This year, China has been purchasing fuel supplies from Russia at a steadily decreasing cost, benefiting from a decline in European demand at a time when Beijing most needs it as the Ukraine conflict forces Moscow to look for new markets.
Both nations benefit from the expanding partnership, which will further develop when Russian President Vladimir Putin and Chinese President Xi Jinping meet on Thursday in Uzbekistan.
China now has access to more affordable energy, and Russia is able to make up for the European Union and its partners’ reduced demand for Russian commodities as a result of sanctions over its assault on Ukraine. A unique military operation, according to Moscow.
The use of the yuan and rouble in commodities trade has also been encouraged by closer connections between China and Russia, reducing reliance on the dollar.
In comparison to the same time last year, China, the world’s leading energy user and the top importer of coal, liquefied natural gas, and crude oil, purchased 17% additional Russian crude during the months of April and July.
During the same period, it increased its purchases of LNG and coal from Russia by over 50% and 6%, respectively. Imports of power, primarily through a cross-border transmission line linking northeast China to Russia’s Far East, increased by 39%.
China has already spent $43.68 billion this year on Russian oil, gas, coal, and electricity purchases.
Closer links between China and Russia have promoted the use of the yuan as well as the rouble in commodities trade, lowering reliance on the dollar.
China, the world’s largest energy consumer and top supplier of coal, crude oil, and liquefied natural gas, bought 17% more Russian crude between April and July this year compared to the same period last year.
It raised its purchases of LNG & coal from Russia by almost 50% and 6%, respectively, within the same time frame. Power imports grew by 39%, mostly via a cross-border distribution line connecting northeast China to the Russian Far East.
China has so far spent $43.68 billion on purchases of Russian energy sources like electricity, gas, and oil this year.
According to Chinese customs data, Russia overtook the United States as China’s main crude supplier between May and July, amounting to 19% of China’s shipments compared to 15% during the same period in 2021.
A report by the Dutch bank ING in August claimed that Moscow’s share might increase to more than 20% this year.
A calculation by experts based on customs data, China saved approximately $3 billion between April – June by purchasing Russian oil rather than other imports. China paid an average of $708 per ton for Russian crude imports, compared to $816 per tonne for imports from other nations.
Saul Kavonic, the face of Integrated Resources and Energy Research at Credit Suisse, claimed that China is reaping the benefits of the disturbing trade flows by purchasing discounted Russian oil as well as LNG cargoes while exchanging alternative quantities back into Europe at increased prices, resulting in a profitable trade.
Along with increasing its gas usage and working to achieve new carbon emission standards, China has also long-term benefits for the Russian supply. This led to an agreement in February for the launch of a new pipeline from Russia during the next two or three years.
China acquired inexpensive coal while Europe avoided Russian shipments in advance of a ban that went into effect on August 11; as a result, China’s imports of coal from Russia increased to their highest level in at least five years in July.