an ’embarrassing reversal’ for Moscow
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Sanctions have forced Russia to rely heavily on China to keep its economy afloat.
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China sends high-tech products to Russia and buys its oil cheaply; This increases Beijing’s influence.
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As China gained economic influence, Russia’s role shrank to junior partner.
Moscow’s wartime turns to Beijing It has helped Russia’s economy survive under the weight of sweeping Western sanctions, but it comes at a price.
What seems like a lifeline today could lock Moscow into a role as Beijing’s junior economic partner in the long run. Russia is now heavily dependent on China for basic manufactured goods and advanced inputs, blocked by Western sanctions, according to a report released Friday by the Atlantic Council, a think tank.
“Economically and politically, Russia’s relationship with China is simultaneously highly asymmetrical and mutually beneficial,” wrote Elina Ribakova, a nonresident senior fellow at the Peterson Institute for International Economics, and Lucas Risinger, a nonresident research fellow and economic analyst at the Kiev School of Economics Institute.
China buys Russian oil Amid Western boycotts and sanctions, Russia is buying machinery, vehicles and electronics from the East Asian giant in volumes that will compensate for the loss of European customers – at a discount.
“This is a complete and shameful reversal in relations compared to the 2000s, when Russia exported higher value-added goods to China,” analysts wrote.
Since Russia’s large-scale invasion of Ukraine in February 2022, the Kremlin has brought the country’s economy to a wartime state. Heavy defense and government spending helps maintain high levels of resilience despite sanctions and export restrictions.
However, cracks are emerging as energy export revenues fall sharply in an environment of low oil prices. consumer demand still weakened despite high inflation.
China now has a large share of Russia’s imports, and the vast majority of its trade with China is conducted in Chinese yuan.
Russia became China’s largest supplier of crude oil in 2023, but the country accounts for only a fifth of China’s imports of the commodity. Meanwhile, oil and gas revenues It accounts for a significant one-third of Russia’s budget flow.
To be sure, China needs global buyers For its huge manufacturing sector, Russia has become one of them. Still, the gains are “much more important for Russia than for China,” analysts wrote, because Beijing does not rely on Moscow the way Europe relies on Russian energy.
