Oilprice.com-By Haley Zaremba
- While a large coalition of countries has come together to condemn Russia’s invasion of Ukraine, China has refused to take sides in the conflict.
- China’s failure to condemn Russia and Putin was not unexpected, but as energy prices soar it will grow increasingly eager to see an end to the war.
- China is the world’s largest energy importer, and as the prices of natural gas and oil soar, Beijing will be forced to weigh its economic needs against its geopolitical ones.
While it is one of the few global powers that has failed to condemn Russia’s invasion of Ukraine, China is also one of the countries that is most threatened by the conflict. As the world’s largest energy importer, China suffers greatly when the price of oil, natural gas, and coal soar as they have in recent days. Beijing is walking a tightrope by trying to shore up international relations and alliances through its sweeping Belt and Road Initiative, while also forging a special economic, political, and ideological bond with Russia as a counterbalance to the superpowers of the Western world.
The oversimplification of West versus East as a story of good versus evil and democracy versus authoritarianism is a tempting and overused narrative, but it fails to encapsulate the complex and intricate web of interests, power relations, exploitation, and geopolitics involved in international relations. Resisting the urge to moralize, however, has become increasingly difficult as Russia has invaded Ukraine, drawing the outrage and ire of nearly all of the international community, with the notable exception of China.
In response, the United States and the European Union have slammed Russia with economic sanctions, sending the Ruble tumbling. So far, these sanctions have largely skirted the issue of energy. Sanctioning Russian energy exports would be one of the most efficient and effective ways to hurt the Kremlin, but it would also cripple European economies, which are dependent on Russia for more than two-thirds of their natural gas at a time when the continent is already facing an electricity price crisis. The energy stand-off in Europe stands to have far-reaching effects on the entire global economy, however, not just the directly involved parties. And in some ways, no economy stands to lose as much from this battle as China.
“China’s dependence on the international market for oil and gas is so high that it greatly exceeds the energy dependence of EU countries on Russia,” stated a recent editorial published by Modern Diplomacy. As such, “once a relatively extreme geopolitical conflict occurs in the current fragile international energy market, the impact of the energy market will ripple through China, regardless of whether China is involved in the conflict.”
According to data reported by the National Bureau of Statistics, in 2021 china imported “320 million tons of coal, 512.98 million tons of crude oil, and 121.36 million tons of natural gas.” And despite Beijing’s best efforts to shore up the country’s energy security and independence, the nation still has a long way to go. The relative insecurity of China’s energy markets was exemplified last year when entire Chinese cities went dark and coal plants went offline in different waves of market turmoil.
In an attempt to mitigate these vulnerabilities ahead of Russia’s invasion of Ukraine, China and Russia cemented economic ties and expanded their energy trade. “Six days before the military campaign began, Russia announced a yearslong deal to sell 100 million tons of coal to China — a contract worth more than $20 billion,” The New York Times reported this week. “And hours before Russia began bombing Ukraine, China agreed to buy Russian wheat despite concerns about plant diseases.”
While China and Russia can shelter each other from sanctions and energy market fallout in the short term, Beijing is playing a dangerous game by putting so many eggs in such a politically fraught basket. Energy security is one of China’s biggest vulnerabilities as the nation’s economy continues to expand, and becoming too dependent on Russia could easily backfire and provide a strategic soft spot to those world powers who wish to wield leverage over Beijing in the coming months and years.
By Haley Zaremba for Oilprice.com