In a sign of the growing closeness of Russia and China, Putin and Xi are communicating with each other more than ever.
While the Ukraine invasion and growing tensions over Taiwan have been factors moving the two closer together, the reality is that this is a trend that has been in the making for well over a decade. China’s ambition to dramatically reduce western influence, and Russia’s drive to re-establish the Soviet empire against the wishes of American and its allies have produced a commonality of interest that grows more intense each year.
Moscow’s and Beijing’s economies have become more intertwined since Putin’s invasion of Ukraine. According to Russia’s semi-official RT news source, “Russia is now in the top three markets for yuan (Chinese currency) payments. The change has come rapidly…Last month, Russian businesses and financial institutions were reportedly involved in nearly 4% of international yuan payments by value, compared to only 1.42% recorded in June…Earlier this week, data tracked by the Moscow Exchange showed that yuan-ruble trading has outpaced the dollar-ruble pairing for the first time, while the yuan-ruble pair exceeded volumes in the euro-ruble pair in late July.”
Radio Free Europe reports that “China’s growing appetite for discounted Russian oil has made it the leading financier of the Kremlin’s war in Ukraine by giving Moscow a reliable revenue source that blunts the impact of tough Western sanctions against its economy…China has overtaken Germany as the biggest single buyer of Russian energy… helping to fill a gap left by Europe, Russia’s biggest export market…Despite being sold at a steep discount, the purchases — along with climbing oil prices — have allowed Russian revenues to grow in the face of Western pressure and given Moscow a crucial financial lifeline to keep funding its war effort.
Energy, of course, is the linchpin of Sino-Russian commerce. A Voice of America analysis found that Russia has overtaken Saudi Arabia to become China’s top oil provider as the West sanctions Moscow’s energy exports…Beijing has refused to publicly condemn Moscow’s war and has instead exacted economic gains from its isolated neighbor.”
Defying international sanctions, Beijing has adopted a policy of “no limits” on trade between the two giant nations. While the U.S. and Europe have crippled their economies with “green” restrictions, Russian sources boast that China purchased 7.42 million tons of Russian coal last month, noting that “China is Russia’s largest coal buyer, taking in more than 50 million tons of the commodity worth $7.4 billion last year via rail and sea, from Russia’s Far East. Russia accounted for roughly 15% of China’s total coal imports.”
The Congressional Research Service reports that Since 2014, China and Russia have reached agreements in trade, energy, finance, technology, and aerospace, while increasing diplomatic and defense cooperation. Bilateral trade has expanded since 2014, but flows are asymmetric. In 2021, China accounted for 18% of Russia’s trade while Russia represented a 2% share of China’s trade. China’s share of Russia’s trade has steadily grown from 11% in 2013, largely at the expense of the European Union.
Even greater growth can be expected. On August 6, Wang Wentao, Minister of Commerce, and Maksim Reshetnikov, Minister of Economic Development of Russia, co-chaired the 25th meeting of the Economic and Trade Cooperation Sub-committee of the China-Russia Prime Ministers’ Regular Meeting Committee. According to the Chinese trade ministry, “The two sides exchanged in-depth views on developing bilateral trade, strengthening cooperation on emerging and key areas, promoting trade and investment facilitation, and deepening cooperation in multilateral arena, and reached several consensuses.”