workforce shrinkage that is already driving up wages today. On the other hand, Russia has been suffering the impacts of a shrinking and aging population ever since the disastrous 90s. Despite signs of recent demographic recovery, Russia’s wage growth is still outpacing productivity. Industrial automation and internet of things will be crucial mitigating technologies to offset the demographic impacts in both countries.

The good thing about IoT in the industrial/public infrastructure space is that most such devices (especially edge devices) do not require cutting edge, best-in-class semiconductors; the low-end micro-controllers needed in the majority edge devices are well within reach of China’s domestic manufacturing capabilities. Both automation and IoT adoption have recently taken off in China. Given Russia’s highly educated population, along with a thriving software and IT industry, there is little doubt that with the right investments and strategy, Russian companies can capture a lucrative piece of the approx. $1 trillion dollar IoT software & services market – around 50% of which resides in Asia.

The bottom line here is that both countries have strong incentives to advance automation and IoT sector, and both countries possess – to some degree – the comparative advantages needed to pursue said incentives. Hopefully Cybernaut’s recent investment in Skolkovo will be a sign of things to come in both hardware and software partnership.

Overcoming barriers

With any form of large scale collaboration, there will be no shortage of logistical, political, commercial, cyber-security, and cultural obstacles that could obstruct the path towards deeper partnership. However, there is reason for optimism given that precedents for constructive partnership already exist in all of the aforementioned spheres of interaction.

Mr. Unknown [contributing author at http://blog.hiddenharmonies.org/]:At the age of 10, Mr. Unknown immigrated to the US from China with his parents. He has had an unusual combination of experiences ever since – an enlistment in the US Army after high school, and a business development job in Russia after college. These experiences prompted his reexamination of pervasive political dogmas in western societies. Mr. Unknown recently completed graduate studies in business and environmental science. He is a finance analyst at a tech company, and hopes to advance his career in China and/or the former USSR at some point.

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