China: The Xi-Putin Summit

Published on February 3, 2022
SGH Insight
More to the point, after attending the opening ceremony of the Beijing Winter Olympics, Xi and Putin will witness the signing of nearly 20 contracts and documents between China and Russia, including on financial, energy, space, and military cooperation, and on a new Sino-Russian natural gas pipeline.

Regarding tensions with Ukraine and the West, our understanding is that Xi will give China’s formal backing to Putin’s drive to “develop a legally binding security” agreement for Russia with NATO, something which China has not done yet to date.

In a related move, our understanding is that the two sides will also sign a document on the construction of a Sino-Russian West-Route Natural Gas pipeline (the Soyuz Vostok gas pipeline construction project).
Xi apparently agreed with Putin in principle to build this second Sino-Russian gas pipeline with the stated intention of supporting Putin in his attempts to extract security demands from the United States.

This pipeline will pass across Mongolia and will be an extension of the “Power of Siberia-2” gas pipeline. The full capacity of the 4,000-kilometer pipeline is expected to be 50 billion cubic meters per annum of natural gas, about 1.3 times the capacity of the Sino-Russian East-Route Natural Gas pipeline, and it is expected to be completed by 2025 at the earliest.
Market Validation
Bloomberg 2/4/22

Russia forged new long-term supply deals with China as the Kremlin aims to strengthen ties with the Asian nation amid souring relations with the West.

Energy giants Gazprom PJSC and Rosneft PJSC signed agreements with the world’s largest energy consumer as President Vladimir Putin met his Chinese counterpart Xi Jinping in Beijing ahead of the Winter Olympics. The two leaders are drawing their nations closer together, united by political, military and economic frictions with Europe and the U.S.

“Friendship between the two states has no limits, there are no ‘forbidden’ areas of cooperation,” the Kremlin said in a statement following the meeting.
During Putin’s visit to Beijing, Gazprom signed its second long-term gas deal with China National Petroleum Corp. Under the agreement, the producer will deliver 10 billion cubic meters per year over 25 years via a new pipeline from Russia’s Far East.

“Delivering gas to China’s northeastern tip makes this project strategically attractive for China, as the only real alternative supply would be more expensive liquefied natural gas,” BCS Global Markets analyst Ron Smith said in an emailed note following the agreement.
The deal also has a strategic importance for Gazprom, which expects gas demand in China to grow by almost 50% to 2030 as consumption in Europe, currently its largest market, shrinks by more than 5%.

Russia wins Chinese backing in showdown over Ukraine

Russia won China’s backing in its showdown with the West over Ukraine today, as Beijing agreed with Moscow that the US-led Nato military alliance should not admit new members.

The demand for Nato to stop expanding came after a meeting between Russian President Vladimir Putin and Chinese counterpart Xi Jinping in Beijing that saw Putin hail the two countries’ “dignified relationship”.

In a long strategy document, Moscow and Beijing hit out at what they said was Washington’s destabilising role in global security.

“The parties oppose the further expansion of Nato and call on the North Atlantic Alliance to abandon the ideological approaches of the Cold War era,” the document read, urging respect for the “sovereignty, security and interests of other countries.”

The call echoes demands from Russia that have been at the centre of weeks of intensive negotiations between Moscow and the West, under the shadow of a potential conflict.

China’s President Xi Jinping will hold face to face talks with Russia’s President Vladimir Putin on February 4 in Beijing for the first time since the outbreak of the Covid pandemic, followed by a luncheon. It will mark the 38th meeting between the two allies since Xi took over China’s top leadership position in the autumn of 2012.

After their meeting, Xi and Putin will issue a joint statement on “international relations in the new era” and, somewhat ironically given the positions of their respective countries, on “global sustainable development.”

More to the point, after attending the opening ceremony of the Beijing Winter Olympics, Xi and Putin will witness the signing of nearly 20 contracts and documents between China and Russia, including on financial, energy, space, and military cooperation, and on a new Sino-Russian natural gas pipeline.

Regarding tensions with Ukraine and the West, our understanding is that Xi will give China’s formal backing to Putin’s drive to “develop a legally binding security” agreement for Russia with NATO, something which China has not done yet to date.

As explained by a senior official in Beijing, “The security guarantees sought by Moscow include an agreement to stop NATO from expanding east, which would close Ukraine’s door to membership, as well as a pledge to halt the deployment of weapons in states that border Russia. President Xi told us that he is fully supportive of Putin’s plan to work out security guarantees with NATO to protect its western border. [That] would show very unusual solidarity with Russia on issues [concerning] Europe. We [China] have previously expressed disapproval of NATO enlargement but have never before publicly supported Russia’s policies.”

In a related move, our understanding is that the two sides will also sign a document on the construction of a Sino-Russian West-Route Natural Gas pipeline (the Soyuz Vostok gas pipeline construction project).

Xi apparently agreed with Putin in principle to build this second Sino-Russian gas pipeline with the stated intention of supporting Putin in his attempts to extract security demands from the United States.

This pipeline will pass across Mongolia and will be an extension of the “Power of Siberia-2” gas pipeline. The full capacity of the 4,000-kilometer pipeline is expected to be 50 billion cubic meters per annum of natural gas, about 1.3 times the capacity of the Sino-Russian East-Route Natural Gas pipeline, and it is expected to be completed by 2025 at the earliest.

Back to list