War in Ukraine Has China Cashing In

The country's trade with Russia this year has exceeded $200 billion, and makers of cars and trucks are the big winners.

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China's Growing Economic Relationship with Russia

On China's border with Russia, a truck dealership has experienced a doubling in sales thanks to Russian customers. China's exports to Russia have been incredibly strong, prompting the construction of warehouses and office towers at the border. China is profiting from Russia's invasion of Ukraine, with Russia turning to China for various purchases.

Trade between Russia and China reached over $200 billion in the first 11 months of this year, exceeding expectations. Russia has also benefited from an image boost in China, as state media aggressively promotes Russian propaganda. Social media influencers even visit Chinese cities, posing in Russian attire in front of historical Russian landmarks.

The close ties between China and Russia have been publicly demonstrated by top leaders Xi Jinping and Vladimir V. Putin. China's exports to Russia have skyrocketed since the invasion of Ukraine, and both countries emphasize the importance of a strong economic relationship.

China Fills Russia's Import Needs

China has become a critical supplier of goods to Russia, as many European and American companies have shunned Russia due to sanctions. Despite the risk to its economic ties with Europe, China believes it should be free to do business with both Europe and Russia. Before the invasion of Ukraine, Europe and China had set aside their differences to emphasize commerce.

The surge in trade with Russia has greatly benefited China's vehicle manufacturers. Chinese carmakers have grabbed 55 percent of the Russian market, overtaking Japan as the world's largest car exporter. German manufacturers like Mercedes-Benz and BMW have pulled out of the Russian market due to sanctions.

While luxury car sales in Russia have declined, lower-middle-class and poor Russian families have increased their purchases of affordable Chinese cars. Russian families of soldiers receive death and disability payments, contributing to the demand for affordable vehicles.

China's Construction Industry Benefits

China's construction industry has received a timely boost from its growing ties with Russia. The Chinese economy has struggled due to prolonged COVID-19 measures, leading to a crisis in the real estate market. However, construction projects along the Russian border have provided new job opportunities for laborers.

Infrastructure like truck stops, customs processing centers, rail yards, and pipelines have been rapidly constructed in border cities like Heihe. Pipelines are especially important for the energy trade between China and Russia. Russia's cheap energy, bypassing Western sanctions, has allowed Chinese factories to remain competitive in global markets.

China and Russia have also worked on building new pipelines to support their energy trade, including a third pipeline that would carry gas from easternmost Russia to northeastern China. Despite historical territorial disputes, China and Russia are now building bridges and pipelines across the Amur River.