The future of Russia-China military cooperation

Defence deals between Moscow and Beijing continue to be plagued by Russian worries of intellectual property violations.

The potential contract for Su-35s may become the first export contract for this aircraft, which is already being supplied to the Russian Air Force. Source: Sukhoi.org

China will once again start buying arms from Russia, according to Chinese media reports, which claim that a framework agreement has been signed for 24 Su-35 fighter jets and four Lada-class conventional submarines.

A RIR source familiar with Russia's military-technical cooperation with foreign countries was unable to confirm these reports. “During Chinese leader Xi Jinping's visit to Moscow, the issue of military-technical cooperation with Russia was not raised at all,” the source said.

In the meantime, the very fact that these reports appeared in the Chinese media prompts one to ponder over the current and potential Russian-Chinese arms contracts and wonder why many of the previous contracts have ended in scandal and how to avoid new controversy.

Judging by the wording in Chinese media reports (“framework agreement”), it is not a firm contract but rather an expanded version of a memorandum of intent. Nevertheless, the reported figures, 24 Su-35 fighter jets and four Lada-class submarines, are already being actively discussed in the media.

Launch Customer

The potential contract for Su-35s may become the first export contract for this aircraft, which is already being supplied to the Russian Air Force. The notion of ‘a launch customer’ is very important in arms sales since it is often that the success of this deal sets customers' attitude to the product for years to come.

Potentially, the Su-35 may be supplied to a variety of regions. These include solvent countries that used to buy Su-30MK2 aircraft, like China, Vietnam and Indonesia. In addition, Russia has for a long time been seeking an opportunity to get through to less obvious customers too, for instance Brazil. The launch of the Chinese deal will make it much easier to further promote the Su-35 on the foreign markets.

With help from the Far Eastern friend

However, the story with the submarines is more intriguing. To begin with, there is speculation that the deal will involve not Lada submarines (Project 677 conventional submarine) but their export modification known as Amur-class submarines.

In effect, it is not yet a finished product but a set of requirements for its technical characteristics. And this set of requirements has been waiting for a large and moneyed customer that could finalise the terms of reference and pay for moving the concept to a working design and then into production.

That is why the potential Chinese order can be considered important: it will help develop and test new technological solutions for the Russian Navy, with the help of Chinese capital.

Russian weapons return to China

What does it all mean? Ten years ago the Russian defence industry's passionate love affair with China saw if not an abrupt end then a considerable cooling-off, particularly in the area that today is once again coming to the fore, in military aircraft manufacturing.

In 2003 China, taking advantage of the provisions of the existing contracts for the licensed assembly of 200 Su-27SK fighter aircraft (under the name of J-11), severed the existing agreements, thus robbing Russia of half of its expected revenues.

The row was caused by a scandal surrounding the J-11B version of the aircraft. The Russian side maintained that China had begun introducing changes to the model and producing an aircraft of its own, based on Russian intellectual property and without paying anything in compensation. And now Russia is ready to return to the Chinese combat aircraft market. It is therefore fair to wonder: what will be done differently this time round in order to avoid similar problems?

The first thing that one should pay attention to is the number of aircrafts sold. If the supplier is seriously concerned that China will buy the minimum required number of aircraft and then will just end the agreement, then the talks should be about firm supplies of a maximum possible number of fighter jets.

The toughness of China's position in the talks on the number of Su-35s, which have been going on for a long time, is impressive. At first, there were rumours that the number would be as sought by the Russian side, 70-75 aircraft; whereas China wanted not more than 10-12. At the time, some experts said off the record that “there was no point in selling fewer than a hundred.”

A year ago, the figure under discussion was already 48, with the understanding that it was the lowest possible limit. Now it too has been halved. From the formal point of view, victory in this tug-of-war has gone to China.

New format or old mistakes?

It is not yet clear to what degree Russia will be able to protect its know-how in the deals that have been announced. In principle, the issue here is not such much about guarantees of “integrity” (it is clear that the sold aircraft will be studied in detail and, if possible and necessary, reproduced) as about a set compensation for such disrespectful behaviour. That is to say that the amount of the contract should include an assessment of risks associated with unsanctioned copying.

However, of far more interest is another aspect of the deal – what is in effect a joint Russian-Chinese project for developing a conventional submarine. Here Russia is starting to use a method that it has already successfully tested in cooperation with, for instance, India. Compared with purchasing ready models or agreeing licensed assembly, this is a new step in developing military-technical cooperation. The question is whether the possible benefits of the joint development of technologies for conventional submarines will make up for the risks associated with the supply of Russia's newest fighter jets to China. It is not a coincidence that both these deals were announced as a single package. This is probably how they should be viewed: as an integrated compromise.

A lot in the Russian defence industry's future foreign strategies will depend on whether this will develop into a new format of military-technical cooperation or a repetition of old mistakes.

Indrus.in