EditAhead of China visit, Putin lambasts Western sanctions as Russia’s economy teeters on the brink
Russia’s economy faces declining oil revenues, a shrinking wealth fund, and a faltering harvest
On the eve of a pivotal four-day visit to China, Russian President Vladimir Putin sharply criticized Western sanctions, blaming them for pushing Russia’s economy to the edge of recession.
In a written interview with China’s state-run Xinhua news agency published on Saturday, Putin decried the sanctions as “discriminatory” and highlighted the deepening economic ties with China as a lifeline for Moscow. The visit, described by the Kremlin as “unprecedented,” underscores Russia’s reliance on its eastern ally amid mounting economic pressures exacerbated by trade restrictions and the ongoing war in Ukraine.
Putin’s itinerary begins with a two-day summit of the Shanghai Cooperation Organisation (SCO) in Tianjin, a security-focused bloc founded in 2001 by Eurasian nations, now expanded to include 10 permanent members such as Iran and India. He will then travel to Beijing to meet Chinese President Xi Jinping and attend a grand military parade commemorating the end of World War II following Japan’s surrender. This follows Xi’s attendance at Moscow’s Red Square parade in May 2025, marking the 80th anniversary of the Soviet victory over Nazi Germany, his 11th visit to Russia since becoming president. The two leaders, who declared a “no limits” strategic partnership in 2022 and have met over 40 times in the past decade, are expected to discuss further economic cooperation to counter Western isolation.
Russia’s economy, battered by multiple rounds of Western sanctions since the 2022 invasion of Ukraine, faces severe challenges. The sanctions, targeting Russia’s financial system, energy sector, and military capabilities, have slashed oil and gas revenues – once a third of the federal budget – by 27% in July 2025 compared to the previous year, totalling 787.3 billion roubles (EUR 8.4 billion). The National Wealth Fund, a critical fiscal buffer, has plummeted from EUR 115 billion in January 2022 to just EUR 30 billion by May 2025, with projections it could be depleted by late 2025. A disastrous 2025 harvest, down 18% from 2022 peaks due to unseasonable frosts, heat, and drought, has further strained agricultural exports, a key economic pillar.
The Central Bank of Russia (CBR) reported a mere 1.1% GDP growth in Q2 2025, down from 1.4% in Q1, with forecasts for 2025 ranging from 1% to 2%, a sharp decline from 4.3% in 2024. High inflation, hovering at 9%, and interest rates at 18% have cooled consumer spending and speculative lending, but at the cost of “anemic growth,” according to analysts. The CBR’s recent 200-basis-point rate cut in July 2025 aimed to revive stalling growth, but experts warn of a looming “fiscal crunch” as military spending, at 8% of GDP, remains protected while other sectors face cuts.
Despite these strains, Putin emphasized Russia’s economic pivot to China, which became its top trading partner after Western nations severed ties in 2022. Bilateral trade hit a record EUR 210 billion in 2024, with transactions nearly entirely in roubles and yuan, bypassing Western financial systems. Russia’s oil and gas exports to China have surged, with agricultural products like pork and beef gaining prominence.
“Economic cooperation, trade, and industrial collaboration between our countries are advancing across multiple areas,” Putin said, adding that his visit would explore “new steps to intensify it for the benefit of the peoples of Russia and China.” China’s role has been critical, supplying goods from cars to electronics and absorbing Russian energy exports, though a brief U.S. sanctions crackdown in February 2025 caused an 18% drop in Russia’s crude exports to China before workarounds restored trade.
U.S. President Donald Trump has kept pressure on Moscow, threatening “massive” sanctions unless Putin advances peace talks for Ukraine. A recent meeting in Alaska yielded no ceasefire, and Trump’s threats now extend to secondary tariffs on nations like China and India for buying Russian oil. Putin, wanted by the International Criminal Court for alleged war crimes, including the deportation of Ukrainian children, avoided mentioning EU accusations of Chinese support for Russia’s war, which Beijing denies. Instead, he framed Russia and China as united against Western “hegemonic bullying,” a nod to their shared resistance to U.S.-led sanctions and tariffs.
As Russia’s economy faces declining oil revenues, a shrinking wealth fund, and a faltering harvest, Putin’s defiance masks growing vulnerabilities. “Russia’s economy is entering a long-term regression,” warned former Russian Central Bank official Alexandra Prokopenko, with the IMF projecting just 1% growth in 2025. Yet, with China’s economic lifeline and protected military spending, Moscow continues its war effort, betting on resilience over retreat. Putin’s visit to China aims to bolster this partnership, but the spectre of further sanctions and economic fragility looms large.
With Reuters, edited by g.g.
Caption: Russian President Vladimir Putin holds a meeting with members of the government at the Kremlin in Moscow, Russia, 27 August 2025. EPA/VYACHESLAV PROKOFYEV / SPUTNIK / KREMLIN POOL
Updated: August 30, 2025 - 07:13
