How China became Russia's economic lifeline

Key Points:

• Since Russia's full-scale invasion of Ukraine in February 2022, Russia’s exports to China have nearly doubled, primarily in discounted fossil fuels like crude oil, coal, and natural gas, providing Moscow with essential revenue amid Western sanctions.
• China supplies Russia with machinery, electronics, and dual-use goods that support Russia’s defense industry, compensating for Western companies that have exited the Russian market, while stopping short of direct military hardware exports.
• Western sanctions have cut off Russia from advanced Western technology, pushing Moscow to rely heavily on China for sanctioned tech imports, including machine tools and satellite imagery, often at significantly higher costs due to evasion tactics.
• To circumvent financial sanctions and frozen reserves, Russia and China have shifted over 99% of their bilateral trade to ruble and yuan settlements, deepening Russia’s dependence on China and increasing Beijing’s economic influence through yuanization.
• Analysts foresee China’s economic dominance over Russia growing, especially if energy projects like the Power of Siberia 2 pipeline proceed, which would enhance China’s energy security but further tie Russia’s economy to Beijing’s priorities amid shifting global alliances.