Energy trade relations between Russia and China

Abstract

Economic relations between Russia and China have been growing over the years. Of particular importance in Russia-China economic relations is the gas and oil trade. Russia has the world’s largest natural resources, while China is the world’s largest energy consumer. In 2014, an agreement was reached to build a new gas pipeline and increase gas exports to China. If the planned volume of gas can be exported to China on a stable basis, Russia will be able to supplement some of the economic sanctions imposed by the West. However, there is much uncertainty as to whether China can be a stable export destination for Russia. There is a significant gap in the trade scale between Russia and China and asymmetrical dependence in the relationship between them. In addition, international pipeline projects have substantial financial and time costs, and the two countries; intentions sometimes differ. The purpose of this research is to clarify the current state of trade interdependence between Russia and China and to study whether China can be a stable economic partner for Russia. This paper consists of three main parts, with an introduction and conclusions. The first part explains an overview of trade and asymmetric interdependence between Russia and China. It then analyses the anticipated benefits and vulnerabilities of increased Russian gas exports to China. The third section investigates the uncertainties of China as a gas importer in terms of China’s dependence on Russia.