Western nations have imposed an avalanche of sanctions on Russia after its invasion of Ukraine, with devastating effects for its economy. China, however, has declined to impose any penalties, after Presidents Xi and Putin had pledged in a meeting early last month that there were “no limits” to their cooperation. 

But as international markets digest the new restrictions imposed on the Russian economy, there are signs that even China will struggle to maintain its burgeoning bilateral trade as before.

This week, The Wire sets out the key facts in the China-Russia economic relationship.

Where Russia and China Rank as Trade Partners

China has been Russia’s single biggest trading partner for 12 consecutive years. Meanwhile, Russia is China’s 11th biggest trading partner, just behind Malaysia and Brazil and ahead of Thailand and India. 

China-Russia Total Trade by Year

Trade in goods and services between the two countries was worth roughly $140 billion in 2021, a record high and a 36 percent increase from the year before. China ran a deficit with Russia of approximately $11.7 billion last year.

Russia’s Biggest Exports to China

Fossil fuels are by far the single biggest Russian export to China, accounting for 65 percent of total exports to China in 2021. But China has recently committed to importing more food from Russia. Last week it ended a longstanding restriction on imports of Russian wheat that was put in place due to concerns about fungal contamination. 

Russian Energy Exports to China

China is Russia’s top individual country destination for petroleum exports, but it ranks behind the European Union as a bloc. When it comes to liquefied natural gas, the EU remains the top destination for Russian LNG, while China ranks third.

China’s Reliance on Russian Energy

Since 2016, Russia has been the largest source of fossil fuel imports to China. But Xi and Putin have pledged to deepen bilateral energy cooperation, signing several oil and gas deals valued at $117.5 billion at their recent February summit. Under that agreement, China National Petroleum Corp (CNPC) will buy 100 million tons of crude oil from Rosneft over the next ten years. Under another agreement, Russian state-owned gas giant Gazprom will provide China with 10 billion cubic meters of natural gas per year through a new pipeline that reportedly won’t come online until around 2026. Preparations for an even bigger pipeline to China to carry as much as 50 billion cubic meters of natural gas — potentially Gazprom’s biggest-ever supply deal — are also underway.

Russian Pipelines to China

The Power of Siberia is the main gas pipeline linking Russia and China. Switched on in 2019, it delivered 16.5 billion cubic meters (bcm) of gas last year. Planning is underway on the Power of Siberia 2, a 2600km new line that could carry as much as 50 bcm of gas to China and create new competition with Europe for gas supply.

China’s Biggest Exports to Russia

Mechanical and electrical products make up the largest portion of China’s exports to Russia, reaching $28.8 billion in 2021. Among electronics, cell phones are the most popular product exported. Chinese smartphone maker Xiaomi is one of the most popular cell phone brands in Russia, with a market share of close to 30 percent last year.

Russia’s Foreign Currency Reserves

China has said that it will continue to trade with Russia, even as many of Russia’s trading partners have shunned it and imposed sanctions. The Russian central bank’s considerable RMB reserves might help in this regard. About 13 percent of Russia’s reserves are held in RMB, and it was already gradually transitioning towards using the RMB instead of the dollar to trade with China. The RMB accounts for 17 percent of Russia-China trade settlements, according to Chinese state media. China also has its own international interbank payment system, known as CIPS, which some analysts have speculated may provide an alternative for Russia in light of its ban from SWIFT. 

But there are signs that even these alternatives are failing to help Chinese businesses get around the West’s sanctions to trade with Russia, with some state banks refusing to provide financing for fear of being hit with secondary sanctions.

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