Trade between Russia and China is no longer booming as it was immediately after Moscow’s full-scale invasion of Ukraine three years ago. In 2024, annual trade between the two was up 1.9 per cent from the previous year to $240 billion (£182 billion). But in the first four months of 2025, it fell 7.5 per cent from the past year to just $71.1 billion (£54 billion), according to Chinese customs data. Chinese exports to Russia are down 5.3 per cent ($30.8 billion or £23 billion), while Russian deliveries to China are down 9.1 per cent ($40.3 billion or £30.5 billion) between January and April.
The drop in Russian exports can only partly be explained by the decline in oil prices. Chinese buyers are becoming more alert to the threat of US secondary sanctions against Russian oil buyers, who transport their goods using blacklisted tankers. The decline in Chinese exports to Russia, on the other hand, can mainly be attributed to the overall cooling of the Russian economy, including consumer and investment demand.
Moscow and Beijing are now more interdependent than ever
However, despite this decline in trade, with sanctions against Russia still in place and the trade war between China and the US only given temporary respite on Monday, Moscow and Beijing need each other more than ever before. Trump’s trade war is now further increasing the interdependence between Moscow and Beijing.
The latest nod to the ‘no limits relationship’ between the two came last week when Chinese President Xi Jinping was Vladimir Putin’s ‘guest of honour’ at the Victory Day celebrations in Moscow. His support has been indispensable to Putin’s war effort and his government’s ability to keep the economy going amid the avalanche of Western sanctions. Without China’s eagerness to buy Russian oil, its readiness to export everything, from cars to microchips, to Russia, and its sometimes lackadaisical observance of the sanctions regime, Moscow would have suffered far more.
Xi and Putin exchange visits annually and spare no superlatives praising the ‘friendship without borders’ between the two nations. However, this friendship is deeply asymmetrical in China’s favour.
Soon after the invasion of Ukraine, Russia found Europe, its traditional oil export market, all but closed. China came to its rescue, becoming the largest buyer of Russian oil. Largely unperturbed by sanctions or moral qualms, Chinese firms are keen to buy Russian oil, preferably at a discount. And with other export options limited, Moscow is ready to sell its oil cheaper.
Russia would like to increase hydrocarbon sales to China by building another export gas pipeline in addition to the already existing Power of Siberia pipeline. However, China is reluctant to follow the EU’s example of becoming overdependent on Russian energy and has yet to agree to its construction.
Moscow relies on Beijing not only for oil exports but also for the import of goods and technologies. From microchips to heavy machinery to clothing, Chinese goods have replaced Western ones. Although China restricts the export of advanced technologies, cooperation between Moscow and Beijing is growing. The Kremlin has to replace Western technology and components, and China eagerly assists in delivering automated warehouse processes, robots, and automatic quality control technologies. After Western companies left Russia, China’s share of robots imported into Russia quadrupled.
Similarly, since 2022, Chinese automakers and chemical and polymer manufacturers have expanded their presence in Russia. Eight of the ten leading automobile brands in Russia are now Chinese. Under normal circumstances, it would take years – and billion-dollar marketing budgets – for Chinese companies to win the trust of Russian consumers. But the Kremlin’s geopolitical choices made this job much easier: Western companies exiting Russia left a big void.
Russia also relies on China for the procurement of Western goods and components restricted by sanctions. Officially, Beijing has always adhered to the West’s ‘red lines’ regarding sanctions: major Chinese banks cut their ties with Russian companies, and Chinese regulators have recently tightened their controls over transactions and exports of sensitive materials to Russia significantly.
Tightening compliance and the threat of secondary sanctions have dented Russian trade with China in the past several months, adding to the declining consumer demand in Russia. However, the flow of such materials has not stopped, and the repeated punishment by America of Chinese companies for breaking sanctions is testament to that.
Over the past three years, the US has uncovered several sanction-evasion schemes that Russian and Chinese companies have set up, including using proxies to deliver dual-use equipment, relying on intermediaries in other countries and the ever-growing usage of cryptocurrencies. Russia wants more Chinese cooperation in the latter in particular, and the US trade war with Beijing might help Moscow achieve this.
If China’s current trade war with Trump intensifies again and bilateral trade collapses without any prospect of revival, Beijing might change its mind about the observance of sanctions: being locked out of the American market for sanctions violations would not look as bad for Chinese companies. Moreover, China would seek new markets for its goods. Russia could become a mass market for Chinese electronics, offering second- and third-tier manufacturers a broader market.
On the exporting side, Russia’s Foreign Ministry has already stated that the country is ready to compensate China for its possible future shortfall of US oil, gas, and coal. China is also watching closely how Russia develops its own financial and technological infrastructure, independent of Western ones. The two countries cooperate closely in implementing technologies that can replace systems from the West. They rely less and less on the global financial infrastructure – Moscow and Beijing are now using their national currencies in as much as 90 per cent of cross-border transactions.
Of course, China cannot solve all of Russia’s infrastructure and payment problems, and Russia cannot satisfy all of China’s economic needs, especially if the US increases tariffs against China for years. But at the moment, Russia and China are being driven further into one another’s arms. This thwarts the ‘Reverse Nixon’ strategy some have suggested Trump might be trying – an attempt to decouple Russia from China, similar to President Richard Nixon’s move to split China from the USSR half a century ago.
Unlike then, Moscow and Beijing are now more interdependent than ever and are not competing for supremacy in the non-Western world. To separate them would demand a bigger stick and a sweeter carrot than anything on the menu today.
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