Russian reliance on China for dual-use goods will rise

Significance Imports of microelectronics and machine tools from the West plummeted due to sanctions imposed after the full-scale invasion of Ukraine in 2022. Exports of dual-use microelectronics and many types of machine tools were banned. China emerged as the only strategic partner capable of replacing the West as a supplier of these goods. Impacts Russian domestic production of microelectronics and machine tools will grow but at a slower rate than demand. Belarus will remain a key supplier of microelectronics to Russia. China and Russia will actively use new financial settlement schemes in renminbi and rubles to facilitate bilateral trade. The creation of a BRICS payment system could also open new trade opportunities.