Chinese and Russian trade grows alongside high-ranking diplomatic contacts

Foreign Affairs

China’s third most powerful leader, Li Zhanshu, visited Russia’s Eastern Economic Forum in Vladivostok to meet with Valdimir Putin, as bilateral trade between Russia and China continues to rise sharply.

A big smile in Vladivostok: Russian President Vladimir Putin shakes hands with Li Zhanshu, Chairman of the Standing Committee of the National People's Congress of China on September 7, 2022. Sergey Bobylev/TASS via REUTERS

Sino-Russian trade showed continued strength in August, as Russian exports to China stood at $11.2 billion, while Chinese exports to Russia reached nearly $8 billion, up 59.3% and 26.5%, respectively, from the same prior-year periods. Chinese trade with Russia rose despite relatively soft macroeconomic growth and trade figures, including a decline in Chinese exports to the United States.

Russian state media reported that Vladimir Putin met with Lì Zhànshū 栗战书, the chairman of the Standing Committee of the National People’s Congress of China, at the Eastern Economic Forum in Vladivostok. Li is the highest-ranking Chinese official to visit Russia since the February invasion.

Putin also confirmed plans to meet with Xí Jìnpíng 习近平 at a Shanghai Cooperation Organization summit in Samarkand, Uzbekistan, on September 15 and 16.

Russian economics, war defeats, revolutions — and Beijing

On Monday, Bloomberg reported that an internal Russian government study found that Moscow privately expects a long, deep recession. According to the study’s estimates, the Russian economy will not return to pre-war GDP levels until 2025, in the most “optimistic” scenario. In the study’s “stress” (or worst-case) scenario, however, Russian GDP would reach its nadir in 2025, falling 11.9% from 2021 levels, and wouldn’t recover to pre-war levels through at least 2030.

Another analysis by Chris Miller, an expert on the Russian economy, finds that Russian real wages are down by about 6% from last year, while retail sales have declined by nearly 10%, suggesting that Russian consumers expect persistently tight budgets. Miller suggests that “Russia’s economy is not going to collapse in a way that forces a halt to the Kremlin’s war effort. The country does, however, face a sharp recession, a long grind of lower living standards, and little hope for a quick rebound.”

While the Russian economy is facing high inflation and weak growth, Moscow’s military efforts in Ukraine may be showing some strain. Ukraine has launched a counteroffensive in the southern part of the country, recapturing at least two villages and forestalling a referendum to incorporate the province of Kherson into Russia. Still, the counteroffensive’s outcome will not be known for weeks or months.

Economic stagnation and battlefield defeat have traditionally shaped Russian sociopolitical trends: Moscow’s defeat in the Russo-Japanese War played a major role in the Russian Revolution of 1905; the war in Afghanistan was a major contributor to the collapse of the Soviet empire; and, most famously, the disastrous performance of Tsar Nicholas II in World War I sparked the Russian Revolution of 1917, which ultimately resulted in the Communist Party’s takeover of Russia.

The past does not necessarily predict the present, however, particularly since ubiquitous digital surveillance has made it vastly more difficult to coordinate popular protests or intra-elite political challenges. Nevertheless, Chinese and (especially) Russian officials are very aware of this history and largely seek to preserve the Russian political status quo.

Beijing clearly aims to support Moscow economically while, importantly, maintaining technical compliance with sanctions. Zhongnanhai has also made no apparent effort to supply the Kremlin with military kit. If economic and military trends continue to move against Moscow, however, the Chinese leadership might be confronted with an awkward choice: Double down on Putin or seek some accommodation with whatever political force arises in post-Putin Russia.