Elina Ribakova, Director of the International Affairs Program and Vice President for Foreign Policy at the Kyiv School of Economics, testified before the U.S.-China Economic and Security Review Commission during a hearing on “An Axis of Autocracy? China’s Relations with Russia, Iran, and North Korea.”

Since Russia’s full-scale invasion of Ukraine and the imposition of Western sanctions, China has become Russia’s largest trading partner. In 2023, China accounted for 34% of Russia’s total trade turnover, while Russia made up only 4% of China’s trade, highlighting the deep asymmetry in their economic relationship.

“China is the most critical enabler of Russia’s war economy. Without Chinese trade and support in sanctions evasion, Russia would struggle to generate revenues and secure critical components for its military production,” says Elina Ribakova. 

Despite claims of a “no limits” partnership, China remains cautious in fully aligning with Russia, especially regarding Western financial sanctions. Chinese banks and companies avoid transactions that could expose them to sanctions, prioritizing their global business interests, as Russia remains a relatively small market for them.

At the same time, Russia’s growing dependence on the Chinese market, circumvention networks, financial infrastructure, and the tightly controlled yuan is creating new vulnerabilities for Russia.

While over 90% of Russia-China trade is now conducted in rubles and yuan, trade growth slowed in 2024, and at times even declined, as both countries sought new ways to circumvent sanctions. However, they still rely on Western financial infrastructure, as BRICS countries have shown little interest in developing alternative payment systems.

Elina Ribakova outlined 3 policy recommendations for congressional consideration to reduce Russia’s economic and military reliance on China:

• Replace the current energy sanctions regime with a framework that imposes greater costs on Russia without providing economic benefits to China through cheaper energy.

• Ensure that export controls on critical technology are effectively enforced in the case of Russia, as their implementation serves as a test case for broader restrictions on exports to China in the future.

• Leverage the continued dominance of the Western financial system to strengthen the enforcement of sanctions and related measures globally.

Russia and China’s challenge to the rules-based international order is a coordinated joint effort. Easing sanctions on Russia could lead to a role reversal, allowing Moscow to assist China in evading future sanctions. “Like interconnected vessels, reducing pressure on one inevitably strengthens the other,” says Elina Ribakova. 

Watch the full hearing and read Elina Ribakova’s testimony here: https://t.ly/BcGOa 

This testimony was prepared jointly with KSE Institute Sanctions Team, which provides in-depth research and policy recommendations on Russia’s sanctions evasion and economic dependencies.