The war has fundamentally changed Russia's economy and trade. Moscow is becoming increasingly dependent on Beijing and its relations with it. Russia has become a "vassal of China", experts say.
The world has changed in the three years since Russia invaded Ukraine on February 24, 2022. Especially for Moscow, this fact is visible in trade and the country's growing dependence on China.
According to the Observatory of Economic Complexity (OEC), almost half of Russian exports in 2021 were directed to European countries, including Belarus and Ukraine. The majority of these exports included energy products, mainly crude oil and gas.
By the end of 2023, less than two years after the start of the war in Ukraine, the picture had completely changed - China and India are now Russia's most important export markets. Almost half of Russia's total exports are directed to these two countries. India accounts for about 33%, and China - about 17% of all Russian exports. Before the attack on Ukraine in 2021, just under 15 percent of Russian exports were directed to China, and only two percent to India.
According to OEC data, in just two years (2021-2023), imports of goods from Europe into Russia fell from 50 to 15 percent. And the data of the think tank "Brügel" for Russian foreign trade show that the trend will continue in 2024. For example, EU purchases of Russian crude oil have fallen by 90%, and those of Russian natural gas have fallen from 40% in 2021 to 15% now.
"Trade has been redirected from the West to these countries in the East," says Zsolt Darvas of the Bruegel think tank, adding that countries that have not imposed sanctions on Russia have significantly increased their trade with Moscow. This applies mainly to China, but also to Turkey, Kazakhstan and some other countries.
According to data from the Observatory of Economic Complexity, Russian exports to Turkey have increased from 4.2% (2021) to 7.9% (2023). Kazakhstan and Hungary - both friendly to the Kremlin - have seen relatively moderate growth since 2021.
"Russia is a vassal of China"
Russia's relations with China have probably changed the most - both in terms of trade and geopolitically.
"Russia is now a vassal of China", Elina Rybakova of the Washington-based Peterson Institute for International Economics said in an interview with DW. China's importance for Russian trade is now so unbalanced that Beijing exercises enormous influence over Moscow. "China is by far Russia's largest trading partner, while Russia holds a very small share of Chinese exports," says Rybakova.
Zsolt Darvas notes in this regard that Western sanctions have made Moscow very dependent on China for high-tech products. "Russia is a big country, but it doesn't have the capacity to supply itself. So it has to get these products from elsewhere - for example, from China," says the representative of "Brugel".
Rybakova suggests that China not only sells its own products to Russia, but also helps Moscow acquire Western goods. So-called dual-use goods, which can be used for both civilian and military purposes, are particularly common.
Exports from China to Russia have also increased. According to OEC data, China supplied more than half of all goods imported into Russia in 2023 - twice as much as two years earlier. Turkey, Kazakhstan and the United Arab Emirates also exported more to Russia compared to 2021. In contrast, the volume of Indian exports to Russia remains unchanged.
Goods from China largely replace Russian imports from the EU. In 2023, China exported goods worth almost €105 billion, 40 percent of which were machinery and components for them. Another 20 percent were imports for the transport sector - cars, trucks, tractors and car parts. In addition, China exports metals and plastics, rubber, chemical products and textiles to Russia.
China is more important to Russia than Russia is to China
Although Russian trade has changed and adapted, experts believe that this does not make Russia's situation good. According to Darvas, Russia can "survive", but it no longer receives the same quality of products as before, which inevitably affects the economy.
Elina Rybakova believes that things have not turned out as badly for Russia economically as many in Moscow feared. The change in trading partners also reflects the transition to a multipolar world order that Russia is striving for. "This is a convenient path for Putin, because he wants this multipolar world in which he is an ally of China and some other countries. And he is most likely ready to pay the economic price for it," she adds.
However, this dependence makes Russia vulnerable. China is the most important trade gateway for Russia. Russia is a kind of accomplice for China, but not indispensable for it, Rybakova emphasizes.