Xi turns Putin into junior partner as China takes 40% of Russia trade

Four years of war and economic isolation have reduced Vladimir Putin from Xi Jinping's role model to a supplicant in a relationship China now dominates across nearly every dimension.

Chinese President Xi Jinping has turned Russian President Vladimir Putin into a junior partner, rejecting Moscow's push for a major gas pipeline deal during a May visit that exposed the stark power imbalance between the two authoritarian allies.

"Xi received Putin like an emperor receiving his visitor in his castle, and sent him home," said Joerg Wuttke, a veteran German business executive with long experience in China-Russia relations.

During the May visit to Beijing, Chinese officials told Gazprom they would sign the Power of Siberia 2 pipeline only if Russia sold gas at the same subsidized domestic rate Moscow charges at home, according to people with knowledge of the talks. Beijing instructed the Russian delegation not to raise the issue again until the terms changed. Putin left the Chinese capital having signed 42 agreements and joint declarations — none of them the pipeline deal.

The failed pipeline deal threatens Russia's strategic pivot to Asia, the centerpiece of Putin's post-Ukraine economic strategy. Without Power of Siberia 2, Moscow has no replacement for the European gas market it lost after the 2022 invasion, leaving its energy sector increasingly dependent on Chinese willingness to buy on Beijing's terms.

Russia's dependence on China has deepened dramatically since the war began. China now accounts for nearly 40 percent of Russia's total trade, up from roughly 10 percent when Xi and Putin first met in 2013. Chinese purchases represent about a third of Russia's export revenues, while Russia makes up less than 4 percent of China's overall trade.

Beijing has used this leverage to extract concessions Moscow resisted for more than a decade. Russia recently acquiesced to the Chinese yuan becoming the primary currency for a planned Shanghai Cooperation Organization Development Bank covering Central Asia, according to Chinese government advisers and diplomats. Moscow had opposed that arrangement for years, wary of China expanding its footprint in what Russia considers its sphere of influence.

Unease Over North Korea Ties

Beyond energy and finance, Beijing has grown uneasy about Russia's deepening military entanglement with North Korea, which has sent troops to fight alongside Russian forces in Ukraine. Chinese officials worry that Russian technology transfers could improve North Korea's nuclear or submarine capabilities, pushing South Korea and Japan closer to the US and undermining Beijing's efforts to draw Seoul toward its orbit.

Putin pushed privately for a trilateral summit between Russia, China and North Korea — a proposal Beijing declined, according to people familiar with the matter. Xi instead visited Pyongyang in early June for the first time in seven years, an effort to reassert that Beijing, not Moscow, remains North Korea's principal patron.

Europe's Russian Gas Paradox

While China tightens its grip on Russia's eastern energy trade, European buyers have paradoxically increased their intake of Russian liquefied natural gas. The EU imported a record 9.97 million metric tons of LNG worth about 5.96 billion euros ($6.82 billion) from Russia's Yamal LNG facility in the first half of 2026, a 16 percent increase from the same period last year, according to Kpler data. European buyers absorbed over 97 percent of the Siberian facility's total output during the period.

The surge came as supply bottlenecks in the Middle East, including blockades in the Strait of Hormuz and damage to Qatari infrastructure, forced European buyers to lean on readily available Arctic gas. The EU's ban on short-term Russian LNG imports took effect April 25, though exemptions built into the regulation allow continued intake before a complete ban on Jan. 1, 2027.

The trajectory points toward Russia becoming structurally dependent on China for the long term. Some analysts see Beijing cultivating ties with Russian officials and elites who will shape the country after Putin, betting that anti-Western sentiment has become so embedded in Russian society it will outlast the current leadership. "China really has a very good chance to turn Russia into a kind of giant Laos, giant Pakistan," said Alexander Gabuev, director of the Carnegie Russia Eurasia Center. "A country much more dependent on China, much more connected to China, much more looking up to China as a model and as a source of modernity."

This article is for informational purposes only and does not constitute investment advice.