Russia’s Economy on China’s Lifeline – A Look at Manzhouli

Anyone walking through the streets of Manzhouli today quickly realizes that this place is more than just a border town. Manzhouli, located in Inner Mongolia in northeastern China, is the most important gateway between Russia and China – a place where global power dynamics take shape in rows of containers, sawmills and supermarkets. Here, the new barter of the 21st century is in motion: Russian timber for Chinese cars, rapeseed for smartphones, political backing for economic dependence. Almost six percent of the Russian economy now consists of exports to China – a share matched only by Iran, which is likewise isolated by sanctions and almost entirely reliant on Chinese purchases. While Europe has turned away from Russia with determination following its war of aggression against Ukraine, China has strategically deepened its alignment with Moscow. In Manzhouli, where a rail line built by Russia in 1900 connects to the Chinese network, the flow of goods is nearly uninterrupted.

Trains loaded with Siberian construction wood – pine for building, birch for chopsticks, aspen for concrete formwork – cross the border, as do trucks full of rapeseed to be processed in Chinese factories into cooking oil. In a highly automated plant near the border, tons of Russian rapeseed are dehulled and pressed daily. Where coal and wood waste were once burned, wind turbines now provide the electricity for this new era. And while China receives raw materials, it delivers in return finished products in a range that makes Russia’s domestic economy look outdated: clothing, smartphones, vehicles. Since Western carmakers withdrew amid the war, China has come to dominate Russia’s auto market – 60 percent of all new cars now come from Chinese manufacturers. Moscow responded with a $7,500 import fee for new vehicles, but Chinese entrepreneurs in Manzhouli quickly figured out how to work around the system: in opulent used car showrooms with golden doors and marble floors, nearly new BMWs, Land Rovers and Chinese luxury brands are sold – as private-use vehicles for Russian buyers, duty-free.

But the economic closeness comes at a price. China is using the situation strategically to reduce its dependence on Western suppliers. Rapeseed once came from Canada – now it comes almost exclusively from Russia. After Trump’s new tariffs on Chinese products, Beijing retaliated against Ottawa: 100 percent tariffs on Canadian canola oil and meal, plus a trade case targeting the seed itself. This new alliance is mirrored on Manzhouli’s shelves – with “Stalin” wine, Putin matryoshkas and Russian instant coffee. What was once a relationship between communist brothers is now an asymmetrical power dynamic. In the 1950s, Soviet advisers helped China build steel mills and railways. Today, China produces more industrial goods than the US, Germany, Japan, South Korea and the UK combined. Russia’s share: 1.3 percent – including weapons production. It is an economic reality that is visible in the streets of Manzhouli, where Chinese semi-finished goods are made from Russian wood, while Beijing steers the flow of trade with a few clicks.

But not everything runs smoothly. Russia recently banned the export of freshly cut pine – forcing Chinese businesses to switch to sawn boards. In the other direction, China imposed tariffs on Russian coal at the beginning of 2024, after state-owned Chinese mines complained of falling prices due to Russian competition. It is a controlled power play in which China sets the rules. The political dimension is ever-present. While Western governments enforce sanctions, China continues to supply drone technology to Russia, secures Moscow’s energy exports and thus effectively sustains Putin’s war economy. Foreign Minister Wang Yi recently described the two countries’ relationship as “the most stable, mature and strategically significant major-country relationship in the world.” A statement that causes unease in Europe.

While Brussels keeps a diplomatic distance, a Chinese pivot away from Moscow might have opened the door to new dialogue. But the opposite has happened. In Beijing, EU leaders like Ursula von der Leyen are calling for a shift. China’s position on the war is a “determining factor” for relations. But Beijing remains unimpressed – the resources from the north are too valuable, the message too strategically important: that neither Washington nor Brussels will dictate how global politics is to be shaped. Manzhouli stands as a symbol of this new order: China’s workshop and Russia’s economic lifeline. A place where geopolitics is reflected in sawdust, truck convoys and cleared BMWs – and which shows how deeply economy and power are interwoven in a multipolar world.

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