Beijing will take the free marketing. When Leland Miller suggests China is becoming an attractive trade option for India and others “because it’s not the United States,” he is identifying a real-time hedging impulse across emerging markets. But the optics of Xi, Putin and Modi sharing a stage obscure a narrower, transactional reality: China is deepening a sanctions-shaped supply relationship with Russia while probing selective openings with India. The policy scaffolding at home is built for both.
The Russia channel is the cleanest example. Since 2022, trade flows have reoriented at speed, with Chinese goods backfilling Western exits in machinery, autos, electronics and consumer durables, while Russian energy finds willing buyers in Asia. Beijing officials have been explicit. Premier Li Qiang said China would align development strategies with Moscow and “maintain the growth momentum” of trade and investment. That is not just diplomacy. China has become Russia’s dominant auto supplier, and exports rebounded again after Xi and Putin met in mid-2024, according to Chinese customs and Russian import data cited by state media.
Asymmetry is now a feature. Russian policymakers worry privately about overdependence on a single supplier, a sensitive point in Moscow even before war. The revival of Russia-India-China consultations offers the Kremlin a stage on which to rebalance optics and options. For Beijing, the calculus is simpler: Russia is a cash-paying buyer of Chinese goods with few political conditions, and energy discounts lower China’s input costs. The risk sits in Washington and Brussels, not Moscow.
India’s stance is more constrained than summitry suggests. New Delhi will join talks that reduce friction with Beijing and preserve space with Moscow, but it is not exiting the Quad or US ties. Attempts to scale rupee-rouble mechanisms since 2022 have run into the arithmetic of India’s bilateral deficits and currency convertibility. China is a major supplier—directly and through third countries—of capital goods and components that India’s manufacturing drive still needs. Yet security concerns after the 2020 border clashes have hardened screening of Chinese investment and technology.
Even so, a limited de-risking from the dollar is attractive in Delhi’s bureaucracy. India’s banks are more comfortable settling Russia trade in non-dollar currencies when sanctions allow. The idea that China is “not the US” is a low bar, not an embrace. For Indian corporates, the operating question is whether Chinese-origin inputs can move with fewer headaches than US-origin ones across their supply chains. The answer depends on sector and sanction, not flags on a photo wall.
RMB settlement has grown where sanctions and convenience intersect. In Russia trade, the yuan has become the default for many transactions, enabled by China’s Cross-Border Interbank Payment System and bilateral banking ties. The People’s Bank of China has expanded swap lines with multiple counterparts and encouraged local-currency settlement through BRICS and the Shanghai Cooperation Organisation. China’s Ministry of Commerce has pushed “稳外贸” measures—export credit insurance, tax rebate acceleration and cross-border e-commerce facilitation—that support this trend.
But RMB internationalization remains a functional workaround, not a new order. When US secondary sanctions risk spikes, Chinese banks retrench, slowing even yuan-denominated flows for sanctioned counterparties. India is not about to invoice broad-based trade with China in RMB, and the rupee’s international use is still narrow. In short, the yuan is gaining ground in sanctioned corridors and specific commodities, but the global dollar plumbing remains intact.
The macro strategy is consistent with the 14th Five-Year Plan and recent State Council guidance: rely on external demand to absorb industrial overcapacity while pushing “new quality productive forces” at home. Electric vehicles, batteries and solar equipment—sectors accused in the West of overcapacity—are positioned as export pillars. Sinosure has expanded coverage for high-growth markets. Local governments have organized overseas trade fairs and chartered flights for buyers. The National Development and Reform Commission and Ministry of Commerce have rolled out incremental steps to reduce logistics costs and speed VAT rebates, aiming to keep factories humming.
This is not triumphalism; it is triage. Domestic property weakness and sluggish consumption make exports a stabilizer of last resort. Emerging markets are the growth vector because they are less likely to erect instant trade barriers, and because they are price-sensitive. Russia is an extreme case of captive demand; India is a test of whether geopolitics can be compartmentalized in services of manufacturing goals.
The main threat to the Russia corridor is enforcement, not demand. US and EU authorities have sharpened scrutiny of third-country re-exports of dual-use goods and financial channels. Each tightening prompts a compliance wave in Chinese banks that narrows the field of active intermediaries and shifts transactions to smaller institutions with higher operational risk. In the EU, anti-subsidy probes into Chinese EVs and clean-tech threaten key export categories. For India, the risk is policy whiplash: tariff and licensing changes, investment screening and periodic bans can flip corporate calculations overnight.
Beijing’s answer is to diversify buyers and insulate channels. That means deeper outreach to the Middle East, Africa and Southeast Asia, and expanded use of local currencies where feasible. It also means making sure state-owned enterprises and large private champions can withstand episodic sanctions waves—an extension of SOE reform priorities that emphasize resilience as much as profitability.
The Xi-Putin-Modi tableau is useful in signaling a non-Western operating system, but supply chains are made in purchase orders and compliance desks. India’s commercial engagement with China will proceed where it advances India’s manufacturing agenda and avoids political blowback. Russia will keep buying what China is willing to sell and paying in currencies both can clear. Beijing will continue to calibrate between market access in the West and volume in the Global South, accepting friction in Europe and episodic US penalties as costs of the strategy.
Three markers matter more than speeches. First, bank behavior: if large Chinese lenders keep trimming exposure to sanctioned entities despite RMB settlement, expect more trade to migrate to cash goods, barter-like exchanges or smaller financial intermediaries, with margin and reliability costs. Second, India’s policy signals: approvals for Chinese electronics investments, tariff moves on components, and use of local-currency settlement in Russia-facing trade will show whether New Delhi’s hedge is widening. Third, capacity deployment: if Chinese autos, batteries and solar gear continue to see restrictions in the West, expect persistent discounting into emerging markets and deeper political ties as grease.
The basic thesis stands: China does not need allies to sell goods. It needs buyers who can pay and channels that can clear. Russia fits by necessity; India fits by case. The optics help, but the trade is in the plumbing.
