Trouble From Where Moscow Least Expected: Russia–China Trade Plunges 8% in Just Half a Year

Trade between Russia and China—once hailed as an unshakable alliance in the face of Western sanctions—is now facing a steep downturn. After years of booming bilateral trade, new data shows a sharp reversal: total Russia–China trade has dropped by 8.1% in just the first half of 2025.

Some of the most notable figures paint a stark picture:

• Fuel exports to China down nearly 20%

• Smartphone and computer imports to Russia down 27.5%

• Chinese vehicle sales to Russia almost halved (−46%)

Behind the numbers is a complex web of sanctions, strategic recalculations, market saturation, and economic headwinds—leaving Moscow in a vulnerable position, and reportedly prompting President Vladimir Putin to prepare for a direct appeal to Xi Jinping “cap in hand.”

A Perfect Storm of Trade Disruption

1. Sanctions and Financial Barriers

In early 2025, the U.S. expanded sanctions targeting Russian oil exporters, insurers, and shipping networks. These measures have had a chilling effect, particularly on Chinese state-owned companies, many of which curtailed or paused Russian oil imports to avoid exposure to secondary sanctions.

Compounding the issue are cross-border payment delays. Chinese banks, wary of Washington’s long reach, have been pulling back from transactions involving sanctioned Russian entities. As a result, many deals remain stalled or unpaid—despite bilateral trade being technically “open.”

2. Energy Trade: Prices Down, Demand Weaker

Energy is the backbone of Russia’s export relationship with China—but that backbone is showing signs of stress.

Crude and LNG sales to China have dropped, not only due to lower global oil prices but also because China is diversifying its energy sources, increasingly turning to countries like Saudi Arabia, Iran, and even the U.S. for LNG imports.

Pipeline gas exports via Power of Siberia 1 remain steady, but the much-hyped Power of Siberia 2 remains stalled—after nearly a decade of discussion—with no final agreement on ownership, pricing or volumes.

3. Falling Demand Inside Russia

On the import side, demand for Chinese goods inside Russia is plummeting.

• Smartphone and computer imports into Russia have dropped by 27.5%, as household purchasing power weakens amid inflation and wage stagnation.

• Chinese vehicle exports—which surged after Western automakers exited Russia—have now cratered by nearly 50%. In part, this is due to Russia’s protectionist tariffs, including sharp hikes in recycling fees, making foreign-built vehicles prohibitively expensive.

Even key sectors like trucks and agricultural equipment saw declines of over 80%.

4. Currency and Reporting Effects

The ruble has gained ground in recent months, which can inflate trade figures in local currency while deflating dollar-denominated values. Additionally, a growing portion of trade is now being conducted in yuan and rubles—masking some of the underlying shifts in physical trade volumes.

5. Stalled Projects and Strategic Misalignment

Grand infrastructure projects, like the Power of Siberia 2 pipeline, have become symbols of stalled ambition. Delays are largely due to pricing disputes and China's desire to avoid over-reliance on Russian energy—especially amid global pressure.

Meanwhile, other bilateral initiatives such as a grain export deal have collapsed, as China pivots to other suppliers and domestic production.

This strategic imbalance is quietly acknowledged even in Moscow. As one Russian official reportedly told Reuters: “China doesn’t behave like an ally. Sometimes it behaves like a partner. Sometimes, it takes advantage.”

The Fallout: Economic, Political, and Strategic

• Budget strain: With falling fuel revenues, Moscow faces a widening deficit, further complicating funding for its military operations and domestic subsidies.

• Reduced consumer access: Ordinary Russians are seeing fewer electronics, vehicles, and imported consumer goods.

• Stagnation in bilateral strategy: Stalled projects and China’s hesitance to deepen ties undercut Russia’s hopes for an “Eastern pivot.”

Despite rhetoric about a "no-limits partnership," China’s actions are increasingly shaped by self-interest. With its own economy slowing and geopolitical calculations shifting, Beijing appears less willing to play the role of Moscow’s lifeline.

Putin's Diplomatic Gamble

Facing these economic and political pressures, President Putin is reportedly preparing for a face-to-face summit with President Xi Jinping. According to Reuters, the trip is aimed at reviving stalled trade, potentially by securing fresh energy and grain agreements.

But the optics are hard to ignore: once cast as equal partners in defiance of the West, the relationship now resembles one of dependence—with Moscow increasingly at the mercy of Beijing’s strategic patience.