Chinese officials are notoriously tough negotiators, especially when they know you're in a pinch. Just ask Gazprom, Russia's natural gas giant, which is on the brink of capitulating to Beijing on a massive energy project, 10 years in the offing. Gazprom and China National Petroleum Corp., one of China's oil giants, are gearing up to sign a 30-year multibillion-dollar deal to send natural gas from Russia to China through a colossal new pipeline network.
A week before Russian President Vladimir Putin was set to meet his Chinese counterpart, Xi Jinping, in Shanghai on May 20-21, Russia's deputy energy minister described the deal as "98 percent ready." However, a Chinese deputy foreign minister was far cagier, noting in mid-May: "We are still exchanging views with Moscow, and we will try our best to ensure that this contract can be signed and witnessed by the two presidents."
On the surface, this seems the kind of win-win outcome that Chinese diplomats regularly tout as the solution to nearly every international problem. Russia sits on the world's largest natural gas reserves, much of it buried in the Siberian hinterland north of its border with China. As the world's largest energy consumer, China is an obvious partner for Russia's economy, in which natural resources make up 70 percent of exports and over 50 percent of government revenue.
But energy trade between Russia and China is surprisingly limited, with only 9 percent of China's oil imports and 1 percent of its gas imports coming from Russia. China is eager to increase and diversify its energy supplies away from overreliance on expensive and volatile sources in Africa and the Middle East that have to pass through precarious sea lanes in the Strait of Hormuz and the South and East China seas. (Beijing really does worry about all the talk among U.S. strategists on how to blockade China's energy supplies in the event of armed conflict.)
Yet China has been unwilling to pay the premium prices that Russia has traditionally charged in Europe. Now, with Russia's worsening economy and an increasingly competitive Asian energy market, Beijing holds most of the cards -- and time is not on Moscow's side.
More from CNAS
CommentaryNo, Trump has not been ‘tough’ on Russia
The simple fact is that even harsh-looking sanctions have little impact when there’s zero political will to enforce them....
By Edward Fishman , James Lamond & Max Bergmann
CommentaryBeijing Believes Trump Is Accelerating American Decline
When China’s perception of American strength shifts, its strategy generally changes....
By Rush Doshi
PodcastProspects for Democracy in Belarus, with Judy Dempsey and Jonathan Katz
Judy Dempsey and Jonathan Katz join Andrea Kendall-Taylor and Jim Townsend to discuss the ongoing protests in Belarus and the country’s prospects for a democratic political tr...
By Andrea Kendall-Taylor, Jim Townsend, Judy Dempsey & Jonathan Katz
CommentaryEnlisting NATO to Address the China Challenge
Moving forward, the DoD should enlist NATO in efforts to address the China challenge....
By Carisa Nietsche, Jim Townsend & Andrea Kendall-Taylor