FT: China Has Almost Doubled The Price Of Dual-use Goods For Russia

Beijing has taken advantage of Moscow's dependence on alternative supplies.

Chinese exporters have significantly raised prices for dual-use goods for Russian buyers, taking advantage of Moscow's growing dependence on alternative supplies amid Western sanctions. This is according to a new study by the Institute of Emerging Market Economics at the Bank of Finland, writes Financial Times.

According to the study, the average price of exports from China to Russia of goods subject to export controls rose by 87% between 2021 and 2024. By comparison, the value of similar shipments to other countries increased by only 9% over the same time period.

Experts note that Russia has indeed been able to restructure imports and rely on Chinese supplies to circumvent Western restrictions on the purchase of products with military capabilities. However, sanctions pressure imposed after a full-scale invasion of Ukraine in 2022 has dramatically raised the price of such reliance.

According to a senior Western official involved in sanctions policy, such a situation actually weakens Russia's military-industrial sector: "If the price of a product goes up by 80 percent, it almost halves the volume of what Russia will be able to buy."

The study's authors, Iikka Korhonen and Heli Simola, analyzed a key trade category, "machinery and mechanical devices," which includes dozens of items critical to Russia's defense industry.

They found that in some cases, the increase in the value of Chinese goods imported by Russia was due solely to higher unit prices, rather than an increase in shipments.

So, by 2024, Russian companies' imports in the category of Chinese bearings increased by 76% in dollar terms, but their real physical volume, on the contrary, fell by 13% compared to 2021.

The researchers also found a significant increase in the prices of sanctioned goods on the part of Turkish exporters. According to their estimates, Turkish suppliers have increased the cost of such goods for Russia by 25-55%, while the prices for similar products for other countries have increased much less.

The overall model, based on data from 14 countries, shows that the median cost of goods imported by Russia that are subject to export controls has increased by 75% since 2021, while the prices for other products on average have remained almost unchanged.

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