Does China or Russia benefit from US sanctions?

As Western countries imposed sanctions on Russia for invading Ukraine, China continued to trade with Russia providing the country with a vital source of capital. More generally, the cliché has it that if the West imposes sanctions on countries, China and Russia continue not only to do business as normal but even increase their trade with these countries, thus simultaneously undermining western sanctions and profiting from more trade.

While there are many anecdotes to that effect, a study by three German economists implies that these anecdotes do not translate to a wider picture. The chart below shows the exports of the EU, Russia, and China to countries under US export sanctions. US exports show a small but statistically significant drop in exports after sanctions are imposed. Ironically though, Chinese exports show an even bigger drop while neither the EU nor Russia shows a significant drop in exports.

Impact of US export sanctions on the exports of other countries

Source: Gutman et al. (2022)

Looking at countries under import sanctions shows the same picture. Imports to the US drop by a statistically significant but not very large amount while imports to China drop even more and imports to the EU or Russia don’t change at all.

Impact of US import sanctions on the imports of other countries

Source: Gutman et al. (2022)

Overall, it is surprising to me that EU countries don’t show a similar drip in trade with sanctioned countries, but one can speculate that this is due to the coordination problem of the EU. In simple terms, the EU may not be able to enforce sanctions because of diverging interests of the individual EU member states. Just think of the difficulty the EU had in agreeing on sanctions against Russia since countries like Hungary depended heavily on Russian oil and other imports from Russia while countries like Spain or Italy did not.

But that China benefits from US sanctions against third countries seem unlikely. At least on average, China reduces its trade with these countries even more than the US does, which is directly the opposite of what these many anecdotes claim happens.