The available data ends on April 30, so the analysis doesn’t give a picture up to the current day, Martin Chorzempa, senior fellow and author of the study, said in an interview. But a separate analysis of China-only data through the end of May shows that China’s exports to Russia remained well below prewar levels, suggesting that Beijing is wary of helping Moscow, Chorzempa said.
“After the European Union, China is the second-largest contributor to Russia’s import decline since the invasion, despite President Xi Jinping’s promise of ‘no limits’ cooperation,” Chorzempa wrote, referring to a partnership Xi and Russian President Vladimir Putin announced shortly before the war in Ukraine began.
The study adds to a mixed picture of Russia’s economy since sanctions first hit. After an initial plunge, the Russian ruble has rebounded and even grown stronger than it was before the war, which economists say has helped calm some of the Russian public’s fears about economic collapse.
It now takes about 53 rubles to buy one dollar, versus about 80 just before Russia invaded, according to Russia’s central bank. The country’s strong energy exports amid rising oil and gas prices partly explains the ruble’s rise, but so does the collapse in Russia’s imports, showing that the currency’s rising value isn’t entirely good news for Moscow.
Because overseas suppliers have cut them off, Russian importers don’t need to exchange so many rubles into dollars these days to make purchases, a phenomenon that inflates the ruble’s value.
“Despite Russia having all this oil and gas money coming in, it is not able to buy much, even from countries not imposing sanctions,” Chorzempa said.
If it continues to struggle with imports, Russia’s economy will degrade over time, with manufacturers required to shut down and lay off employees, economists warn.
Russia “so far has not experienced a collapse. A significant economic downturn is nonetheless very likely going forward as supply chain issues accumulate and fiscal problems emerge,” said Oleg Itskhoki, an economics professor at University of California, Los Angeles.
Some signs of those problems have already cropped up. Russian automakers AvtoVAZ and GAZ recorded an 84 percent and 57 percent drop in domestic vehicle sales in May, compared with the same month in 2021, a drop that Maxim Mironov, a Russian economist at IE Business School in Madrid, attributed to the manufacturers’ inability to buy imported parts.
Western sanctions were designed to prevent Russia’s military and high-tech economy from accessing the components they needed to keep functioning. Initially, some U.S. and European officials feared China might step in to fill that gap.
But economists said China is likely wary of losing access to U.S. and European technology — and access to those markets to sell its goods — should it anger the West by supplying Russia. For example, one provision in the U.S. sanctions package bans other countries from selling Russia semiconductors if they want to continue using U.S. technology to manufacture the semiconductors. Most countries, including China, rely on U.S. tools and software for chip manufacturing.
Another factor that could explain part of China’s drop is that foreign multinational companies are responsible for half of China’s exports, Chorzempa said. “Those corporations need to be plugged into the global economy and are presumably following orders not from Beijing but from their own corporate headquarters,” he said.
What’s more, the negative impact the war is having on Europe’s economy is bad news for China, because it depresses Europe’s ability to buy Chinese goods, Mironov said.
China’s apparent hesitance to supply Russia will spell trouble if it continues, economists said. The country supplied a quarter of Russia’s imports in 2021 — more than any other country.