Negotiations over the sale of Russian fighter jets to China have broken down over Russian concerns about Chinese "technology cloning," Russian media reported March 10, citing defense ministry officials. More than just an isolated disagreement, the dispute represents a larger shift in the trading dynamic between the two countries as Moscow becomes increasingly concerned about the pace of Chinese reverse-engineering.

This most recent disagreement was over negotiations between Moscow and Beijing for as many as 50 Russian Su-33 "Flanker-Ds." The airplane is capable of operating from an aircraft carrier and is used by the Russian navy. The acquisition by China would be yet another signal that it is making progress in its long-term plans to field a small fleet of aircraft carriers.

China's request for an initial delivery of only two airframes appears to have been the stumbling block, according to Russian reports. Russian concern over China’s technology cloning — reverse-engineering of a Russian design in order to build its own domestic copy — is not unfounded. In the mid-1990s, China made arrangements to locally assemble 200 kits of components provided by Russia for Su-27SK "Flanker-Bs" as the J-11. Nearly a decade later, Moscow discovered that the Chinese were also building a J-11B — a copy made with Chinese-built components. The Kremlin canceled the original J-11 deal, but the contract was already nearly half complete.

For much of the post-Soviet period, Russian-Chinese arms sales were the product of a deeply symbiotic relationship. Chinese expenditures on Russian defense hardware were absolutely critical to sustaining the struggling Russian defense industry. That investment allowed the Chinese military to make major strides in fielding modern military equipment. Indeed, Beijing has been one of the principal beneficiaries of permissive Russian sales, receiving more late-model S-300PMU2 strategic air defense systems than any other country and becoming the only export recipient of the SS-N-22 "Sunburn" supersonic anti-ship missile.

Long Russia's single biggest customer, China has bought and dissected much of Russia's best military hardware and has begun to build copies domestically. This is not new Chinese behavior (and it is hardly limited to Russian products), but the pace has become a matter of concern to Russia. China has made it clear that it is using the imported technology to build its own domestic defense industry and that it does not intend to rely on Russia forever. In the long run, with Russia's defense industry in danger of losing its innovative edge, Chinese innovation could bring certain indigenous technologies into direct competition with Russian technologies. Hence, Moscow is having to examine which weapon systems and technologies it is willing to share with the Chinese and which are not worth the cost.

When figures emerged in 2008 suggesting a noteworthy decline in Russian sales to China, Stratfor noted the significance. Such a decline in sales will not necessarily benefit China, which still has much to learn from Russia, and the Su-33 is a perfect example. Modifying an aircraft so it can operate from a carrier and sustain the beating of arrested recovery is an immense challenge. Similarly, China still has more to learn in areas such as nuclear submarine propulsion, long-range air transport and strike aircraft. (There is also room to cooperate with Russia in commercial endeavors.)

The Russian-Chinese partnership has not seen its final days, but it is undergoing a fundamental shift. China is now capable of replicating defense hardware of the late Soviet period. Although their copies are not generally thought to be as good as the Russian originals, they are laying the groundwork for Beijing's own domestic defense industry, and compared to Russia, China has no shortage of young, eager and talented engineers to take apart and improve upon existing designs.

And while China has not yet begun to move beyond Russia, it has made dramatic progress in closing the technology gap in the last decade. For example, China now offers an anti-radiation version of the HQ-9 air defense system (a hybrid of American Patriot and Russian S-300PMU technology that closely resembles the S-300) for sale on the open market as the FT-2000. More limited in capability than the Russian S-300, it is still a sign that China may someday compete against Moscow with products heavily grounded in Russian technology.