Russian Foreign Minister Sergey Lavrov touched down in China on 8 April as his first overseas trip of his new six-year term. Next month, Russian President Vladimir Putin is expected to follow suit, choosing China as his first foreign visit after his re-election to reaffirm the centrality of the countries’ “no–limits partnership”. Apart from North Korea, China remains the only destination that Putin has visited several times since launching a full-fledged war in Ukraine in 2022. This period has also seen a rapid growth in high-level diplomatic visits between the two countries.
While it is common knowledge that the Ukraine war has pushed Russia closer to China than ever before, what is often overlooked is the indispensability of Zhongnanhai for the Kremlin, and the geopolitical ramifications of this for the rest of the world, especially India.
India’s multi-alignment and abiding engagement with Russia needs to be firmly rooted in strategic realism. An essential aspect of this is decoding just how the “no-limits” friendship between Russia and China has evolved qualitatively and quantitatively since the Ukraine war. What becomes clear is that Beijing’s veil of “neutrality” is slipping away, etching it firmly in Moscow’s calculus for times to come.
The extent of Russia’s China dependence falsifies the earlier hypothesis that cracks would develop between the two due to Moscow’s unwillingness to accept “junior partner” status in the increasingly asymmetrical relationship. This hypothesis also overestimated the impact of their historical disputes and cultural distancing, as pointed out by analyst Alexander Gabuev in an essay for Foreign Affairs. Underlying problems remain, but dependence on China is more entwined and intrinsic to Moscow’s worldview today and than it has ever been in the past.
As for China, its attitude toward Russia can best be described by the Italian word sprezzatura—studied and strategic nonchalance.
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Beijing’s sprezzatura
Lest it be forgotten, China was the first country to set up working groups on the impact of secondary sanctions as its biggest banks withheld financing Russian companies in selfish interest. However, China has exploited the various crevices and loopholes in the sluggishly enforced sanction regime with a strategic deftness that is not easy to maintain in such fluid geopolitics. All of that, while upping the pressure in the Indo-Pacific on Taiwan and naming Indian villages in Arunachal Pradesh.
It is no surprise, then, that Janet Yellen’s recent appeals to Xi’s regime to stop supporting Putin’s war effort are unlikely to deter China, despite the threat of secondary sanctioning. Indeed, some Chinese entities were sanctioned in January 2024, but it is no match for the volume of trade enabled by proxies and under the garb of dual-use tech.
So, what does China get out of supporting Russia? The most obvious answer is steady and cheap supply of Russian oil and gas. Unlike India, which keeps running into payment issues in its oil-centric trade with Russia, there is a perfect seamlessness of interests and payment gateways in China-Russia trade.
Talking about figures, their bilateral trade has already crossed all targets set at the beginning of the no-limits friendship, crossing a record $240 billion in 2023, a 26.3 per cent increase from the previous year. Notably, 70 per cent of that trade is done in yuan, a preferred currency for both Beijing and Moscow.
Breaking down the figures, China imported $129 billion worth of energy products—including oil, pipeline gas, LNG, and coal—from Russia in 2023. These shipments account for 73 per cent of Russian exports to China. Conversely, Chinese exports to Russia have also jumped 47 per cent in 2023, marking a 64.2 per cent rise compared to 2021. These exports, amounting to $111 billion, are primarily in industrial equipment, cars, and consumer electronics.
It must also be noted that not only does China pay for its energy purchases in yuan, but also receives yuan payments for the products it sells to Russia, including dual-use tech. The two-way trade value between China and Russia reportedly stood at 1.69 trillion yuan ($235.90 billion) last year, a 32.7 per cent year-on-year increase.
That is where India’s trade with Russia strikes a discordant note. New Delhi is a steady buyer of Russian crude and prefers paying in rupees that may be converted to rubles. But the convertibility of the ruble remains an unresolved problem. Most of the oil trade has been settled in currencies such as the dirham and, per some reports, even in yuan. Meanwhile, India’s weapon payments have been done in rupees. There is no evidence that these accumulated trillions in Russian accounts in Indian banks are actually reaching the Russian economy. The fact that Russia has not been able to meaningfully invest the rupees back into India to offset the incurred trade deficit also tells the same story of difficulties in the rupee-ruble mechanism.
Beyond hydrocarbons, Russia is dependent on China for everything from cars and mobile phones to electronic equipment and machinery, as Western brands have left the Russian market. China’s trade with Russia is simply a fraction of its global trade, but Russia’s trade with China is an overwhelming part of its total trade. Shrouded in the oft-quoted trade figures lies a concerning trend— the rising percentage of dual-use items that have steadily boosted Russian war efforts.
Their bilateral defence relations have also matured, with Moscow stepping up arms deliveries, including Su-35s and S-400s, to Beijing after 2014. Despite India being a more loyal and older customer, China has received more supplies from Russia than India between 2019-2023, according to a March 2024 report by the Stockholm International Peace Research Institute.
After the war, there has also been an increase in Russia-China war exercises. Analysts have pointed out at least four joint patrols in Asia with nuclear-armed bombers in 2022 and 2023. Their preference for the term “Asia–Pacific” when referring to the Indo-Pacific, a key maritime domain for India, is not comfortable for New Delhi.
Russia’s China dependence is set to grow
It is important to understand that regardless of the outcome of the war in Ukraine, Russia’s China dependence is slated to grow. The thousands of sanctions and their enforcement mechanisms will likely further isolate Russia from Western markets. The yuan is already the preferred currency for Russia and will become more so as China ramps up pressure to use it further for its trade. The other option will perhaps be gold bullion, which Iran reportedly got against its latest sales of Shahed-126 drones to Russia.
But the most fundamental reason why this asymmetry is going to further rise comes from Putin’s decision to overheat the Russian economy to fuel the war effort. A recent Spiegel interview with Alexandra Prokopenko, a Berlin-based former advisor to Russia’s Central Bank, sheds light on this.
Prokopenko offers a realistic assessment, praising the performance of Russian economists and rating them far higher than the war generals. According to her, it is the policies of the Central Bank that have helped the ruble stay as stable as possible and deliver to whatever extent possible on the Fortress Russia strategy.
However, Russia’s current economic performance relies heavily on defence-related industries, not on exports or foreign investments, which are virtually non-existent in the country today. Even China, wary of the current uncertainty, has not invested in Russia.
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Putin’s ‘trilemma’
Prokopenko aptly points out “Putin’s trilemma”—financing a seemingly endless war, managing inflation to maintain living standards, and ensuring that the Russian economy does not lose its macroeconomic balance.
The rub—fulfilling these three objectives at the same time is virtually impossible without sustained Chinese support.
China is the only clear winner of the Ukraine war and it is seemingly doing everything it can to prolong it. The longer the war stretches, the more room it gets to manoeuvre unbeatable prices for the energy trade and raw earth minerals. And while China keeps the US and its transatlantic allies engaged in the European theatre, it’s freeing strategic space in the Indo-Pacific.
Through all of this, China has consistently positioned itself as a potential mediator, offering a peace plan for Ukraine, calling to end Russian sanctions and earning points with developing economies.
India’s engagement with Russia must be balanced against China’s manoeuvres, and it must operate on strategic realism.
Wishing it away will only aid Beijing’s grand plans to subvert the global order in its favour, which will have implications for India.
The writer is an Associate Fellow, Europe and Eurasia Center, at the Manohar Parrikar Institute for Defence Studies and Analyses. She tweets @swasrao. Views are personal.
(Edited by Asavari Singh)