Trade Boom with China Slows as Sanctions and Market Saturation Take Their Toll, Warns Russian Minister

Russia’s Minister of Industry and Trade, Anton Alikhanov, stated on Tuesday that sanctions and market saturation are starting to hinder the previously rapid increase in trade with China, moderating the significant growth witnessed since the comprehensive invasion of Ukraine.

“We are noticing a certain decrease in mutual trade… In the medium term, we should anticipate more modest growth rates than we experienced previously,” Alikhanov mentioned during a Russia-China business forum held in Kazan this week.

Trade between Russia and China surged after many Western companies exited the Russian market in 2022, achieving a record turnover of $245 billion last year, positioning Russia as China’s seventh largest trading partner. However, bilateral trade saw an 8.1% decline from January to July compared to the same timeframe in 2024, amounting to $125.8 billion.

Alikhanov identified three primary factors contributing to this slowdown: Western sanctions and overall economic pressures, fluctuations in global commodity prices, and what he referred to as the «expansion limit» of Chinese products within the Russian market.

Chinese automotive manufacturers quickly entered the Russian market following the withdrawal of Western competitors, but demand has weakened in recent months. In July, regulatory authorities prohibited imports from four leading Chinese truck manufacturers, as Russian companies responded to decreasing sales by reducing workweeks.

Alikhanov asserted that the future of trade will focus less on raw materials and consumer goods, and more on technology and industrial collaboration. He emphasized 63 joint ventures in sectors such as electronics, automotive, metallurgy, chemicals, and pharmaceuticals, collectively valued at around $130 billion.

“In the long run, the most effective projects will be those that involve investments in collaborative manufacturing, technology transfer, and the implementation of cutting-edge technologies,” remarked the Industry and Trade Minister.

Nonetheless, the business publication Kommersant pointed out that China invests only a small portion in Russia compared to its financial commitments to neighboring Southeast Asian countries, highlighting the limitations of their partnership.