Redefining A New World Order

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In this pool photograph distributed by the Russian state agency Sputnik, Russia’s President Vladimir Putin (L) shakes hands with China’s President Xi Jinping during a meeting at The Great Hall of the People in Beijing on September 2, 2025. (Photo by Sergey Bobylev / POOL / AFP) (Photo by SERGEY BOBYLEV/POOL/AFP via Getty Images)

POOL/AFP via Getty Images

Many thought Trump’s meeting with Putin in Alaska and Zelenskyy in the Oval Office had ushered in a new round of serious negotiations about peace in the ongoing 4 year-long conflict in Ukraine. However, the reality is that peace talks between Russia, Ukraine, and the US and Europe are clearly stalled, if at worse dead with many contentions from both sides surrounding security concerns and, importantly, trade sanctions. Putin is increasing his strikes and pressing for further military gains in defiance of Trumps deadlines to enter any serious peace talks. Moreover, at the September 3rd military parade in China marking 80 years since the country’s victory over Japan in World War Two, the Putin and Xi standing side by side sent a clear message to President Trump: Your tariffs will not deter a new world order.

Throughout the Russian Ukraine war, sanctions from Europe and the US have increasingly intensified on Russia and their trading partners. Secondary sanctions have even been enacted largely to prevent Russia from using intermediaries in other countries to fully continue its role in the global economy. According to multiple Treasury press releases the Office of Foreign Assets Control (OFAC) over the last year has intensified sanctions on over 400 individuals and entities over 17 different jurisdictions. This has forced Russia to lean heavily on China specifically in order to prop up its wartime economy and most importantly, continue trading its most important commodity crude oil. In fact, over the last five years, China has become Russia’s biggest customer for crude oil, buying nearly half of the oil that Russia exports. Furthermore, bilateral trade between China and Russia surged to $244.8 billion in 2024, fueled by Western sanctions and wartime demand. On top of buying Russia’s oil and energy commodities, China also supplies Russia with cars, semiconductors, and consumer goods. The two countries have also increasingly settled transactions in rubles and yuan with Putin announcing that 90% of the two countries transactions are being settled in those currencies as of December 2024, sidestepping Western financial systems. In fact, only 18% of Russian trade now uses the dollar or euro as of December, down from 87% and 67% of imports and exports, respectively in early 2022.

China has also supported Russia’s war effort directly, with reports linking Chinese companies to shipments of gallium, germanium, and antimony–key inputs for missile and drone production–while banning their export to the US. A fundamental question many analysts have been questioning is whether Russia’s wartime economic dependence on China is a tactical approach or symbolic of a more long-term strategic realignment?

Russia’s Historical Reaction to Western Economic Pressure

Russia is no stranger to Western pressure and intense economic sanctioning. The closest precedent to today’s standoff was in 2014 when Russia annexed Crimea. Western sanctions, similarly, targeted access to Western finance systems, energy exports, and defense industries. As a result, many Western banks, Exxon, BP, and other companies pulled out of or lessened operations in Russia. In response, Russia pivoted towards eastward to China again, signing the Power of Siberia Pipeline, and then accelerating the development of payment systems like Mir and System for Transfer of Financial Messages (SPFS) to circumvent Western financial systems. This move from Russia laid the groundwork for its current geopolitical maneuvering in lieu of Western economic pressure.

Even when put under lighter sanctions in 2018, during the Salisbury chemical attack, claims of election interference, and criminal cyber operations continued. Russia doubled down on de-dollarization policies through increasing gold reserves and diversifying trade settlement currencies. A practice going back to the Cold War, when Washington restricted technology exports through The Coordinating Committee for Multilateral Export Controls (CoCom), the Soviets hunkered down and adapted by trading with neutral states and relying on the Eastern Bloc.

The lesson is clear: when squeezed, Russia has always sought workarounds, often outside Western systems. This suggests that Russia’s relationship with China is not just out of necessity but a sign of further realignment that has been in the works for decades. Historical trade data supports this trend as China has surged past Germany and the US who were formerly very important trade partners. Yet history also shows when sanctions ease, Russia opportunistically re-engages with the West and Europe. After 2014 in the graph it shows that Russian imports in Germany sharply rebound coinciding with the annexation in Crimea ending. This highlights that Russia’s current alignment with Beijing may remain during peace, but it is definitely not immutable.

Implications

The energy sector is perhaps the most important facet of Russia’s realignment with Beijing. With the destruction of the Nordstream pipelines and Europe’s pivot to alternate suppliers, the continent has locked in deals to reduce dependence on Russia. This shift is reinforced by Russia’s push to expand its eastward infrastructure through the Power of Siberia pipelines cementing a more permanent divide in global energy markets.

Europe’s energy profile has already been undergoing large-scale restructuring: Russian energy imports have dropped sharply, and have been replaced partly by deals with the US, Norway, and Libya. Even after a post-war settlement Europe’s new energy supply chain makes it unlikely that Russia will regain the dominance in Europe’s energy supply. This also presents an opportunity for Europe to turn strongly towards renewables and develop more nuclear, wind, and water infrastructure in order to fully account for the gap which would further erode Russia’s relevance in that market.

With Russia increasingly opening doors to become an oil supplier to Asia due to Western sanctions. This has been seen through China as Russia has become the biggest portion of its energy imports. This highlights an establishment of Cold War-esque trading blocs in energy markets where instead of a globalized interdependent market there is a rise of parallel energy spheres. This fragmentation further entrenches geopolitical tensions and makes LNG and energy pipelines strategic assets on top of commercial projects.

Another key implication lies in the de-dollarization trend driven by Russian alignment with China. As aforementioned, the two countries have increasingly settled trade in Yuan and Rubles and have been increasingly cut out of Western markets through tariffs and sanctions. In doing so, they are not only insulating themselves from Western financial pressure, but also developing the infrastructure to build parallel financial networks. This creates a new financial battleground in the Global South where Beijing and Moscow can promote non-dollar settlements in trade especially for discounted necessary energy resources and other more advanced manufacturing commodities. This undermines the dollar’s dominance in the energy trade ecosystem and makes a multipolar financial world closer to a reality.

Special thanks to Artem (Tom) Valyaev Kunisky, for his for his exceptional thought leadership, research, and editorial contributions to this article.