When Vladimir Putin made a four-day trip to visit Xi Jinping in September, he addressed his Chinese counterpart as “dear friend”.
Speaking to Xi in front of a vast display of orchids in Beijing’s Great Hall of the People, the Russian president claimed that their ties were at an “unprecedented high level”.
Certainly on the surface it appears that China’s alliance with Russia has only grown stronger since Putin’s invasion of Ukraine in 2022.
Nowhere was this more evident than when looking at trade between the two countries, which has increased since the West slapped Putin with heavy sanctions.
Last year, the value of trade between Russia and China hit a record $245bn (£182bn), driven by Xi becoming the world’s biggest buyer of Putin’s oil and gas. Overall, China has also become Russia’s largest supplier of goods.
However, closer ties with China have come at a cost.
In particular, Russian businesses have grown increasingly frustrated by a flood of cheap Chinese goods.
Vladimir Milov, who worked in the Russian government from 1997 to 2002 before becoming a vocal critic of Putin, says the economic alliance is backfiring for Russia.
“It’s deeply disadvantageous,” he says. “China is taking advantage because it knows that Russia has nowhere to go.”
Such warnings may indicate that the economic ties between the two countries are beginning to fall apart.
While mutual trade reached a record high in 2024, it has declined by nearly tenfold so far this year.
Lada a task like selling
A major area of tension is cars.
After Western manufacturers cut ties with Russia in 2022, Chinese competitors duly entered.
In the two years to 2024, Chinese car exports to Russia have increased seven times, leading to an increasing number of complaints from domestic manufacturers.
Maxim Sokolov, the chief executive of Russian carmaker AvtoVAZ, accused the Chinese of “unprecedented dumping”, which he said in December crossed “all imaginable boundaries”.
Sales of his company’s signature Lada car slumped, prompting the company to cut production by nearly half and move to a four-day work week at the end of September.
Sales of AvtoVAZ’s signature Lada cars have fallen, prompting it to halve production – Andrei Bok/SOPA Images/LightRocket via Getty Images
Russia’s biggest truck maker, Kamaz, also thinned its working week in August after demand for its vehicles fell by 60pc. At the time it blamed “excessive” imports.
To assuage some of the criticism, the Kremlin responded by significantly raising import tariffs on vehicles.
From October 2024, Russia has more than doubled the “recycling fee” it charges on imported cars.
This charge, which is supposed to cover the future disposal of the vehicle but functions largely as a fee, has been 667,000 rubles (£6,275) per vehicle since January this year.
This caused Chinese car exports to Russia to halve in the first six months of 2025.
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1912 China’s car exports to Russia
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In July, Russian regulators also banned imports of trucks from a fleet of major Chinese brands – Dongfeng, Foton, FAW and Sitrak – which they branded a “direct threat” to public safety.
“These trade-related tensions will start to happen more and more as the market is saturated with Chinese goods and uncompetitive Russian industries are unable to make their sales,” says John Kennedy, head of research at Rand.
Sanctions bite
There are signs that Russia’s steel sector is also suffering.
Andrey Gartung, chief executive of the Chelyabinsk Forging and Press Plant, warned last year: “Russian companies competing with Chinese ones are holding on.”
Not one to fear, China has hit back with trade restrictions of its own.
In particular, Xi reintroduced tariffs on Russian coal in January 2024, two years after the restrictions were first lifted.
This has already hit exports to China, with Milov claiming that the levies are adding to what is the worst crisis for Russia’s coal industry since the fall of the Soviet Union.
The sector’s income is expected to decrease by 12pc this year alone.
Elsewhere, China has so far refused to lift a long-standing ban on imports of Russia’s biggest agricultural exports – winter wheat and barley. Instead, he buys from Ukraine and Kazakhstan.
What China imports from Russia, it becomes incredibly cheap because it has a monopoly as one of Russia’s only buyers, says Milov.
Russia’s biggest exports to China are oil and gas, which together make up two-thirds of its trade.
Igor Sechin, Rosneft’s chief executive, said that between January 2022 and June 2024, China’s savings from buying Russian oil compared to Middle Eastern exports would amount to $18 billion.
“Sanctions removed, Russia is what Beijing wants every trading partner to look like,” says Gregor Sebastian, of Rhodium’s China Corporate Advisory team.
“China is importing raw materials that it produces into manufactured goods that it can then resell at a much higher profit margin back to Russia. That’s the bulk of the relationship.”
However, more than anything, Russia wants new technology and investment from China. And she is not having it.
Joint projects stall
The average annual flow of Chinese investment in Russia has fallen from an average of $1.2 billion since 2011 to $400 million, says Milov.
In 2022, China dropped Russia from its Belt and Road funding program, while in July, China’s commerce ministry “advised” automakers not to invest in Russia.
Many major projects previously announced with Chinese support have now been scrapped or are on hold.
Russia has quietly dropped out of what was supposed to be a long-term joint aircraft development with China’s Commercial Aircraft Corporation.
Work had already begun on the project, initially called CR929, which meant “China Russia”. However, lR has now been discontinued, with the aircraft renamed as C929.
Plans for Chinese Railways CRRC Changchun to build a high-speed rail line between Moscow and Kazan in southwestern Russia have also been put on hold.
Separately, there has been no progress on the development of the Tianjin oil refinery, a joint venture between Rosneft and the Chinese National Petroleum Corporation (CNPC), which was approved in 2014.
After the meeting between Putin and Xi in September, Gazprom announced that the two countries signed an agreement to build a “Power of Siberia 2” gas pipeline to China.
But while this would undoubtedly be a great victory for Russia, China has yet to confirm the project.
This may be a sign that, for all the pomp and ceremony, the countries’ authoritarian alliance may be weaker than it appears.
“Despite all these hugs and kisses at summits, China and Russia are very far apart,” says Milov.
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