The Geopolitics of the World’s Weirdest BFFs: Russia, China and Everyone In Between

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• The hottest topics in geopolitics? Ukraine, Russia, China and the interplay between them — as well as the U.S., of course.
• Marko Papic, a global geo-macro strategist, says that China and Russia aren’t natural allies. So, investigating their relationship can tell us quite a bit about the motivations of each country at any given time.
• Why are China and Russia such strange bedfellows? Does their alliance pose a threat to the Western world? Marko shares his insights on this relationship and more.

China and Russia have a lot in common: massive land, the color red, political autocracy — the list goes on. However, their alliance isn’t nearly as strong or as sensical as one might think.

“China’s a weird BFF to Russia,” says global geo-macro strategist Marko Papic. It “hasn’t really done what you would expect an ally to do — other than buying [Russia’s] oil,” he adds.

So why are China and Russia working together at all, seemingly in opposition to America and its allies?

Marko joined Cem Karsen and me for a Global Macro series of Top Traders Unplugged to talk about the evolving power dynamics between the United States, Europe, Russia and major Asian players, especially China. Read on for some of the timeliest insights he shared on the relationship between America’s two biggest rivals.

Mission unconquered

More than two years on from Putin’s full-scale invasion of Ukraine, the regional conflict still leads to volatile and elevated commodity and energy prices around the globe. As a result, the prospect of additional Russian aggression in the Baltics could make investing in Europe less appealing, says Marko.

Russia’s actions over that period of time, however, suggest they are hesitant to fully commit to major offensives like its incursion into Ukraine. Marko notes that the Russians seem constrained, partly by domestic factors — polls indicate that the majority of Russians are tired of the conflict and want it to end. Although those polls have pro-Kremlin bias, they suggest that Russians believe they are winning, which could help Putin de-escalate gradually.

In terms of territorial ambitions, Russia will likely still attempt to secure certain areas in the Donbas region that remain unconquered. A major new offensive seems unlikely, because the country lacks the domestic support for — and political feasibility of — a significant new military campaign in Ukraine or elsewhere.

Power modes

Cem, who characterizes Russia as “like a vassal state of China,” sees the Ukraine war as part of a larger, simmering global conflict.

“The Hamas [attack] against Israel as well seems like … another front of the same war,” he says, suggesting that major conflicts happen “due to a [nation’s] feeling of weakness … of being encircled or somehow at risk.”

So he thinks the Russia-China alliance grew out of necessity.

“What happens the more they become encircled, the more that Europe is stronger and doesn’t have an energy constraint?” Cem asks. “[Europe’s strength and Russia-China’s relative isolation] may mute the short-term war in Ukraine, but does it make the existential risk of a bigger global conflict to hot war, or am I just being polemical here?”

“I think if the world did become bipolar [in its power structure, any] equilibrium … would be a difficult one to maintain,” Marko replies.

Russia and China together “stand no chance against the West, really,” he adds. “Japan, South Korea, Taiwan, Australia, New Zealand, Canada, the EU and the United States of America are just overwhelmingly powerful technologically, economically, materially from a resource perspective. … We’re not fighting trench warfare anymore.”

Sure, China is one of the most populous countries on earth — although the population is “increasingly aging,” Marko argues. “So I think that a bipolar distribution of power would serve American interests.”

Allies and embargos

Marko says that the U.S. likes to tell the Europeans, Japanese and Indians that because Russia and China are allies, the rest of the world needs to be on the American side. U.S. leaders argue that we need to create a “containment structure” around China similar to the one we had around the Soviet Union.

“The rest of the world just doesn’t see it that way,” says Marko. “And I think the rest of the world is kind of right.”

So why hasn’t this uniquely American foreign policy propaganda worked?

Marko argues that China is a “weird, strange ally” that “hasn’t really given [Russia] any military help.” He notes that the American government is watching their interactions carefully.

“If there was evidence that China was sending military equipment to the Russians, we would have found it,” he says. “In fact, there was a case in which the U.S. did find that there were drones being sent to Russia. It ended up being some college student that started a drone company in Outer Mongolia … unbeknownst to the fact that Beijing didn’t want him to do that.”

The upshot of the current environment: “The Chinese have maintained an arms embargo on Russia,” Marko continues. “There is some seepage, sure — through Central Asia — but there’s seepage through Dubai and seepage through EU countries. So let’s not make a big deal out of it.”

‘Geopolitically promiscuous’

Actors like Saudi Arabia, India and Indonesia — as well as South Africa, Brazil and other countries in the global South — are increasingly aware that neither China nor the U.S. are as powerful as their counterparts during the Cold War (America and the Soviet Union).

“It actually pays to be geopolitically promiscuous and sort of flip and flop between the two,” he says. “Because you end up being showered with money by both superpowers. It’s almost like children of divorced parents: They get two Christmases and two birthdays from mom and dad.”

Based on most nations’ behavior, “it’s pretty clear that the world is more multipolar than bipolar,” Marko says.

“The U.S. has tried very hard to create a very clear bipolar structure because it would solve all of America’s problems. If you could convince Europe and Japan and South Korea and India, that [they must] pick one or the other camp, if you could convince the rest of the world … it would be ‘game over’ for Russia and China.”

Alliances and aspirations

Although the Chinese “have great pride and belief that they are the next superpower,” Marko thinks that the alliance between the Kremlin and the Chinese Communist party (before Russia invaded Ukraine) was “because China has a commodity issue.”

Marko sees this as a “true weakness” for China, and one of which it’s well aware. The only way China can maintain economic power (despite its relative lack of commodities) is through an alliance with Russia, he explains.

“And I do think China — and I could be wrong … does have long-term aspirations,” he adds.

China wants to be the richest and most powerful nation on earth — “but so does every other country,” says Marko.

As the geopolitical chessboard continues to evolve, China’s strategic maneuvers and partnerships will shape its trajectory toward superpower status. As we look ahead, we’ll keep you apprised of all the moves that drive our interconnected world.

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This is based on an episode of Top Traders Unplugged, a bi-weekly podcast with the most interesting and experienced investors, economists, traders and thought leaders in the world. Sign up to our Newsletter or Subscribe on your preferred podcast platform so that you don’t miss out on future episodes.