President Vladimir Putin and his Chinese counterpart, Xi Jinping, sat side by side in Red Square on May 9 to celebrate the end of World War II. But while they may have looked like equals, they are nothing of the sort, and the disparity in power is widening.
Russian and Chinese officials regularly speak of a “friendship without boundaries,” and the delegation from China was huge this time. Almost 30 documents were signed in Moscow, albeit mostly non-binding agreements and memorandums of intent.
However, the relationship is deeply asymmetrical in China’s favor. Since Moscow’s invasion of Ukraine began, China has become Russia’s leading buyer of oil. Moscow is often dubbed Beijing’s “gas station;” even Putin has said that energy is the basis of their connection.
Russia is also the main testing ground for China’s financial and technological infrastructure to counter the West. The two countries have been cooperating to shake off Western technological and financial dominance. The Kremlin’s ability to run the country despite the avalanche of Western sanctions can be partly attributed to this cooperation. Chinese technologies replaced those of Western countries, and Moscow and Beijing are now using their national currencies in as much as 90% of cross-border transactions.
Officially, China has always stuck to the West’s “red lines” regarding sanctions: major Chinese banks cut their ties with Russian companies, and Chinese regulators have considerably tightened controls over transactions and exports of sensitive materials to Russia.
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.
Russian-Chinese trade is no longer booming as it did immediately after the full-scale invasion in 2022. In 2024, annual trade between the two was up 1.9% to $240bn billion. But, in the first four months of 2025, it fell 7.5% from the past year to $71.1bn, according to Chinese customs data. Chinese exports to Russia are down 5.3.% (to $30.8bn), while Russian deliveries to China are down 9.1% ($40.3bn) from January to April.
There are, however, significant signs of widespread sanctions evasion. In November, the US said it had “very extensive evidence” that China was aiding the Russian war machine, and sanctions have been aimed at some of those responsible. Over the past three years, the US has uncovered several schemes involving Russian and Chinese companies — from using proxies to deliver dual-use equipment to reliance on intermediaries in other countries and the ever-growing use of cryptocurrencies.
If the current trade war with the US intensifies, and bilateral trade collapses without prospects of revival, China might change its mind about sanctions observance and become more willing to openly defy Western restrictions. Moreover, China would seek new markets for its goods. Once barred from the US market, Russia could become a mass market for Chinese electronics, offering second- and third-tier Chinese manufacturers an export space.
Although China restricts exports of advanced technologies, cooperation between Moscow and Beijing is growing. The Kremlin must replace Western technology and components, and China will eagerly assist.
This would involve automating warehouse processes, robotization, and automatic quality control. 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 been expanding their presence in Russia. Eight of the 10 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.
On the exporting side, Russia’s Foreign Ministry has already stated that Russia is ready to compensate China for any shortfall of US oil, gas, and coal.
China cannot solve all of Russia’s infrastructure and payment problems or significantly damage the US dollar, but it can continue to help Moscow mitigate the impact of Western sanctions.
The trade war between China and the US will drive Russia and China further into one another’s arms. Equally, a US-China trade deal (which appears to have made progress on May 10-11) would be bad news for the Putin regime.
An agreement would align with the Trump administration’s aim to prize apart Moscow and Beijing.
Alexander Kolyandr is a Non-Resident Senior Fellow at the Center for European Policy Analysis (CEPA) specializing in the Russian economy and politics. Previously, he was a journalist for the Wall Street Journal and a banker for Credit Suisse. He was born in Kharkiv, Ukraine, and lives in London.
More on this and other aspects of the Russian economy in a weekly summary produced by The Bell, independent publication.
https://en.thebell.io/tag/economy-weekly
Europe’s Edge is CEPA’s online journal covering critical topics on the foreign policy docket across Europe and North America. All opinions expressed on Europe’s Edge are those of the author alone and may not represent those of the institutions they represent or the Center for European Policy Analysis. CEPA maintains a strict intellectual independence policy across all its projects and publications.
War Without End
Russia’s Shadow Warfare
CEPA Forum 2025
Explore CEPA’s flagship event.
