In an era of global economic restructuring, opportunities for growth and development are ripe for those with the vision and determination to seize them. China’s relationship with its northern neighbor Russia has recently been a much-needed bright spot. 

The deepening economic ties between the two giants have given China significant opportunities, particularly for its exporters. The Russian market has opened new avenues for Chinese goods, and the growing collaboration between the two countries has taken on strategic importance in the face of mounting pressure from the West.

While China has long been Russia’s largest trading partner, their economic partnership has taken on new urgency for Russia in light of the international sanctions imposed on it after the eruption of the Ukraine-Russia conflict. These sanctions, which cut off Russia from Western markets and financial systems, forced Russia to turn eastward, making China a crucial partner in economic cooperation. China has seized this opportunity, expanding its market access and cementing its influence over a critical regional player.

The Russian market represents a substantial opportunity for Chinese exporters, especially as Western companies have withdrawn en masse following the sanctions. From consumer electronics to heavy machinery, Chinese goods have become increasingly dominant in Russia, filling the void left by departing Western brands. With limited access to Western imports, Russian consumers and industries turn to Chinese products to meet their needs, creating a windfall for Chinese manufacturers.

Cars, electronics, automotive parts, and machinery have been at the forefront of this export surge. Chinese carmakers have capitalized on the retreat of Western auto giants from the Russian market. Chinese brands have quickly gained market share, offering an affordable alternative to European and Japanese cars. Chinese producers have been keen to create local partnerships, assembly lines, and dealership networks, and sell vehicles to traders willing to navigate the overland supply routes in Russia. This influx of Chinese cars has allowed Russia to maintain a functioning automotive sector.

Similarly, consumer electronics have seen a boom. Chinese brands were already popular in Russia pre-conflict and have become even more prominent as Western tech companies reduce their presence. Chinese companies are now filling the gaps left by Western firms and deepening their foothold in a market that had previously been split between East and West. The demand for telecommunications equipment, smartphones, and other high-tech products continues to grow, bolstering China’s role as Russia’s primary technology provider.

While China benefits from exporting goods to Russia, it is also a significant importer of Russian commodities, particularly energy. Russia, facing reduced demand from European markets due to sanctions and efforts to wean off Russian oil and gas, has found a reliable buyer in China. The Power of Siberia pipeline, which delivers natural gas from Russia to China, has symbolized their energy cooperation. In 2022 alone, China increased its imports of Russian oil by 10 percent, and Russia became the top supplier of crude oil to China, surpassing Saudi Arabia.

The complementary nature of their economies underpins this mutually beneficial trade relationship. Russia, rich in natural resources but needing consumer goods and technology, provides a steady flow of raw materials to fuel China’s industrial growth. In return, China offers manufactured goods and technological expertise, ensuring both sides gain from this deepening economic bond.

This partnership, however, has its challenges. While China has carefully avoided violating international sanctions against Russia, it has also refrained from endorsing Moscow’s military actions. Beijing’s calibrated strategy has maintained a neutral stance on the Ukraine conflict, avoiding entanglement while supporting Russia economically. This is important, as while the relationship with Russia is fruitful and beneficial in the near term, China’s trade with Europe and the United States remains far more significant than its trade with Russia. This delicate balancing act allows China to benefit from its partnership with Russia without alienating its trading partners in Europe and elsewhere.

The growing Sino-Russian trade relationship is a testament to the pragmatism that defines modern international relations. For China, the opportunities presented by Russia’s isolation from the West are too valuable to ignore. Yet Beijing must proceed cautiously, balancing its economic interests with the need to respect international law and maintain a positive global image.

As Confucius once said, “The man who moves a mountain begins by carrying away small stones.” China’s relationship with Russia is a strategic effort to move the mountain of global power dynamics, one careful step at a time. China is determined to pursue its economic interests by collaborating with Russia without upsetting the political applecart in the region. It is in everybody’s best interest that China gets its balancing act just right.

The author is a 15-year Asian investment veteran and the research lead and co-manager at PACAT Capital Management in Hong Kong.

The views do not necessarily reflect those of China Daily.