Putin’s visit to Beijing, well-timed to follow President Trump’s trip to meet with Xi Jinping, left few doubts about the state of Russia-China relations. Russia is structurally trapped as a junior partner of diminishing value. The failure to reach an agreement on Power of Siberia 2 was symbolic of Moscow’s larger problem: even amid an impending energy shock with no historical precedent, China has options. Russian policymakers, desperate for foreign-currency earnings, tax revenues, and corporate revenues to avoid larger domestic price increases, do not.
The recent shift in Ukraine’s ability to conduct long-range strikes has tilted battlefield conditions further in its favor, even as Russian forces regroup for another offensive. This only deepens Moscow’s dilemma. China will continue selling whatever is needed for the war or demanded by Russian consumers, but it has other priorities and a strong negotiating position with the U.S. government.
Markets continue to underprice the risk of an explosion in energy prices, thanks largely to steep drawdowns in crude-oil and refined-product inventories. Gas markets face fewer immediate pressures, as China and other countries with available coal-fired plants switch away from gas. The real risks, however, will emerge after summer in Europe and other import-dependent markets that must refill storage. Oil is a different story. The longer the Strait of Hormuz remains effectively closed, the greater the danger of non-linear price spikes once inventories are exhausted. Prices cannot respond rationally once physical shortages set in.
Setting aside the lack of meaningful announcements from the visit, two core problems embedded in Sino-Russian economic relations cannot be wished away by the Kremlin.
First, Russia cannot export its way out of its difficulties. Its best potential sources of growth lie in investment, consumption, and higher productivity—not commodity sales. Even with a 40% surge in oil-and-gas budget revenues in May, the overall outlook for the year remains worse. Industrial-scale agricultural exports to China rose 38% in dollar terms from January to April, reaching $ 3.5 billion—a strong increase, yet still a modest sum. Worse, rising commodity prices and, later this year, higher global food prices from smaller harvests will drive inflation and interest rates higher in Russia, where staples account for roughly 40% of average consumer spending.
Logistical constraints compound the problem. Higher interest rates hurt investment and force Russian Railways and other operators to raise tariffs, feeding inflation further because transport plays a larger role in price formation in Russia than in most economies of comparable or greater wealth. Commodity dependence creates mostly negative feedback loops in a wartime economy. Neither the budget nor the strength of the ruble is the best metric for measuring the fallout on consumers.
Second, China’s economic-security strategy and dominance in cleantech are bearing fruit amid this shock. Beijing holds more crude oil in stockpiles than any other country—a cornerstone of its policy of diversifying supply and maintaining healthy buffers. A conservative pre-conflict estimate placed China’s crude inventories at 1.3−1.5 billion barrels, enough to cover roughly four months of demand. U.S. EIA data suggest that in 2025 China added about 1 million barrels per day to those stockpiles. Crude imports fell 20% year-on-year in April, and because refiners cut back even more sharply, net crude inventories continued to grow.
Add to this China’s cleantech momentum and macro dynamics. While electrifying transport does not immediately slash oil demand, global EV adoption accelerated in 2025 and has accelerated further since the current shock began. It is now on track to account for nearly 30% of all light-vehicle sales this year. China is exporting more than $ 25 billion of green technology every month, with particularly strong demand from the world’s poorest markets—precisely those most exposed to surging oil and gas prices. Headwinds exist—Chinese manufacturers are beginning to see costs rise—but this structural shift steadily erodes the urgency of deeper partnership with Russia. The effect will become even more pronounced as Chinese firms electrify diesel-intensive long-haul trucking at scale, a process already underway. Beijing is prepared for worst-case scenarios. When it eventually returns to buying barrels on the open market, prices will break loose.
With these structural factors in play, it is no surprise that the Russian delegation left Beijing relatively empty-handed. The timing could hardly have been worse. While the economy is not in freefall, the overall signals point toward recession. The Bank of Russia reported that annualized inflation in April slowed from 5.9% to 2.4%. Inflation below 3% is typically a highly negative indicator in Russia, given the economy’s structure since Putin’s first term: wage growth is tightly linked to price increases, systematic competition is limited (and varies by sector and strategic importance to the Kremlin), and the system’s capacity to invest in productive fixed assets is constrained. If inflation is truly that low, conditions are deteriorating rapidly.
Ministry of Economic Development’s proposed sector programs to raise labor productivity by 25% by 2030 are telling. The state is attempting to engineer gains that market conditions do not support. Private-sector cement demand is falling, taxi fleets are bleeding cash, and sales of primary residences dropped 14.9% year-on-year in April—even as the ruble value of mortgages issued rose. Times are getting tougher.
Tempting though it has been to portray Russia as a big winner from the Gulf conflict, the Beijing visit suggests something far more damning: the prospect of the worst energy crisis in more than half a century is not enough to materially change Beijing’s approach. Buying more Russian crude on the open market is acceptable, but Ukraine now possesses the strike capability to damage a wide range of refining, processing, midstream, and export infrastructure across European Russia at scale. If Putin cannot leverage the looming threat of $ 200+ oil into meaningful concessions—and those concessions would still be inadequate to arrest the disequilibrium slowly eroding the productivity of the Russian economy—what exactly can he leverage?
