USA.
and Russia would negotiate an end to the conflict in Ukraine?
1:39
(CNN) --
In the year since Russia's invasion of Ukraine, Moscow has been hit by unprecedented Western sanctions and shut out from much of the world economy.
But China, which has declared no "limits" on its friendship with its northern neighbor, has thrown an economic lifeline at the Kremlin, softening the impact of its banishment from the global financial system.
Underlining the closeness of the relationship, China's top diplomat Wang Yi met Russian President Vladimir Putin on Wednesday during a visit to Moscow.
The Wall Street Journal reported that Chinese President Xi Jinping and Putin could hold a summit in Moscow in April or early May.
Here are three ways that China, the world's biggest buyer of commodities and a financial and technological powerhouse, has propped up the Russian economy:
1- Buying your energy
Western sanctions against Moscow include an embargo on oil sales and a price cap on its crude, denial of access to SWIFT, the international messaging system that enables banking transactions, and a freeze on central bank assets in abroad.
What is SWIFT and why it could be the most feared weapon for Russia
These moves were aimed at weakening Russia's ability to finance the war.
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They have had an impact.
Russia's economy entered a recession in 2022 and contracted by 4.5%, according to the most recent World Bank estimate.
But Moscow's tax revenue increased, according to the Russian government.
That's mainly due to high energy prices and Russia's efforts to divert exports to other willing buyers such as China and India.
China has bought more energy from Russia since the Ukraine war began.
VCG/VCG/Getty Images/Archive
“China has financially supported Russia's war in the sense that it has increased trade with Russia, which has weakened Western efforts to cripple Moscow's military machine,” said Neil Thomas, senior analyst for China and Northeast Asia. at Eurasia Group.
"Xi Jinping wants to deepen China's relationship with an increasingly isolated Russia," he said, adding that Moscow's "pariah status" allows Beijing to exert more influence over him for cheap energy, advanced military technology and diplomatic support for China's international interests.
Total trade between China and Russia hit a new record in 2022, up 30% to $190 billion, according to Chinese customs figures.
In particular, energy trading has increased markedly since the start of the war.
China bought $50.6 billion worth of crude oil from Russia from March to December, up 45% from the same period a year earlier.
Coal imports rose 54% to $10 billion.
Natural gas purchases, including pipeline gas and LNG, jumped 155% to $9.6 billion.
It is a blessing for both sides.
For Russia, because it desperately needs new customers as the West shuns its fossil fuels.
For China, now focused on pulling its economy out of recession, it needs cheap energy to power its huge manufacturing industry.
“For Russia, this partnership is born out of desperation,” said Keith Krach, former US assistant secretary of state for economic growth, energy and the environment.
"He [Putin] looks for help wherever he can find it, and Xi Jinping is only too willing to take advantage of Putin's desperation."
"As for China, its enthusiasm to boost Russia is the latest in a series of moves that once again reveal that Beijing is an irresponsible player," Krach told CNN.
The two sides plan to further expand that partnership, including an agreement between Gazpro and the China National Petroleum Corporation to supply more gas to China over the next 25 years.
“With the opening of China's economy in 2023, we can expect a further increase in Russian exports to China, including oil and other refined products,” said Anna Kireeva, an associate professor at the Moscow State Institute of International Relations.
2 - Substitution of western suppliers
Aside from energy, Russia has also spent billions buying machinery, electronics, base metals, vehicles, ships and aircraft from China, as detailed in a US Congressional Research Service report from last may.
"Despite China's reluctance to provide direct support to Russia's war, bilateral ties will continue to grow because Beijing is opportunistic," Thomas said.
"Xi values Putin's support as a strategic ballast against an increasingly hostile US, but he is interested in Russia primarily because of what it can do for China," he added.
Russia also needs to find substitutes for its imports from Western markets, such as cars and electronics.
“And here, China with its industrial capacity cannot be rivaled by any other major producer,” Kireeva said.
Chinese auto brands including Havel, Chery and Geely have seen their market share rise from 10% to 38% in a year after the Western brands exit, according to the latest data from Russian research firm Autostat. .
And that share is likely to grow even more this year, he predicted.
In consumer electronics, Chinese brands accounted for about 40% of the smartphone market at the end of 2021. A year later, they have virtually taken over the industry with a 95% market share, according to the market research firm Counterpoint.
3 - Offer an alternative to the US dollar
After some Russian banks were cut from SWIFT, Moscow has released the dollar for the Chinese yuan.
Russian companies have used more yuan to facilitate increased trade with China.
Russian banks have also made more transactions in yuan to protect themselves from sanctions risks, according to Kireeva.
Tense moments during the coverage of the Russian invasion in Ukraine 8:19
The yuan's share of the Russian forex market jumped to 48% in November 2022 from less than 1% in January, according to Russian media, citing the director of the Moscow Stock Exchange.
Russia briefly became the world's third-biggest offshore trading center for the yuan last July, behind Hong Kong and the United Kingdom, according to figures released by SWIFT.
Since then, it has remained one of the top six markets for yuan trading;
It wasn't even in the top 15 before the Ukrainian war.
Russia's Finance Ministry has also doubled the share of yuan reserves that the country's sovereign wealth fund can hold to 60%, after a large chunk of its savings were frozen by international sanctions, according to Reuters.
Finance Minister Anton Siluanov said Russia would only buy yuan in 2023 to top up the country's sovereign wealth fund, Tass reported.
"Of all the foreign currencies that the Russian [central] bank had its reserves in, only the Chinese yuan was not frozen and remains 'friendly,'" Kireeva said.
"We are likely to see further de-dollarization of Russia's foreign trade in general and [a] growing share of trade in national currencies with all states that are friendly or neutral to Moscow."
With more yuan reserves, Moscow can use the Chinese currency to stabilize the ruble and its financial markets.
The ruble has plunged more than 40% against the euro and the dollar in the past year, and Russia's main stock index has fallen by more than a third.
Last month, the Russian Finance Ministry announced that it would resume foreign exchange interventions by selling yuan and buying rubles.
However, the relationship is not entirely frictionless.
UnionPay, the Chinese payment system, has reportedly stopped accepting cards issued by Russian banks for fear of international sanctions, according to the Russian newspaper Kommersant.
“Large Chinese companies are wary of secondary sanctions and are cautious when dealing with Russian entities under sanctions or the Russian market in general,” Kireeva said.
CNN's Michelle Toh contributed to this report.
