When they last met, in February in Beijing during the Winter Olympics, they stated that their friendship knew “no boundaries.” Since then, Russia has sought ever closer ties with China, as Europe and the United States responded wave after wave of sanctions to the invasion.
Beijing has carefully avoided violating Western sanctions or providing direct military support to Moscow. This balancing act, experts say, is a sign that Xi will not sacrifice China’s economic interests to save Putin, who arrived this week at the Shanghai Cooperation Organization summit in Uzbekistan with his army withdrawing from large swaths of Ukrainian territory. .
But the trade relationship is booming, in a lopsided way, while Russia is desperate for new markets and China – an economy ten times its size – is looking for cheap raw materials.
China’s spending on Russian goods rose 60% in August from a year ago, to $11.2 billion, according to Chinese customs statistics, more than 49% gain from July.
Shipments to Russia rose 26% to $8 billion in August, also faster than the previous month.
In the first eight months of this year, total trade in goods between China and Russia rose 31 percent to $117.2 billion. That’s already 80% of last year’s total — that stood at a record $147 billion.
“Russia needs China more than China needs Russia,” said Keith Krach, former United States Secretary of State for Economic Growth, Energy and the Environment.
“As the war in Ukraine continues, Putin is quickly losing friends and becoming more and more dependent on China, whose economy is ten times that of Russia,” he added.
For China, Russia now accounts for 2.8% of total trade volume, slightly more than its share of 2.5% at the end of last year. The European Union and the United States have much larger shares.
The Russian central bank stopped publishing detailed trade data when the war in Ukraine started. But Bruegel, a European economic think tank, recently analyzed statistics from Russia’s 34 largest trading partners and estimated that China accounted for about 24% of Russia’s exports in June.
“China-Russia trade is booming as China is taking advantage of the crisis in Ukraine to buy Russian energy at a discount and replace Western companies that have left the market,” said Neil Thomas, senior China analyst at Eurasia Group.
Yuan the new dollar in Russia?
Russian companies and banks are also increasingly turning to the yuan for international payments.
For Beijing, it is a boost to its ambitions to make the yuan a global currency.
Russia’s increased use of the yuan is also helping to advance China’s long-term goals of turning the redback into a global currency, isolating itself from Western financial sanctions, and increasing its institutional power in international finance. said Thomas from Eurasia Group.
For Russia, this partnership with China is “born out of desperation,” Krach said.
“Because Russia has been severely weakened, in part by sanctions, Putin is willing to make a deal with a predatory power as long as it gets access to capital,” he added.
Chinese companies fill the vacuum
Chinese companies are also benefiting from the exodus of Western brands from Russia.
Chinese cars have also flooded Russia.
Borders in ‘no borders’ partnership
But there are also significant limitations in the China-Russia partnership, analysts say.
China does not provide military, commercial or technological support that would “risk significant US sanctions against China,” Eurasia Group’s Thomas said.
“Beijing will not sacrifice its own economic interests to support Moscow,” he said.
Fearing a backlash from the US, China has so far “steadfastly” refused to violate international sanctions against Russia, forcing Moscow to request military support from North Korea, said Craig Singleton, senior China fellow at the DC-based Foundation for Defense of Democracy.
“Beijing’s refusal to violate US and international sanctions reflects its grudging acceptance that China will remain dependent on Western capital and technology to support its continued development, even though Xi is personally inclined to assist Putin’s war efforts,” he said. .
In addition, China’s rapid economic slowdown this year will further curtail Xi’s willingness to help Putin. The Chinese president does not want to risk anything that further destabilizes the economy just a few weeks before he is poised to secure a historic third term at the Communist Party Congress.
What the future has in store
Future relationships are likely to remain tense, and China will want to keep its options open, analysts said.
“There has always been mistrust between the two regimes, which historically treated each other as rivals,” Krach noted.
The current Sino-Russian partnership is primarily a “defensive one,” bolstered by Beijing and Moscow’s shared view that NATO and the United States pose a “tangible threat to national security,” said Susan Thornton, senior fellow and visiting lecturer at the United Nations. Yale Law School.
“Russia’s war in Ukraine is not in China’s interest, but given the Western hostility, China will not oppose Russia,” she added.