Executive Summary

The Russian-Chinese economic relations experienced a sharp dip in the immediate months after Russia’s full-scale invasion of Ukraine in February 2022, but has since rebounded and reached new record levels, and grown strongly and widely in both directions, and in many areas:

• Bilateral trade turnover reached a record high of USD 190 billion in 2022 (29 percent up on 2021), and USD 94 billion in the first five months of 2023 (41 percent up on 2022).
• Russian energy export to China has increased moderately in volume, in line with pre-war plans, but massively in value, including oil, pipeline gas and LNG, and coal. However, no progress has been made on new infrastructure, and no new Chinese investments upstream. As China profited less than it could have, the largest energy winner has instead been India.
• The countries’ metals trade has grown much. Russia is selling gold, platinoids, copper, and steel, while China is exporting alumina – which has crucial military applications.

After an initial post-invasion decline, Chinese exports to Russia have significantly increased since the summer of 2022, including vehicles, machinery, electronics, metals, and plastics and rubber.

• Most major Chinese companies have continued their operations in Russia as before. This includes banks, technology companies, industry and construction companies, and others. While sanctions have had an effect on some companies, actions do not always follow words. 
• There has been a huge comeback over the past year in Chinese electronics exports such as smartphones, laptops, televisions, and refrigerators to Russia. Crucially, Chinese official and unofficial exports of the militarily important integrated circuits have skyrocketed. China has thus revived Russian electronics markets, and partly met some Russian technology needs.
• The strongest Chinese export category of 2023, driving export growth, is motor vehicles, including cars, trucks, and parts, where Chinese brands have entirely swallowed up the Russian markets, allowing China to become the world’s leading car exporter.

At the same time, the war has also shown the limits and challenges of the countries’ economic relations, as well as Russia’s increasing economic dependence on China, which in the long run could likely be the biggest threat to Russian sovereignty:  

• Russia is undergoing increasing “yuanisation,” where the yuan’s role in Russia’s economy is growing, which might mitigate sanctions but entails risks and vulnerabilities vis-á-vis China.
• Russia’s isolation and dependence on China means a bleak future for the Russian state and its people: the exports to China are discounted, the imports are of lower quality and more expensive, and investments are absent. Growth, state budget and spending will all suffer.
• While China has exported many products with crucial military applications, it has not delivered lethal weapons, which is a clear limitation in Beijing’s support to Moscow.

The trends of growth in trade and economic relations, and of Russia’s dependence on China will likely continue. How strong the economic relations can grow will depend on many things: the outcome of the war; the power dynamic and balance between Moscow and Beijing; the ability of the West to counteract and punish China’s sanctions-busting; how China’s relations with the West develop overall; and how well China manages to balance and diversify its economic ties.

Om författaren