Russia Faces Steep Markups on Sanctioned Goods from China

In a revealing analysis of the current trade dynamics between Russia and China, a report from the Bank of Finland Institute for Emerging Economies highlights that Russia is experiencing a nearly 90% markup on sanctioned goods imported from China compared to just 9% for products from other countries. This situation reflects the increasingly imbalanced nature of their relationship, which was touted as having “no limits” in early 2022 when Vladimir Putin launched a full-scale invasion of Ukraine.

The report underscores that the median price Russia paid for Chinese exports of sanctioned products surged by 87% from 2021 to 2024. In contrast, prices of sanctioned goods from other nations increased only modestly during the same period. Specific products, such as ball bearings, crucial for industrial applications and listed as high-priority items by the European Union, illustrate this trend. The value of Chinese ball-bearing exports to Russia rose by 76%, despite a 13% decline in the quantity exported, indicating that the unit price has effectively doubled.

In another notable example, prices for tapered roller bearings nearly quadrupled. These products are essential for various industries, including Russia’s weapons sector, raising concerns about the implications of such price increases. The Bank of Finland remarked, “Our general results… lead us to conclude that trade sanctions have been successful in their aim of limiting Russia’s access to critical goods.”

Turkey has also benefited from this shift, with export prices of sanctioned goods to Russia climbing between 25% and 55% compared to other exports. Overall, prices for sanctioned products are now 40% higher than those for non-sanctioned goods.

In a broader context, data from Capital Economics indicates that total bilateral trade between Russia and China fell by 9% during the first nine months of 2025 compared to a year earlier. This follows a period where trade more than doubled between 2020 and 2024. Currently, China accounts for 30% of Russia’s goods exports and 50% of its imports, while Russia constitutes only 3% of China’s goods exports and 5% of its imports.

As Chinese firms express concern over potential repercussions from Western sanctions on Russia, there is little evidence of an expansion of supply chains into the country. Foreign direct investment remains limited, underscoring the asymmetric nature of the Russia-China relationship. According to Capital Economics, “China is more important for Russia economically than Russia is for China. And Russia wants and needs more from the relationship than China is willing to provide.”

These findings emerge as the Kremlin reportedly explores business deals with the United States in an effort to negotiate an end to the Ukraine conflict and ease sanctions. Meanwhile, Putin’s wartime economy is encountering significant challenges. Issues such as production bottlenecks, labor shortages, and a lack of Western technology are intensifying strains on the Russian economy.

Alexandra Prokopenko, a fellow at the Carnegie Russia Eurasia Center and former advisor to the Russian central bank, recently noted that to increase military production or enlist more soldiers, Moscow would need to adopt a more comprehensive war footing. This would involve reallocating all available resources towards military needs, reminiscent of strategies employed during World War II.

The dynamics between Russia and China continue to evolve, highlighting the complexities and challenges both nations face in their economic interactions amid ongoing geopolitical tensions.