China and Russia Deepen Ties: Strategic Partnership or Calculated Risk?
When Chinese President Xi Jinping publicly framed closer Beijing–Moscow ties as a “shared strategic choice” in late 2025, he did more than reiterate friendly rhetoric — he pushed forward an agenda with economic, technological and geopolitical consequences that will reverberate across Eurasia and beyond. This piece breaks down the drivers of that rapprochement, the hard data that matters, the fault lines beneath the headlines, and the concrete scenarios policymakers and businesses should watch carefully.
1. Why China and Russia are drawing closer
Geopolitical hedging: Both capitals face a shifting external environment. For China, a closer relationship with Moscow helps secure its northern flank, diversify energy and mineral supply chains, and give Beijing added diplomatic ballast in international fora. For Russia, China offers scale — a vast market for commodities, investment, and a partner to blunt the impact of Western sanctions.
Economic complementarity: The partnership is pragmatic. Beijing imports raw materials and energy; Moscow imports manufactured goods and technology that remain accessible despite Western restrictions. In recent years the two have expanded trade settlement in local currencies and piloted linked payment systems — a gradual re‑engineering of international financial plumbing that has symbolic and practical implications for the U.S. dollar’s long‑standing dominance.
2. The economic reality: growth, imbalances, and the 2025 slowdown
The headline numbers show scale: bilateral trade has been historically large, with 2024 recording record volumes. Yet momentum cooled in 2025. Early‑year data pointed to a contraction in trade flows — an indicator that diplomatic warmth alone cannot erase structural barriers: logistics, sanctions, payment frictions, and China’s cautious re‑balancing of overseas purchases.
| Indicator | Why it matters | Recent trend (2024–25) |
|---|---|---|
| Bilaterial trade volume | Depth of economic ties | Record in 2024; slowdown in H1 2025 |
| Energy projects (e.g. pipelines) | Long‑term strategic anchors | Major memoranda signed; commercial details pending |
| Currency settlement | De‑dollarisation indicator | Growing share in yuan/ruble settlement |
3. Where the partnership is fragile
Asymmetry of benefits. China remains the dominant industrial and financial power. Moscow’s export profile — heavy on hydrocarbons and raw materials — risks entrenching a supplier‑buyer imbalance that limits Russia’s upward mobility inside value chains.
Sanctions, secondary pressure and logistics. Western sanctions remain a wild card. Even when China trades with Russia, logistics bottlenecks and secondary sanctions risks add costs and uncertainty that reduce trade efficiency and private appetite for deep integration.
Political distrust and divergent priorities. Public statements emphasize “strategic coordination,” but private-level mistrust — especially in technology transfer and intellectual property — can slow the pace of high‑value cooperation.
4. Geopolitical implications
Strengthening a multipolar world. Deeper China–Russia coordination in forums such as the Shanghai Cooperation Organisation (SCO), BRICS, and other Eurasia‑focused institutions contributes to a more multipolar diplomatic architecture — one in which the United States is only one of several major actors shaping outcomes.
Pressure on dollar hegemony. Local currency settlement and alternative payment rails, while not yet a revolutionary replacement for global financial markets, represent incremental steps that will matter over time — especially if replicated across other emerging‑market partnerships.
Security externalities. Military and dual‑use technology cooperation, even if limited, has the potential to alter regional balances and spur problematic spillovers into neighbouring theatres, particularly in the Indo‑Pacific and Central Asia.
5. What to watch next (practical signals)
- Concrete energy deals: Will the Power of Siberia 2 (or equivalent) reach final commercial agreements and financing? Timelines and financing arrangements will show whether this is symbolic or binding.
- Trade composition shifts: Growth in services and high‑value manufactured goods would indicate deeper integration — a raw‑to‑manufactured trade pattern suggests continued asymmetry.
- Currency & payments: Measurable growth in yuan/ruble settlement share beyond pilot programs would indicate tangible de‑dollarisation trends.
- Defense and high tech: Any sustained or transparent military‑tech transfers would escalate strategic concern among Western and regional actors.
6. Three scenarios for 2026–27
Scenario A — Managed partnership: Both governments formalise select infrastructure and energy deals, trade stabilises, and financial coordination expands slowly without triggering major secondary sanctions. This outcome preserves flexibility for both capitals.
Scenario B — Deep strategic integration: Bilateral projects and payment systems scale rapidly; military‑tech cooperation grows. This would represent a decisive long‑term strategic axis and force Western policymakers to recalibrate regional strategies.
Scenario C — Fracture under pressure: Economic frictions, domestic politics, or external sanctions cause cooling. Moscow grows frustrated by dependency; Beijing realigns priorities. The partnership remains transactional and limited.
Conclusion — Opportunity with limits
Xi’s push for deeper China–Russia ties in 2025 isn't merely rhetorical: it is backed by concrete diplomacy, trade flows and ambitious energy plans. But beneath the summit photographs and joint statements lie real limits — structural imbalances, logistics and financial frictions, and the long shadow of Western sanctions. For businesses, investors and policymakers, the practical approach is clear: monitor concrete deals (especially in energy and payments), track composition changes in trade, and beware simplistic narratives that treat the relationship as either invincible or purely symbolic.
Keywords: China–Russia 2025, de‑dollarisation, Power of Siberia 2, bilateral trade, Beijing Moscow cooperation