Xi Jinping traveled to Moscow to commemorate Victory Day.
Heading Out to Moscow: Xi Jinping's State Visit and Gas Negotiations
China's leader, Xi Jinping, took off from Beijing aboard a special jet on Wednesday, heading to Russia for a state visit and Victory Day celebrations. According to the Xinhua News Agency on its Telegram channel, this high-profile meeting is set to cover ongoing discussions regarding the proposed Power of Siberia-2 gas pipeline project [1].
As per the report, during their Moscow meetup, Xi Jinping and Russian President Vladimir Putin will likely delve into the specifics of the Power of Siberia-2 venture. China might be prepared to compromise on gas pricing for this contract, allowing the acquisition of fuel at elevated rates [3].
To determine whether the higher prices are justifiable, Beijing plans to assess the discrepancy between the gas cost within Russia and what it pays for supplies via the existing Power of Siberia pipeline, which became operational in 2019 [3].
Interestingly, China is eager to ensure that the new gas pipeline steers clear of Mongolia. Despite spending resources to establish a route that traverses Mongolia, Chinese authorities have reservations about this option, likely due to geopolitical or cost-related concerns [4].
In a previous statement, Xi Jinping pointed out that the ongoing trade wars were wreaking havoc on the global economic order [7]. Amidst the backdrop of these global economic shifts, it remains to be seen how the negotiations for the Power of Siberia-2 project unfold.
Insight:
- Smooth Sailing: The route through Mongolia could face resistance due to geopolitical complexities and the need for significant infrastructure development, making a purely Russian route potentially more attractive for its simplicity and cost savings [5].
- Bargaining Power: China's willingness to compromise on gas pricing may indicate that it is eager to secure resources and strengthen its ties with Russia, despite the higher costs involved [3].
- Xi Jinping, China's leader, is on his way to Moscow for a state visit and Victory Day celebrations, where he will also discuss the Power of Siberia-2 gas pipeline project with Russian President Vladimir Putin.
- During their meeting, Xi Jinping and Vladimir Putin will likely explore the particulars of the Power of Siberia-2 venture, with China potentially prepared to pay higher prices for the gas.
- To ascertain if the elevated prices are justified, Beijing intends to assess the difference in gas costs within Russia and what China pays for supplies via the existing Power of Siberia pipeline.
- China is keen to avoid a route for the new gas pipeline that goes through Mongolia, due to geopolitical or cost-related concerns.
- As world economies adjust to ongoing trade wars, it remains uncertain how the negotiations for the Power of Siberia-2 project will proceed.
