Europe

cross-posted from: https://mander.xyz/post/44153480

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Certainly on the surface it appears China’s alliance with Russia has only grown stronger since Putin’s invasion of Ukraine in 2022.

Nowhere has this been more evident than when looking at trade between the two countries, which has boomed ever since the West slapped Putin with massive sanctions.

Last year, the value of trade between Russia and China hit a record $245bn (£182bn), fuelled by Xi becoming the world’s largest buyer of Putin’s oil and gas. Overall, China also became Russia’s biggest supplier of goods.

However, closer ties with China have come at a cost.

In particular, Russian businesses have grown increasingly frustrated at a flood of cheap Chinese goods.

Vladimir Milov, who worked in the Russian government from 1997 to 2002 before becoming a vocal Putin critic, says the economic alliance is backfiring badly for Russia.

“It is deeply disadvantageous,” he says. “China is taking advantage because it knows that Russia has nowhere to go.”

Such warnings could signal that the economic ties between the two countries are beginning to fray.

While mutual trade hit a record high in 2024, it has fallen by nearly a tenth so far this year.

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One key area of tension is cars.

After Western manufacturers cut ties with Russia in 2022, Chinese competitors duly stepped in.

In the two years to 2024, Chinese car exports to Russia have increased sevenfold, prompting a growing number of complaints from domestic manufacturers.

Maxim Sokolov, the chief executive of Russian carmaker AvtoVAZ, has accused the Chinese of “unprecedented dumping”, which he said in December has crossed “all imaginable boundaries”.

Sales of his company’s signature Lada car have plunged, pushing the company to slash production by nearly half and move to a four-day work week at the end of September.

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There are signs that Russia’s steel sector is also hurting.

Andrey Gartung, chief executive of the Chelyabinsk Forging and Press Plant, warned last year: “Russian enterprises competing with Chinese ones are holding on by the skin of their teeth.”

Not one to shy away, China has hit back with trade restrictions of its own.

Most notably, 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 collapse of the Soviet Union.

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Elsewhere, China has so far refused to lift a longstanding ban on imports of Russia’s largest agricultural exports – winter wheat and barley. Instead, it buys from Ukraine and Kazakhstan.

What China does import from Russia, it gets incredibly cheaply because it has a monopoly as one of Russia’s only buyers, says Milov.

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The average annual flow of Chinese investment into Russia has plummeted from an average of $1.2bn from 2011 to $400m, says Milov ... In 2022, China dropped Russia from its Belt and Road financing programme, while in July, China’s commerce ministry “strongly advised” carmakers against investing in Russia.

Many major projects that were previously announced with Chinese backing have now been scrapped or are on hold.

Russia quietly disappeared from what was supposed to be a joint development of a long-haul aircraft with the Commercial Aircraft Corporation of China.

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Plans for Chinese CRRC Changchun Railway Vehicles to build a high-speed rail line between Moscow and Kazan in south-west Russia have also been paused.

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.

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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 much far apart,” says Milov.

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