The Russian economy is currently facing significant challenges as it experiences a notable decline in trade, particularly with two of its major partners: China and Germany. Recent reports reveal that Russian exports have taken a staggering 9.5% hit, largely attributed to China’s decreasing demand for Russian goods and growing trade tensions with the West.
Declining Trade with China
Recent data from the General Administration of Customs of China indicates that trade turnover between Russia and China fell by 8.2% year-on-year between January and May 2025, amounting to $88.7 billion (£65.9 billion). Notably, exports from China to Russia decreased by 6.6% to $38.89 billion (£28.8 billion), while Russian exports to China plunged by 9.5% to $49.91 billion (£37 billion).
In May alone, the trade turnover between the two nations totaled $17.7 billion (£13.1 billion), a slight 0.6% decline from April. China exported $8.1 billion (£6 billion) worth of goods to Russia in May, while Russian deliveries amounted to $9.6 billion (£7.1 billion). This decline is significant when viewed in context; trade turnover surged by 26.3% in 2023 to $240 billion (£178.2 billion), and soared to a record $244 billion (£181.2 billion) in 2024.
This downward trend can be attributed to a waning demand from China for Russia’s East Siberia-Pacific Ocean (Espo) crude oil, resulting in a significant drop in seaborne imports of Russian crude oil. Consequently, Indian buyers have increasingly sought Espo cargoes as an alternative.
Impact on Relations with Germany
The situation is not any better on the European front. Reports suggest that yearly exports from Germany to Russia have slumped by 9.3%. In April 2025, the imports of Russian goods to Germany fell dramatically by 22.6% in monthly terms, equating to £84 million and marking a staggering 50.3% decline in annual terms. In the same month, adjusted German exports were recorded at €131.1 billion (£110.8 billion), reflecting a 1.7% loss compared to March, and a 2.1% decrease from April 2024.
Experts opine that growing tensions with the United States have significantly influenced this decline. Trade dynamics have shifted, and this has left the Russian economy vulnerable to fluctuations in demand from its traditional trading partners.
Chinese and U.S. Trade Dynamics
On the broader international stage, while Russia grapples with diminishing exports, trade relations between the U.S. and China are being scrutinized. Recently, top officials from both countries met in London to address trade negotiations, indicating ongoing efforts to stabilize relations. Kevin Hassett, director of the National Economic Council under former President Donald Trump, emphasized the need for a firm commitment from China to supply rare earth minerals, highlighting how interconnected and fragile trade relationships have become.
China’s exports rose by 4.8% year-on-year in May, amounting to $316.1 billion (£234.7 billion). However, imports suffered a decline of 3.4%, totaling $212.9 billion (£158.1 billion), suggesting a potential slowdown in economic activity that could affect global markets.
Future Implications for the Russian Economy
The implications of these trade downturns are profound for the Russian economy, which has historically relied on its trade relationships with both China and Germany. The sharp drops in exports indicate not only failing demand for Russian products but also signal changing dynamics in geopolitics. As traditional partners rethink their economic ties, Russia will face mounting pressures to diversify its export markets and adapt to the quickly evolving global landscape.
Such economic shifts may stimulate discussions within Russia about restructuring its economy and finding new avenues for trade. However, the immediate future appears bleak, with trade volumes increasingly showing signs of instability.
As observers analyze these developments, the overarching narrative remains clear: the Russian economy is caught in a perfect storm of external pressures, with diminishing exports and an uncertain geopolitical climate reshaping its economic foundation. Moving forward, how Russia navigates these challenges will determine its resilience and adaptability in an increasingly interconnected and competitive global economy.
