Russia’s economic plunge leaves China scrambling to redirect exports abroad

China’s carmakers are watching the Russian market fall apart fast. What started as a goldmine after the Ukraine invasion is now a closed gate.

Chinese brands rushed in when Western automakers left. They took over Russia’s showrooms like it was a clearance sale.

Now in late 2024, Moscow’s new “recycling fee” has jacked up the cost of basic cars, those with one- or two-liter engines, by over $8,000. No warning, no mercy. At the same time, Russia’s sky-high interest rates are making it near impossible for buyers to get loans.

The result? Russia’s car sales dropped 27% in just six months. But that’s not even the worst of it. Imports of Chinese cars fell 62% during the same period.

And China’s top car brands are already bleeding. This was the market that helped China grab the crown as world’s largest car exporter in 2023, with nearly 20% of all whole-car exports going to Russia.

Chinese brands lose grip as Russia pulls back

The damage is real. Geely, one of China’s biggest players, saw its export numbers shrink 8% between January and August. Great Wall Motor barely held its ground; no gain, no loss. That’s a red flag for a company built on expansion.

And Chery, the country’s top auto exporter, only managed to grow exports by 11%. Sounds okay, until you realize that last year they were growing at 25%. So, that momentum’s gone.

Meanwhile, BYD, China’s biggest seller at home but with no official business in Russia, is now chasing Chery hard. BYD’s overseas sales more than doubled. It’s clear they’re pushing hard into other countries while everyone else is stuck cleaning up the Russia mess.

But the story doesn’t end at shrinking exports. China’s factories are choking on overcapacity, and a brutal price war back home is pushing them to offload vehicles anywhere they can.

Russia’s market crash means one less outlet for that flood. And don’t think other countries are just sitting back and watching. Tariffs are popping up all over the map. Several regions have already started slapping taxes on Chinese autos to slow the flood.

The more China pushes, the more doors close. It’s a bad loop, and Beijing knows it.

Trump talks Russia war as BRICS gathers for trade fight

While China’s automakers get squeezed, global politics are heating up too. Donald Trump, back from the U.S. Open in New York, told reporters on Sunday that European leaders will be flying to Washington early this week. His reason? “To discuss how to resolve the Russia-Ukraine war,” he said.

Trump didn’t name names. The White House stayed silent when asked for more details. But he made one thing clear, he’s not pleased. “I’m not happy about the status of the Russia-Ukraine war,” he said, after being asked about the Russian air attack that lit up Kyiv’s government building overnight. Still, Trump’s tone was confident. He repeated that the war “would soon be settled.”

On another front, China confirmed that Xi Jinping will join a virtual BRICS summit on September 8. It was called by Brazil’s Lula da Silva, and the agenda is clear; talk about Trump’s trade threats.

India’s Prime Minister Narendra Modi won’t attend, but he’s sending a top official in his place. Trump has already warned that if they push ahead with plans to dump the U.S. dollar, he’ll respond with 100% tariffs.

China’s Foreign Ministry said Xi will “deliver an important speech” during the online gathering. Russia’s Vladimir Putin will also be there, according to Kremlin spokesman Dmitry Peskov, who spoke last week to Russian news agency Tass.

Meanwhile, Brazil is using the summit not just to talk tariffs but to rally other emerging markets behind multilateralism, according to Bloomberg, which cited sources familiar with the meeting.

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