How Russia's Wartime Economy Is Benefiting China Too

Chinese exports have significantly increased, rising by 7.1 percent in the first two months of 2024 compared to the same timeframe last year, with notable growth in trade between China and sanction-strapped Russia.

The data comes as Russia's wartime economy defies naysayers and as China lauds a "new paradigm" in Moscow-Beijing ties.

The latest trade figures, released Friday by China's customs authorities, defies a Reuters survey of economists that forecast a modest 1.9 percent growth in export growth amid muted consumer confidence, a drop in foreign investment, stagnation in China's manufacturing sector, and a bevy of other economic headwinds.

The actual figures far surpassed these projections, marking a nearly 5 percent jump from December's export figures. Meanwhile, China's imports grew by 3.5 percent year-on-year, indicating an uptick in demand a year after the lifting of China's strict zero-Covid restrictions.

Trade between China and Russia has notably flourished, with total trade values reaching $37 billion.

The Russian embassy in the United States did not immediately respond to Newsweek's written request for comment.

This includes $16.8 billion in Chinese exports (a 12.5 percent increase) to Russia and $20.2 billion in imports (a 6.7 percent increase) from the northern neighbor a 9.3 percent increase in total trade between the two countries year-on-year.

This growth outpaced that which the world's second-largest economy enjoys with most other countries.

Only India and Canada experienced higher increases in bilateral trade, with rises of 15.8 and 10.4, respectively.

"China and Russia are each other's biggest neighbor, with a comprehensive strategic partnership of coordination for the new era," Liu Pengyu, spokesperson for the Chinese Embassy in Washington, D.C., told Newsweek.

"Last year, bilateral trade reached a record US$240 billion, hitting the target of $200 billion ahead of schedule. Russian natural gas is fueling numerous Chinese households, and Chinese-made automobiles are running on Russian roads. All this shows the strong resilience and broad prospects of China-Russia mutually beneficial cooperation."

Meanwhile exports to China's largest trade partner, the United States, have fallen by 5 percent while American imports into the country are down by nearly 10 percent.

The export category of "mechanical and electrical products" did particularly well, rising by 8.5 percent year-on-year after shrinking by 2.4 percent in December.

Tao Wang, chief China economist at financial services firm UBS, attributed the export recovery largely to the global tech product cycle, especially electronics, which has seen an upswing in recent months.

"We have seen that cycle bottoming in the latter part of last year," Wang said.

At a press conference last week during the annual Two Sessions gathering of the Chinese government's who's who, Chinese Foreign Minister Wang Yi said: "China and Russia have created a new paradigm of great power relations."

"The expanding volume of exports to Russia is surely part of the trend in which sino-Russian trade is displacing other trade and reflective of increased integration," economist George Magnus, former chief UBS economist of UBS and current associate at the University of Oxford China Centre, told Newsweek.

China has effectively helped Russia mitigate the impact of these sanctions by strengthening economic ties, providing an alternative currency for transactions, and helping offset the loss in Western orders of Russian gas and oil.

This partnership has become increasingly critical as Western nations have imposed economic and financial sanctions on Russia in response to its invasion of Ukraine, now entering its third year.

Update 3/12/24, 1:30 p.m. ET: This article has been updated with a comment from the Chinese Embassy in Washington, D.C.