Putin’s ‘dear friend’ Xi piles pain on Russia’s economy

 When Vladimir Putin made a four-day trip to visit Xi Jinping in September, he addressed his Chinese counterpart as a “dear friend”.

Speaking to Xi across a vast display of orchids in Beijing’s Great Hall of the People, the Russian president claimed their ties were “at an unprecedentedly high level”.

Certainly on the surface it appears China’s alliance with Russia has only grown stronger since Putin’s invasion of Ukraine in 2022.

Nowhere has this been more evident than when looking at trade between the two countries, which has boomed ever since the West slapped Putin with massive sanctions.

Last year, the value of trade between Russia and China hit a record $245bn (£182bn), fuelled by Xi becoming the world’s largest buyer of Putin’s oil and gas. Overall, China also became Russia’s biggest supplier of goods.

However, closer ties with China have come at a cost.

In particular, Russian businesses have grown increasingly frustrated at a flood of cheap Chinese goods.

Vladimir Milov, who worked in the Russian government from 1997 to 2002 before becoming a vocal Putin critic, says the economic alliance is backfiring badly for Russia.

“It is deeply disadvantageous,” he says. “China is taking advantage because it knows that Russia has nowhere to go.”

Such warnings could signal that the economic ties between the two countries are beginning to fray.

While mutual trade hit a record high in 2024, it has fallen by nearly a tenth so far this year.

Lada sales plunge

One key area of tension is cars.

After Western manufacturers cut ties with Russia in 2022, Chinese competitors duly stepped in.

In the two years to 2024, Chinese car exports to Russia have increased sevenfold, prompting a growing number of complaints from domestic manufacturers.

Maxim Sokolov, the chief executive of Russian carmaker AvtoVAZ, has accused the Chinese of “unprecedented dumping”, which he said in December has crossed “all imaginable boundaries”.

Sales of his company’s signature Lada car have plunged, pushing the company to slash production by nearly half and move to a four-day work week at the end of September.

Russia’s largest truck manufacturer, Kamaz, also trimmed its working week in August after demand for its vehicles plunged by 60pc. At the time it blamed “excessive” imports.

To alleviate some of the criticism, the Kremlin has responded by significantly raising import fees on vehicles.