May 24, 2022
China’s Economic and Trade Ties with Russia
Two developments in February 2022—the announcement
sanctions on Russia. China’s critique of U.S.-led sanctions
by leaders of the People’s Republic of China (PRC or
appears to disregard how it has used economic coercion,
China) and the Russian Federation (Russia) of a strategic
import bans, and de facto trade embargoes against countries
partnership that “knows no limits” and Russia’s renewed
for economic and political aims. The PRC government has
invasion of Ukraine with tacit PRC support—may raise new
positioned itself to engage in counter-sanctions by enacting
considerations for Congress about the deepening China-
new anti-sanctions laws and blocking measures to counter
Russia ties. China’s trade, financial, and technology ties
foreign sanctions with which it disagrees. These laws and
with Russia may affect the strength of U.S.-led efforts to
measures contain provisions to punish PRC and foreign
constrain Russia, including through sanctions and export
firms that comply with such sanctions. China’s leaders may
controls. China’s alignment with Russia also appears to be
assess that China will not face consequences for its support
part of broader efforts to create alternative global systems
of Russia and unwillingness to impose sanctions on Russia.
in trade, finance, and technology that could intensify and
They may judge that China can wait out or work around
challenge the liberal global economic order. Also see CRS
any sanctions on Russia, which they may assess as not
In Focus IF12100, China-Russia Relations.
longstanding or comprehensive enough to constrain China,
while some restrictions might advantage China. They also
China’s Economic Ties to Russia
may assess that China could leverage EU-U.S. rifts,
An easing of trade tensions and mutual assurances on
although such PRC efforts seem to have fallen flat for now.
border disputes has deepened Russia-China ties and
allowed both sides to focus on other geopolitical priorities.
Figure 1. Share of Russia’s Trade with Select Partners
Since 2014, China and Russia have reached agreements in
trade, energy, finance, technology, and aerospace, while
increasing diplomatic and defense cooperation. Bilateral
trade has expanded since 2014, but flows are asymmetric.
In 2021, China accounted for 18% of Russia’s trade while
Russia represented a 2% share of China’s trade. China’s
share of Russia’s trade has steadily grown from 11% in
2013, largely at the expense of the European Union (EU).
(Figure 1).
Russia provides China strategic exports, including energy,
fertilizer, and metals (e.g., gold, nickel, titanium, and
platinum). China has been increasingly turning to Russia
Figure 2. Russia as Share of China’s Imports
for crude oil, natural gas, and coal (Figure 2), and Russia
could become a more important supplier of wheat and
fertilizer as China faces shortfalls. After Russia’s 2022
invasion of Ukraine, China lifted import restrictions on
Russian wheat. China exports to Russia machinery and
electronics ($28.8 billion), followed by base metals ($5.7
billion), textiles and apparel ($5.4 billion), and vehicles,
ships, and aircraft ($5.0 billion). The war could deepen
bilateral ties if Russia’s access to global markets further
deteriorates, and if China looks to Russia to address global
shortages. Disruptions in Ukraine likely affect China’s

access to agricultural products (e.g., corn, sunflower oil,
and pork). China had turned to Ukraine to diversify away
Source: CRS with data from the Trade Data Monitor.
from U.S. exports and is now seeking alternative suppliers.
Note: Percentage based on value (Figure I) and volume (Figure 2).
Given its outsized role as a buyer, China could crowd out
countries seeking scarce food and energy.
China’s approach to sanctions will likely evolve with any
U.S. and EU Sanctions
shifts in global approaches to Russia and identification of
China’s leaders have not condemned Russia’s invasion of
potential new trade and financial pathways. Responses may
vary depending on the type of firm and extent of global
Ukraine—instead largely blaming the United States and
exposure, and the strategic value of certain trade and
NATO—and have criticized and refused to join U.S.-led
investment. So far, some PRC firms and banks with major
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China’s Economic and Trade Ties with Russia
global exposure have reportedly paused certain U.S. dollar
military systems, including a potential need for mature
transactions and trade with Russia. The Communist Party of
semiconductor nodes. While China’s industry uses U.S.
China in March 2022 issued a ban on its leaders’ purchase
technology, software, and equipment, the U.S. government
of property overseas or stakes in foreign firms possibly to
may not have sufficient visibility and access to enforce its
insulate them from sanctions. PRC firms have previously
controls on Russia through China’s trade. It also has not
gained market share in U.S.-sanctioned markets; the pull
issued requirements for U.S. technology exports to China
back of U.S. and allies’ energy, financial, and technology
that might restrict exports or require China to abide by U.S.
firms from Russia provides openings for China. China’s
controls to enforce and strengthen controls on Russia.
banking regulator said in March 2022 that China would not
Figure 3. Russia’s Technology Imports (2021)
participate in U.S.-led sanctions and would maintain normal
trade and financial ties with “relevant parties.” Other firms,
encouraged by the PRC government, have sought to buy
Russian and western assets in Russia, and denominate some
trade (e.g., oil and coal) in China’s currency, the renminbi
(RMB). State-tied PRC firms have violated U.S. sanctions
in the past. The U.S. government sanctioned Huawei and
ZTE for sales to Iran that violated U.S. sanctions. In 2009,
PRC state oil firm CNPC created the Bank of Kunlun as a
special purpose vehicle to skirt U.S. sanctions on Iran, and
then used a shell company to conduct trade after the U.S.
government sanctioned the bank.
Since Russia and China agreed in 2019 to decrease use of
the U.S. dollar, about 25% of their bilateral trade has been
settled in RMB or Russia’s ruble. Firms might seek to
leverage barter trade, a border trade system used through
the 1990s, and similar methods used in Iran trade,
especially for commodity and other state trade. In March
2022, China’s and Russia’s payment processing firms
Source: CRS with data from the EIU and Trade Data Monitor.
(UnionPay and Mir) announced a system in which Mir
Outlook and Issues for Congress
would issue cards tied to UnionPay’s network; however, it
China has partnered with Russia to launch new global trade,
reportedly suspended the launch. Several Russian banks
finance, and technology frameworks while relying on the
have ties with UnionPay. Its global network could handle
current trading system, the U.S. dollar, and access to G-7
transactions for Russia. While the RMB is not widely used
export markets. These efforts include a global payment
globally, it could be backed by energy or gold via Russia’s
ties to Shanghai’s gold exchange
system, a One Belt, One Road trade network that ties supply
. Trade in RMB could
chains to China, and global satellite positioning (e.g.,
allow both sides to conserve U.S. dollars, insulate trade
BeiDou and GLONASS) and smart device operating
from sanctions, and expand the currency’s use. Russia’s
systems (e.g., Harmony and Aurora). Congress might
central bank reported that about 14% of its reserves were in
consider what closer China-Russia ties and competitive
RMB as of June 2021. It holds about $140 billion of PRC
approaches imply for the U.S. posture vis-a-vis China,
RMB-denominated bonds and could draw on a $24 billion
including whether and, if so, how to sustain and develop
commitment with China’s central bank for short-term loans.
critical U.S. advantages and points of leverage over China.
China’s Technology Trade
Among potential issues that could be considered:
The Biden Administration has said it expects China not to
 Should the United States work with other countries to
substantially support Russia. Unlike a requirement that
thwart China-Russia efforts to create new rules,
China commit to restrict trade, this approach could require
standards, and systems in trade and finance? What is the
the U.S. government to prove that PRC firms are violating
potential for global RMB-denominated trade backed by
sanctions in a consequential way to justify any new actions
oil or gold in the current period or over time?
on China. Additionally, current multilateral sanctions and
 Is U.S. implementation of sanctions and export controls
export controls appear to leave open areas in which PRC
on Russia sufficient? Should Congress examine China-
firms could still operate in agriculture, energy, minerals,
Russia ties and how China might avoid these measures?
and technology. Without secondary sanctions, the United
Should the United States enact secondary sanctions or
States and Europe are limited in their ability to constrain
tighten technology trade and terms of trade with China
PRC activity. China supplies about 70% of Russia’s
to require China to choose between trade with Russia
technology imports, such as semiconductors and
and with the United States and Europe?
electronics. These exports are about 2% of China’s total
 The United States is a top supplier of agriculture, oil,
exports of these products (Figure 3). China is a global
and liquefied natural gas for China. In light of China’s
production and final assembly hub for electronics and
support of Russia, the global food and energy crisis,
semiconductors. U.S. export controls on Russia focus
China’s trade coercion in these sectors, and Europe’s
restrictions on advanced technologies for certain military
shifts away from Russia, should the United States
end users and uses and may not sufficiently restrict China’s
prioritize such exports for Europe and countries in need?
technology trade with Russia. China might support Russia’s
Karen M. Sutter, Specialist in Asian Trade and Finance
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China’s Economic and Trade Ties with Russia

IF12120
Michael D. Sutherland, Analyst in International Trade and
Finance


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https://crsreports.congress.gov | IF12120 · VERSION 1 · NEW

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