The last two decades have seen a very rapid
increase in trade and lending between China and Russia. The investment relationship has remained
more subdued. China dominates every aspect of the bilateral economic relationship, as a net
exporter, net creditor and net investor, despite Russia long being a richer country than China.
China and Russia are increasingly viewed as important political and economic partners,
notwithstanding their past differences. However, in terms of trade and investment, economic
cooperation between the two countries' remains less intense than their diplomatic relationship, even
though their formal economic interactions can be traced back to the 1700s and both shared a similar
economic model, namely central planning, for a good part of the twentieth century.
China
has developed very rapidly in economic terms over the past two decades since its accession to the
World Trade Organisation. In particular, it has become the largest exporter in the world from a very
low base (Figure 1 and Table A1 in the Annex), surpassing Europe. In that context, it is
unsurprising that Chinese goods have flooded Russia, eating into the EU's and the US's export shares
to Russia. Beyond China's increasing economic weight, the changing global environment, including the
sanctions and counter-sanctions between the West and Russia, the US-China trade war and the US-led
IndoPacific Strategy, have helped re-orient Russia's economic relationships towards the east, with
China being the largest player.