China aligns with Russia and North Korea, yet fault lines remain

China’s pageantry with Russia and North Korea is deliberate theater, and it serves a policy purpose. The recent tableau of Xi Jinping, Vladimir Putin and Kim Jong Un at a Beijing military parade offered a visual shorthand for strategic alignment, and it was paired with announcements that implied deeper economic integration. The scene matters because it sets expectations in regional capitals about China’s tolerance for friction with the West, and its willingness to absorb reputational costs for strategic depth. The event signaled unity, but it did not erase the limits that Beijing still observes around formal alliance structures or direct military entanglement.

Look beneath the optics and the policy signals diverge from the headline narrative. On paper, the governments touted progress on the Power of Siberia 2 pipeline, with a legally binding memorandum that would re-route fifty billion cubic meters of Russian gas toward China through Mongolia. In practice, key commercial terms, including price and financing, remain unresolved, which effectively preserves Beijing’s leverage while awarding Moscow a news cycle. This is consistent with China’s preference for optionality in energy security, not overdependence on any single supplier.

The commodity relationship is real, but even there the asymmetry is visible in the trade data. Two-way trade hit a record in 2024 near two hundred forty five billion dollars, then softened through mid 2025 as sanctions compliance and payment bottlenecks complicated settlements. Growth decelerated versus 2023, and recent customs prints show year-to-date declines that reflect both demand normalization and banking caution. The tie is strategic, but it is not frictionless.

Security alignment sits on even shakier ground. Russia and North Korea formalized a mutual defense treaty in June 2024, and Seoul, Washington and European capitals now treat North Korean ammunition and rocket shipments to Russia as an established feature of the battlefield. Independent estimates put the volume of North Korean artillery supplied to Russia in the millions of rounds, a material contribution that extends the conflict’s duration and deepens Pyongyang’s sanctions exposure. These flows tighten the Moscow–Pyongyang axis, yet they also raise the cost of overt Chinese endorsement.

Beijing has moved closer to Moscow’s political posture on sanctions enforcement, but not to the point of absorbing the full legal risk. At the United Nations in March 2024, Russia vetoed the renewal of the DPRK Panel of Experts that monitored sanctions, while China abstained. That outcome narrowed investigative scrutiny and signaled diplomatic cover for Pyongyang and Moscow, yet China still avoided a matching veto that would have invited sharper European response. The abstention preserved maneuvering room.

Financial plumbing tells the same story. Working capital flows between Russian exporters and Chinese buyers face episodic delays when new sanctions land, and firms resort to intermediated or netted settlement schemes to reduce visibility. The result is a two-tier system in which the headline relationship expands, while day-to-day cash conversion cycles lengthen and discounting costs rise. For China’s large banks, the compliance calculus is straightforward, since loss of dollar access would be a far greater shock than a marginal slowdown in cross-border sales. This is why Beijing courts symbolism in energy, while letting banks ration risk in payments.

For policy makers in Singapore, Riyadh and other non-aligned hubs, the implication is not that a formal trilateral bloc has emerged, but that portfolio risks are shifting along distinct channels. Energy supply chains are migrating eastward on paper, yet execution relies on contract optionality that China will use to protect price and volume. Arms flows between Pyongyang and Moscow are real, yet their visibility increases diplomatic costs that Beijing seeks to avoid. Trade value is high, yet settlement friction limits balance-sheet velocity for Russian firms and raises the effective cost of capital.

Historical behavior supports this reading. China has long preferred flexible partnerships over treaties that trigger automatic commitments. The present choreography adds spectacle and reciprocal signaling, but it does not change the underlying institutional design in Beijing, where the priority remains domestic growth, export access to Europe, and managed geopolitical risk. The abstention at the Security Council fit this pattern, as did the decision to keep pipeline terms open. The policy is alignment by degrees, not alliance by law.

Sovereign allocators and central banks should interpret the moment through flows, not photos. In energy, the memorandum on Power of Siberia 2 gives China negotiating power over future gas pricing and optionality against LNG contract rollovers in the late 2020s, while leaving Russia to shoulder timeline pressure. In payments, the persistence of workarounds suggests that renminbi invoicing will grow, but only within a compliance perimeter that Chinese banks enforce when Western penalties rise. In security, the Russia–North Korea treaty increases sanction risk for any entity that looks like a conduit, which discourages Chinese corporates from formal roles even as unofficial trade persists.

What it signals is straightforward. China is comfortable projecting China-Russia-North Korea unity when the costs are reputational and recoverable, and it will pocket leverage where commercial terms are fluid. It is not committing to automatic defense obligations or unconditional financial backstops. The theater will continue, since theater shapes bargaining power, yet the system remains transactional. Signal is not commitment, and policy remains calibrated to protect access, price, and time.