Since the outbreak of the Russia-Ukraine conflict in 2022, Russia has long been in a state of friction with the NATO camp, with the U.S. and Europe having successively introduced more than ten rounds of sanctions covering the entire chain of finance, trade, energy, and logistics. As this unfolded, Russia-China’s economic and trade cooperation has defied the trend and risen, with bilateral trade reaching USD 227.9 billion in 2025, accelerating further in the first half of 2026 to USD 134.2 billion, a year-on-year increase of 25.6%. It is expected to break through USD 250 billion for the full year. On the surface, policies such as the implementation of the new version of the bilateral investment treaty and the signing of more than 20 cooperation documents during the heads of state meeting continue to release cooperation dividends, and the prospects for economic and trade cooperation are favorable. However, judging from the practical level of past cooperation, the bilateral investment treaty has long suffered from difficulties in implementation and weak enforcement. All these have become a deep-seated cooperation risk that is easily overlooked.

Specifically, the 2006 version of the China-Russia Bilateral Investment Treaty has long since existed in name only in actual cooperation, with Russia essentially not taking it seriously, leading to multiple problems and failing to provide Chinese investment with adequate protection. Even state-owned enterprise assets, such as civil passenger aircraft, could be confiscated by the Russian side arbitrarily. Investment disputes between the two countries have also occurred one after another and are practically difficult to resolve. Although China and Russia have signed a new version of the bilateral investment treaty, the key remains Russia's implementation issue. Of course, this treaty also acts as a crucial strategic bargaining chip for China in dealing with Russia, and if the Russian side fails to observe it, any discussion of national credibility becomes baseless. Consequently, the Chinese side must attach high significance to this core leverage point and seize it firmly.

Considering these challenges at the level of investment performance, and building on long-term information tracking and research, ANBOUND researchers noted that while China-Russia trade continues to grow in scale, the three major difficulties of logistics bottlenecks, cumbersome customs clearance, and poor payment collection are constraining the development of Chinese enterprises' trade with Russia, dragging down performance efficiency, compressing profit margins, and threatening financial security. Coupled with the historical problem of the Russian side failing to comply with bilateral economic and trade treaties, Chinese enterprises trading with Russia face not only short-term operational and practical issues, but also hidden risks of long-term asset security and policy uncertainty.

First of all, after the West imposed transportation sanctions against Russia, the nation's traditional logistics channels in the European direction were virtually interrupted, where shipping routes were drastically reduced, and land routes became the core carrier of China-Russia trade. With the contradiction between surging trade volume and lagging port infrastructure and supporting services becoming prominent, logistics shifted from an efficiency issue into a bottleneck for industry development.

Over 60% of China-Russia cross-border freight relies on ports in the eastern corridor network such as Manzhouli, Suifenhe, Heihe, and Hunchun along China's northern and northeastern border. After the western corridor’s cross-border passage became congested, 80% of cargo was diverted to the eastern route, causing truck queues at ports to reach up to 72 hours during peak freight periods, with overall transport time extended from 30 days to 40 days, and cross-border e-commerce dedicated lines taking 25 to 35 days. Although new channels such as the Tongjiang Railway Bridge and the Heihe Highway Bridge have supplemented transport capacity, port transshipment, warehousing, and inspection facilities remain imperfect, and the "last mile" bottleneck has not been resolved. Highway transport is also affected by cumbersome cross-border visas, poor road conditions within Russia, and strict transit inspections, frequently dragging regular 7-to-10-day journeys out to over 20 days.

Maritime transport channels are similarly under pressure. Cross-border logistics industry research shows that freight rates on traditional European routes have risen by 21% to 33%, and the risk of vessel sanctions has escalated. Loading and unloading capacities at core Far East ports are insufficient, and the winter freezing period further reduces operational efficiency. Navigation duration on the Arctic shipping route has been extended to 8 months; yet constrained by shortages of icebreakers and weak supporting facilities, it can only serve as a supplementary channel and cannot be applied on a large scale.

Sanctions compounded by tight transport capacity have driven logistics expenses within Russia up by 30% to 50%. This doubling of cross-border freight rates is forcing numerous small and medium-sized merchants to abandon orders due to runaway costs. Unstable shipping schedules have also triggered cascading losses, such as claims for delayed delivery, inventory backlogs, and missed sales windows. This is especially damaging for businesses that handle time-sensitive categories like fresh produce, electronics, and fast-moving consumer goods. Furthermore, cross-border logistics providers and transport fleets face secondary sanction risks, which substantially increase compliance screening costs for businesses.

A deeper issue is the fragmentation of the logistics network. China and Russia have yet to establish an integrated service framework encompassing warehousing, trunk transport, customs clearance, and final-mile delivery. Because businesses must coordinate with fragmented service providers across different segments, information has also become scattered and responsibilities remain blurred, making it exceptionally difficult to seek recourse for cargo damage, lost parcels, or delays. Industry estimations indicate that cross-border e-commerce transactions between China and Russia exceeded USD 40 billion in 2025, a 2.64-fold increase over five years. Yet, overseas warehouses remain concentrated in western Russia with a complete void in the Far East, further driving up fulfillment costs.

Second, since the outbreak of the Russia-Ukraine conflict, Russia has tightened customs oversight while introducing successive rounds of import tariffs and regulatory measures. These policies have had a particularly significant impact on competitive Chinese export sectors, including machinery, electronics, and automobiles. In addition, differences between Chinese and Russian industrial standards, together with complex customs clearance procedures, have further raised the barriers to bilateral trade. At the same time, non-tariff barriers, procedural inefficiencies, and discriminatory policy measures continue to constrain the overall level of trade facilitation between the two countries.

On the one hand, the gradual escalation of tariffs has directly increased the cost of imports. Beginning in the second half of 2024, Moscow intensified its measures targeting competitive Chinese export sectors. In October 2024, the recycling tax on imported vehicles was increased by an initial 70% to 85%, with mandatory annual increases of 10% to 20% thereafter. The further expansion of these levies in 2025 contributed directly to a decline of more than 40% in China’s exports of complete vehicles to Russia, while some parallel import channels experienced even sharper contractions.

Under new policies rolled out in 2026, Russia began a year-by-year reduction of the duty-free exemption for parcels valued under EUR 200, bringing the threshold down to zero by 2028, while phasing in a 5% annual import value-added tax (VAT) starting in 2027 until it reaches 20% by 2030. This policy severely squeezes the profit margins of over 100,000 Chinese cross-border sellers. Concurrently, Russia imposed industrial surcharge taxes on 23 main Chinese export categories, including smartphones and home appliances, with maximum levies reaching RUB 5,000 per unit, precisely targeting China's export strengths in electromechanical and light industrial goods.

On the other hand, product certification standards are rigorous and continually tightening. Russia continues to rely on legacy national standards that map poorly onto China’s standards. Core export items such as machinery, electronics, vehicles, and agricultural products must undergo specialized certifications like GOST and EAC, with single-item certification cycles lasting 3 to 6 months, costing tens of thousands of yuan, and requiring exhaustive Russian-language documentation alongside authoritative third-party testing reports. In 2026, Russia placed over 600 additional categories of goods under top-tier EAC supervision, accompanied by a comprehensive upgrade of audit criteria. Following the Ussuriysk customs incident in October 2025, eastern border ports instituted 100% full-coverage inspections for electromechanical and electronic products, causing demurrage and warehousing fees to soar.

Additionally, customs clearance procedures are cumbersome. Russian customs relies heavily on manual verification. The electronic "single window" customs clearance systems of China and Russia are not fully interconnected, and duplicate documentation is required across multiple steps. Although Russia's "audit after release" policy briefly shortened clearance times in October 2025, its validity window was narrow and excluded most categories such as foodstuffs and medical devices. Even with 24-hour clearance operations at the Manzhouli port, peak queues still exceed 12 hours, leaving delivery reliability exceptionally poor. Meanwhile, pursuing a domestic industry protection strategy, Russian authorities have subjected competitive Chinese sectors, such as new energy products, machinery, electronics, and auto parts, to differentiated oversight characterized by priority scrutiny, enhanced traceability, and strict end-use controls, with 2026 focal points centering on inspections of the electric vehicles (EVs), lithium-ion batteries, and photovoltaic roducts, leading to a marked increase in cargo detentions and mandatory rectifications.

Finally, following the exclusion of most Russian banks from the SWIFT system, China-Russia bilateral trade has shifted almost entirely to local currency settlement, with the rate reaching 99.1% in 2026 and the yuan accounting for over 90%. Although this transition appears to complete a de-dollarization process, difficulties in payment collection persist. While the linkage between China's CIPS and Russia's SPFS systems allows for hourly clearing, restricted settlement channels, difficulties in repatriating profits, and high exchange rate risks, all driven by Russian capital controls, remain central operational challenges for Chinese businesses.

As it stands, cross-border settlement channels continue to contract on both ends. Aside from domestic Chinese banks tightening operations out of apprehension over secondary sanctions, Russian authorities have simultaneously tightened cross-border capital supervision, imposing stringent quotas and due diligence reviews on trade settlements and fund transfers, which artificially drags out routine settlement workflows. Only a privileged minority of enterprises can achieve rapid settlement through bank "white lists", while micro, small, and medium-sized enterprises are forced to rely on small border banks or intermediary channels characterized by exorbitant fees and low reliability.

Barriers to profit repatriation are, in fact, a severe and pressing bottleneck. Affected by Russian capital controls and corporate risk-mitigation strategies that favor localized fund retention, over 70% of Chinese corporate profits generated in Russia cannot be smoothly remitted back home. Machinery and light industrial exporters across various regions report that only a small fraction of operating profits earned in Russia can cross the border, with the bulk of funds trapped locally for reinvestment, severely constraining corporate cash recovery and business expansion.

Moreover, exchange rate volatility and bad debt risks are intensifying. Driven by geopolitical tensions and shifting energy prices, the ruble has fluctuated wildly. Between February and March 2026, the Russian currency weakened continuously under geopolitical and energy shocks, with its maximum depreciation against the yuan exceeding 6% and inflicting clear foreign exchange losses on exporters. In addition, Russian importers are facing severe cash crunch pressures. Sampling data indicates that average account settlement periods have stretched from 30 days to between 60 and 90 days, while the bad debt rate on credit sales has climbed to 5.8%. As the stability of Russia's financial system is being impacted by the sanctions, corporate accounts face heightened risks of frozen funds and transfer restrictions, leaving capital security difficult to guarantee.

For China, there is a need to leverage the new investment treaty to strengthen government–business coordination, improve the cross-border trade support system, and build a more stable economic and trade framework capable of withstanding a high-friction environment.

One priority for China should be to develop an integrated cross-border logistics and fulfillment network. This could include promoting a “TIR plus bonded” multimodal transport model to reduce trunk transit times, while proactively adapting to Russian regulatory requirements and addressing the shortage of overseas warehousing capacity in the Russian Far East. Establishing one-stop service platforms that integrate warehousing and transportation would also help reduce last-mile fulfillment costs. At the same time, China could develop a whitelist of compliant logistics service providers, diversify cross-border transit routes, and strengthen operational resilience against geopolitical sanctions and policy changes.

China’s other step would be to advance mutual recognition of standards and improve customs clearance efficiency. It should continue promoting bilateral mutual recognition of key product certifications, Authorized Economic Operator (AEO) status, and regulatory outcomes. Greater interoperability between the two countries’ customs single-window systems would help streamline declaration requirements and reduce unnecessary inspection procedures. At the enterprise level, companies should be encouraged to conduct compliance reviews in advance and closely monitor changes in Russian tariffs, certification requirements, and other regulations so that they can align with market-access standards before entering the market. At the same time, it is also crucial for China to make full use of the revised investment protection treaty to formally request that Russia review outstanding investment disputes and uphold its obligations under the bilateral agreement.

What China should also consider is maintaining efficient local-currency settlement channels. There is a need to expand the capacity of direct inter-institutional financial networks between the two countries and promote faster settlement through bank whitelists. To better align with Russian capital-control regulations, China could pilot local-currency funding pools in border free-trade zones to simplify approval procedures for cross-border profit repatriation. Businesses should also be encouraged to adopt risk-management instruments, including letters of credit, advance-payment guarantees, and export credit insurance, to mitigate exposure to credit defaults and exchange-rate fluctuations. At the same time, promoting a “trade + localized investment” business model would help Chinese enterprises better align their operations with Russia’s industrial and financial policies.

Although China-Russia trade has continued to grow steadily, the structural challenges facing Chinese firms operating in the Russian market remain long-term and systemic. These challenges are most evident in three areas, namely logistics bottlenecks, cumbersome customs procedures, and difficulties in cross-border payment collection, all of which continue to undermine operational efficiency and financial security. More importantly, the Russian side’s weaker enforcement of the 2006 bilateral investment protection agreement has left Chinese investors’ interests insufficiently protected for many years, raising concerns about the effective implementation of the new agreement. China and Russia need to strengthen coordination between their governments and businesses, both to improve the supporting framework for cross-border trade and to ensure that the Russian side fully fulfills its obligations under the agreement, for the long-term, stable development of bilateral economic and trade relations.

Final analysis conclusion:

Despite a range of challenges, China-Russia trade has continued to grow steadily in recent years, while the new investment agreement has delivered tangible policy benefits. However, concerns remain over its effective implementation, particularly in light of Russia’s weaker implementation of the 2006 framework. Chinese businesses trading with Russia continue to face three major challenges of logistics bottlenecks, customs barriers, and difficulties in cross-border payments. This has undermined operational efficiency, put pressure on profit margins, and increased financial risks for Chinese firms. To address these issues, China will need to make strategic use of the new agreement while strengthening government-business coordination on both sides to improve the supporting framework for cross-border trade and promote the long-term, stable development of bilateral economic relations.