When Vladimir Putin made a four-day trip to visit Xi Jinping in September, he addressed his Chinese counterpart as “dear friend”.
Speaking to Xi at a vast orchid exhibition in Beijing’s Great Hall of the People, the Russian president claimed their ties were “at an unprecedented level”.
Certainly, on the surface, it appears that China’s alliance with Russia has 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 grown since the West slapped Putin with massive sanctions.
Last year, the value of trade between Russia and China hit a record $245bn (£182bn), fueled by Xi becoming the world’s biggest buyer of Putin’s oil and gas. Overall, China has also become Russia’s largest supplier of goods.
However, closer ties with China have come at a cost.
In particular, Russian businesses have become increasingly frustrated by a flood of cheap Chinese goods.
Vladimir Milov, who served in the Russian government from 1997 to 2002 before becoming a vocal critic of Putin, says the economic alliance is backfiring for Russia.
“It’s deeply disadvantageous,” he says. “China is taking advantage because it knows Russia has nowhere to go.”
Such warnings could signal that economic ties between the two countries are beginning to fray.
While mutual trade reached a record high in 2024, it has fallen by almost a tenth so far this year.
Lada sales are falling
A key area of tension is cars.
After Western manufacturers cut ties with Russia in 2022, Chinese competitors have stepped in accordingly.
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, chief executive of Russian carmaker AvtoVAZ, accused the Chinese of “unprecedented dumping”, which he said in December crossed “all imaginable boundaries”.
Sales of his company’s Lada car fell, prompting the company to cut production by nearly half and switch to a four-day work week at the end of September.
Sales of AvtoVAZ’s signature Lada cars have fallen, prompting it to halve production – Andrei Bok/SOPA Images/LightRocket via Getty Images
Russia’s biggest truck maker, Kamaz, cut its working week in August after demand for its vehicles fell by 60 percent. At the time he blamed “excessive” imports.
To assuage some of the criticism, the Kremlin responded by significantly raising import duties on vehicles.
From October 2024, Russia has more than doubled the “recycling tax” it charges on imported cars.
This charge, which is supposed to cover the future scrapping of the vehicle but operates largely as a tariff, was 667,000 rubles (£6,275) per vehicle in January this year.
This led to the halving of Chinese car exports to Russia in the first six months of 2025.
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1912 China’s car exports to Russia
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In July, Russian regulators also banned imports of trucks from a fleet of major Chinese brands — Dongfeng, Foton, FAW and Sitrak — that they branded a “direct threat” to public safety.
“These trade tensions will start to emerge more and more as the market becomes saturated with Chinese goods and uncompetitive Russian industries are unable to make sales,” says John Kennedy, research leader at Rand.
Sanctions bite
There are signs that Russia’s steel sector is also hurting.
Andrey Gartung, executive director of the Chelyabinsk Forging and Press Plant, warned last year: “Russian companies competing with Chinese ones are holding on by the skin of their teeth.”
Not one to shy away, China has responded with trade restrictions of its own.
Most notably, Xi reinstated tariffs on Russian coal in January 2024, two years after the restrictions were first lifted.
This has already affected exports to China, with Milov saying the tariffs add to what is the worst crisis for Russia’s coal industry since the collapse of the Soviet Union.
The sector’s revenue is expected to fall by 12% this year alone.
Elsewhere, China has so far refused to lift a long-standing ban on imports of Russia’s biggest agricultural exports – winter wheat and barley. Instead, they buy from Ukraine and Kazakhstan.
What China imports from Russia, it becomes incredibly cheap because it has a monopoly as one of Russia’s only buyers, Milov says.
Russia’s biggest exports to China are oil and gas, which together account for two-thirds of its trade.
Igor Sechin, Rosneft’s chief executive, said that between January 2022 and June 2024, China’s savings from buying Russian oil compared to exports from the Middle East amounted to $18 billion.
“By lifting sanctions, Russia is what Beijing would like every trading partner to look like,” says Gregor Sebastian of Rhodium’s corporate advisory team in China.
“China imports raw materials that it makes into manufactured goods that it can then resell at much higher profit margins back to Russia. That’s the biggest part of the relationship.”
However, more than anything, Russia wants new technology and investment from China. And he doesn’t get it.
Joint projects get stuck
The average annual flow of Chinese investment into Russia has fallen from an average of $1.2 billion since 2011 to $400 million, Milov says.
In 2022, China dropped Russia from its Belt and Road funding program, while in July China’s Ministry of Commerce strongly “advised” automakers not to invest in Russia.
Many major projects that were previously announced with Chinese support have now been abandoned or are on hold.
Russia has quietly dropped out of what was supposed to be a joint development of a long-range aircraft with China’s Commercial Aircraft Corporation.
Work had already begun on the project, originally called CR929, which means “China Russia”. However, the R has now been dropped, with the aircraft being renamed the C929.
Plans for China’s CRRC Changchun Rail to build a high-speed rail line between Moscow and Kazan in southwestern Russia have also been shelved.
Separately, there has been no progress on the development of the Tianjin oil refinery, a joint venture between Rosneft and China National Petroleum Corporation (CNPC), which was approved in 2014.
After the meeting between Putin and Xi in September, Gazprom announced that the two countries had signed an agreement to build a “Power of Siberia 2” gas pipeline to China.
But while this would undoubtedly prove to be a huge win for Russia, China has yet to confirm the project.
This may be a sign that, despite the pomp and ceremony, the countries’ authoritarian alliance may be weaker than it appears.
“Despite all the hugs and kisses at the summit, China and Russia are very far apart,” says Milov.
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