Deal of the Century

The Deal of the Century comprises of a multitude of extremely lucrative industrial and commercial offers by Chinese firms and even the Chinese government itself to Russia with regards to its military industrial complex.

Land

In light of the Russian cancellation of the T-14 project, Norinco has offered Uralvagonzavod an extraordinary $500 million deal to purchase the intellectual property rights to the T-14 project in its entirety alongside 2 prototype units, the injection of foreign currency expected to be extremely valuable to the Russian company. This is coupled with an MoU for an additional $200 million from the Export-Import Bank of China into the UVZ supply chain and production to fulfil the current existing Armata order in the Russian OrBat. This includes funding for equipment renovations, 2,000 experienced Norinco engineers, alongside exports of tooling, advanced machinery and electronics and a revamp of the UVZ production process to streamline the production process.

Norinco is also offering to set up 2 new factories in Russia to the Russian Government, under a new subsidiary Norinco Russia. Factories might be understating things, as these are planned to be massive complexes, entirely a self sufficient supply chain for a large portion of required resources like steel or composites, alongside housing for its 30,000 employees. The plants will be expected to hire locally, and would be entirely financed as part of the Belt and Road Initiative, at the cost of around $10 billion in zero-interest 50 year-term loans. As soon as Moscow gives the go ahead cities may begin the bidding process for these complexes.

Naval

In the realms of naval construction, DSIC offers the Russian Navy the usage of its massive drydocks for repairs to the Admiral Kuznetsov, with 10% of the remaining cost covered by a grant from the Chinese government. The repairs would likely be completed in time at Dalian, for a 2023 in service date, instead of the likely delay to even later should it be serviced in Russia.

The People’s Liberation Army Navy has also offered CV-16 Liaoning to the Russian Navy by 2026, allowing it to replace the troubled Kuznetsov with an extremely similar ship, but much more modern and far less troubled. This includes an offer to purchase accompanying FC-31 naval fighters which would also be made available to the Russian Navy once it’s available, likely in 2025. CV-17 Shandong would also likely be available in 2030, though it is far more Sinofied and might not completely integrate smoothly with the Russian Navy.

A CATOBAR carrier variant of the Type 076 is also offered to the Russian Navy, at 46,000 tons and with 2 catapults it’s best compared to a conventional Charles de Gaulle.

In terms of surface ships, Chinese companies CSSC Marine Power and Hudong Heavy Machinery Co. are offering to export copied LM2500 gas turbines to the Russian Navy, integration with existing Russian warships awaiting powerplants will have to be done by the Russian Navy however, though 100 PLAN engineers will be sent to Russia to assist in this process. It would entail redesigns of certain sections of the ship especially those around propulsion, but better delayed than to never have them.

The Chinese Government has also offered a MoU for the Russian Ministry of Defense to purchase ships off the shelf from Chinese shipyards, including the potential for Russian designs to be built in China. The 4 PLAN Improved Sovremmenyy destroyers are also offered back to Russia, alongside the 2 modernized Type 052B destroyers all to be released from PLAN service between 2023-2025.

General investments into Russian shipyards are also promised, with CSIC and CSSC promising up to $10 billion in investment projects into expanding Russian shipbuilding and to finally remedy the damage that the loss of Ukraine did to Russian shipbuilding. This however, is an optional offer coming under the condition that the shipyards invested in must be privatized, and CSIC or CSSC will gain a 51% stake in those shipyards.

Submarine cooperation between the PLAN and the Russian Navy is expected to continue strong, with the joint diesel electric attack submarine continuing, with PLAN leadership hoping for 2 types of conventional (one smaller, more leaned towards shallow operations and one ocean going) submarines to be born out of it.

Further cooperation is hoped for in this department however. The PLAN is looking for a license and technology transfer for the Yasen boats for construction at Bohai, and Chinese joint participation in the Laika-class program, promising to bring the best of Chinese electronics and sensors to complement upon Russia’s excellent boat making capabilities.

Aerospace

The last and arguably most important sector, aerospace. Here, cooperation between China and Russia has room to grow.

The state of the Russian electronics industry has left its aircrafts a decade behind competitors. With this in mind, export restrictions on Chinese electronics and sensors will be lifted, clearing the way for Russia to purchase advanced technology from China. Avenues for this to take place can take two routes.

One, the Shenyang proposal, this would see the Shenyang Aircraft Corporation leveraging its extensive Flanker and Russian design experience to form a joint venture with the Sukhoi Design Bureau to design a new Flanker upgrade for Russia, with all the material and composite advancements SAC has made, alongside sophisticated imported Chinese electronics. This proposal will also see 4 facilities being involved in the supply chain, with 1 being SAC’s primary facility in Shenyang, 1 being the final assembly facility, which will remain Sukhoi’s, while the other 2 will be brand new Exim Bank funded facilities to be owned at 60-40 SAC-Sukhoi respectively, to be placed in Russia and would hire from the local pool.

The second is the Chengdu proposal. This will see 2 production plants for the J-20 and its future engine, the WS-15 popping up in Russia (once again funded by the Exim Bank) utilizing the local work force, and to be 40% owned by the Russian Government. These facilities will be a direct part of the J-20 supply line for the PLAAF, and will grant Russia up to 20,000 jobs, and experienced engineers with work experience onthe most advanced aircraft outside of America.

Of course, both of these proposals need not be mutually exclusive.

The third player interested in Russia is the Aero Engine Corporation of China. AECC is looking for commercial partners in Russia to supply it with high quality materials for usage in its production line, facilitated by the full economic power of the Chinese state as a $20 billion mining development package for rare earth and other minerals like Titanium and Tungsten is attached to this offer, once again from our old friend the Exim Bank of China and the Belt and Road Initiative.

Flowing back to China, the Chinese government is requesting a full license and technology transfer for the Tu-160M2, and even a purchase of 12 from Tupolev as a gesture of goodwill to support Russian industry. This include a lucrative contract worth billions of dollars (up to 4-5) to supply China with NK-65 engines alongside its intellectual property rights.

A request for the full IP and design of the Su-57 has also been requested for usage by SAC. Shenyang promises to in exchange, help assist Sukhoi in remedying the Su-57’s poor finish and quality, as well as to assist in scaling up productions.

Lastly, CASC is offering to straight up purchase NPO Energomash for an inflated $800 million.

End note

China is also looking to inject cash directly into the Russian military industry, with the potential gigantic “offset deal” worth billions of dollars, including 24 Su-57, 20 Il-76, 24 Su-35S, 24 Su-30MK2, 40 Superjet 100, 60 MiG-35 and 6 Improve Kilos. This of course is completely dependent on the Russian answer to the above suggestions, all of which could be described charitably as “irresistible” for the dying Russian arms industry, yet highlight the potential for a symbiotic relationship between the People’s Republic and the Russian Federation.