Moscow and Beijing: A Growing Partnership?

Moscow and Beijing: A Growing Partnership?

05/28/14

Ali Wyne

Security, Russia

After a decade of wrangling, China and Russia have signed a landmark energy deal, worth $400 billion: beginning in 2018, Russia will supply China with 38 billion cubic meters of natural gas annually for three decades.  Importantly, though, the final unit price remains a mystery.  European countries pay a higher unit price for Russian gas than China pays for Central Asian gas.

China seems to be in a position of strength when it comes to price.  The IMF forecasts that Russia’s economy will suffer $100 billion in capital outflows this year and grow by just 0.2%.  Russia was already more dependent on Chinese largesse than China was dependent on Russian gas prior to this year’s events; its heightened economic vulnerability only compounds that asymmetry.  As Ely Ratner and Elizabeth Rosenberg of the Center for a New American Security explained recently,

“Unlike Moscow, Beijing has options….Gazprom will have to move quickly to lock in the infrastructure and financing commitments necessary for the Siberian pipeline project.  Otherwise it risks being beaten to the Asian market by alternative suppliers in Central and Southeast Asia…or by suppliers from North America, Australia, and East Africa that are working furiously to build gas liquefaction and export facilities.”

Read full articlehttp://nationalinterest.org/blog/the-buzz/moscow-beijing-growing-partnership-10550