China and Russia's joint institutional innovation contributes to a dynamic world economy

At a time when global governance seems ensnared in the narrative of the so-called "Thucydides Trap"—the idea that a rising China will inevitably challenge, and potentially disrupt, the US-led global order—China and Russia are focusing on supplementing, rather than confronting, the Western-led post-Cold War global economic architecture through institutional co-creation.
Building on targeted initiatives in trade and supply chain integration, financial system alignment, and joint infrastructure development, the evolving China-Russia partnership embodies a shared effort to bolster economic resilience in the face of increasing geopolitical challenges. This strategy may inspire emerging economies to reconsider their role and actively contribute to shaping a more inclusive global governance system.
Cross-border trade and supply chain integration
One of the most tangible expressions of China-Russia institutional collaboration lies in the reconfiguration of cross-border trade and supply chains. The 2023 Joint Statement on Pre-2030 Development Plan on Priorities in China-Russia Economic Cooperation outlines clear priorities in this regard—from streamlined customs and upgraded border ports to coordinated logistics infrastructure.
These commitments have yielded tangible results. Both countries have simplified customs procedures, significantly cutting clearance times and improving cargo turnover. The opening of the Heihe-Blagoveshchensk road bridge has further enhanced connectivity between China's northeast and Russia's Far East, boosting regional trade.
China and Russia are also building a more integrated industrial base. The joint statement emphasizes aligning technical standards and industry regulations to enable domestic enterprises from both sides to jointly build new industrial value chains. This has helped lower technical trade barriers and laid the groundwork for deeper supply chain cooperation.
At the product level, China's exports to Russia primarily include mobile phones, computers, automobiles, electric machines, machine tools, and specialized industrial equipment. Notably, machine tools and industrial machinery support Russia's drive for import substitution in manufacturing. Russia's growing use of upstream Chinese equipment reflects closer industrial coordination, highlighting a complementary relationship that links China's production capacity with Russia's efforts at domestic industrial renewal.
On the other side, Russia's exports to China are concentrated in energy—especially oil, natural gas, and coal. To ensure long-term stability, the two sides have signed a series of long-term agreements. The China-Russia East-Route Gas Pipeline, for example, is backed by 30-year contracts and joint infrastructure investment. Such long-term arrangements help smooth out economic cycles, and provide mutual protection against external shocks—whether in the form of price volatility or international sanctions.
Financial system alignment
In the wake of the 2022 SWIFT sanctions imposed on Russia, both China and Russia have accelerated efforts to align their financial infrastructures and reduce dependence on the US dollar. According to a January 2025 statement by Kremlin aide Yuri Ushakov, more than 95 percent of bilateral transactions are now settled in local currencies—the renminbi and the ruble. This shift marks a significant step toward monetary sovereignty in bilateral trade.
Institutionally, cooperation has focused on building functional connectivity between China's Cross-Border Interbank Payment System (CIPS) and Russia's System for Transfer of Financial Messages (SPFS). These complementary systems offer an alternative to SWIFT-based settlements and enhance the resilience of financial flows against external sanctions or disruptions. Together, they represent an emergent framework for regional financial autonomy, particularly relevant to other emerging economies exploring de-dollarization strategies.
Beyond mitigating risks, these financial arrangements serve a broader purpose: institutionalizing trust in cross-border transactions and embedding local currency settlement into a stable, long-term bilateral framework. It also sends a signal to third countries seeking greater financial autonomy—demonstrating that building parallel financial rails is not only feasible but increasingly necessary in a fragmented global order.
Joint infrastructure development
Infrastructure cooperation between China and Russia increasingly reflects a model of institutional co-creation—not just building roads or railways, but shaping the rules, priorities, and platforms that govern cross-border development. Nowhere is this more visible than in the case of the China-Europe Railway Express, whose transcontinental routes rely heavily on Russia's railway system as a central artery connecting East Asia with Europe. The sustained expansion and operational refinement of these routes have required bilateral coordination not only in logistics, but also in the establishment of a jointly governed and co-developed institutional framework.
This model of jointly governed infrastructure extends into China's broader cooperation with the Eurasian Economic Union (EAEU), which includes five members—Russia, Kazakhstan, Belarus, Kyrgyzstan, and Armenia—all active participants in the Belt and Road Initiative. The EAEU's goal of promoting free movement of goods, services, capital, and labor aligns with China's emphasis on connectivity-driven development. The institutional interface between the BRI and EAEU thus fosters a co-designed ecosystem that enhances regional integration through coordinated sovereignty and shared rule-making.
A more recent milestone came in December 2024 with the official groundbreaking of the China-Kyrgyzstan-Uzbekistan (CKU) railway in Jalal-Abad, Kyrgyzstan. This long-anticipated project—which had previously stalled due to geopolitical hesitations—marks a breakthrough not just in physical connectivity, but in regional consensus-building. Reports indicate that Russia's shift from initial reluctance to quiet endorsement played a key role in advancing the project. As construction commenced on the Kyrgyz section in April 2025, the CKU railway reflects that a gradual alignment of regional interests can be achieved through converging incentives.
In parallel, Russia has invited China and other interested partners to co-develop the Northern Sea Route—a prospective Arctic shipping lane that could significantly shorten transit times between Asia and Europe. While still in its early stages, such joint exploration signals a widening of the China–Russia infrastructure agenda into maritime domains, with potential to extend institutional co-creation to areas such as navigation systems, environmental monitoring, and Arctic governance standards.
Together, these efforts illustrate how regional infrastructure—when co-planned and co-managed—can evolve from a means of physical connectivity into a mechanism of regional governance. For emerging economies observing these developments, the China–Russia experience offers a viable model of shared rule-making and long-term coordination.
Pathways and implications for emerging economies
The deeper value of China-Russia institutional co-creation lies in its ability to generate what might be termed "nested incrementalism"—constructing new institutional layers within the framework of the existing international order. In doing so, China and Russia create space for emerging economies to draw inspiration from, empowering these nations to rethink and reshape global governance architectures while maintaining engagement with established systems.
In an era marked by systemic uncertainty, this approach to pragmatic experimentation provides a potential blueprint for pluralist cooperation—one grounded not in the logic of dominance, but in adaptation, complementarity, and sovereign choice. Ultimately, it reframes rising powers' roles, positioning them as active contributors to shaping a dynamic world order—one that balances continuity with gradual transformation, offering a middle ground between radical change and passive acceptance.
(Source: CGTN)
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