China Prioritizing Gas Pipeline Projects With Central Asia Over Russia

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News Analysis

China’s top leader Xi Jinping appears to be prioritizing cooperation with Central Asia for gas pipelines, having urged the accelerated construction of a fourth pipeline to the region during a meeting with heads of state from the five Central Asian countries in May.

Meanwhile, Russia has been pushing China, without success, for the construction of a new gas pipeline (PS-2) connecting Russia and northern China via Mongolia, in addition to the current PS-1 that runs from Siberia to China’s northeastern Heilongjiang Province. PS-1 has been transporting gas to China since 2019. 

In March, Russian President Vladimir Putin met with Xi in Moscow for two days of talks, including about Russia’s long-proposed PS-2. Putin referred to the project as “the deal of the century.” However, the CCP’s brief official statement following the talks didn’t mention the pipeline, revealing a lack of urgency for the project on China’s part.   

Russia’s Prime Minister Mikhaïl Michoustine visited China in late May and met his Chinese counterpart Li Qiang and Xi. He returned to Moscow without obtaining any confirmation from the CCP of the new pipeline, according to Financial Times.

Amid the increasing cost of war and expanding budget deficits from Russia’s prolonged invasion of Ukraine, the Kremlin is eager to obtain additional income. For Russia, constructing the PS-2 pipeline project to increase oil sales to China is a way to compensate for its loss of the European market amid European sanctions.

Lu Sibin, a researcher at the Taiwan Defense Policy Initiative, holds that the PS-2 pipeline project is an important component of the China-Russia relationship.

“The core of the China-Russia relationship is whether China is willing to allow Russia to sell its energy to China,” Lu said in a recent interview with the Chinese language edition of The Epoch Times. “With Putin repeatedly emphasizing PS-2, only when this pipeline sees progress [in construction] will [improvement] of Russia-China relationship be achieved.

“If there is no progress [of PS-2], Russia and China will backtrack to a cold stage, when political ties remain hot but the economic ties turn cold [between the two countries],” Lu added.

Last year, Russia sold 16 billion cubic meters (bcm) of gas to China via PS-1, while Central Asian oil pipelines transported 43.2 bcm of gas to China’s western Xinjiang region.

China’s trade volume with Russia last year increased by nearly 30 percent, hitting a record high of $190 billion, according to the statistics of Chinese customs. Nonetheless, China’s 2022 trade with Russia accounted for merely three percent of China’s total trade.

Comparatively speaking, China’s bilateral trade with the five Central Asian countries increased to US$70.2 billion in 2022. Though the volume is yet to catch up with that of Russia, this amount is a significant increase from US$460 million in 1992. 

Russia has been increasing trade barriers and restrictions on the export of certain agricultural products, which has resulted in higher costs for Chinese importers of products like sunflower seed oil and soybeans. For instance, Russia imposes a 20 percent export duty on soybeans, directly impacting the export of Russia’s soybean to China, driving Beijing to look for other alternatives to food imports.

Another reason Beijing keeps its distance from Moscow is its concern about sanctions by the EU. Beijing wants to be cautious and to avoid leading to a conclusion by European countries that China directly supports the Russian invasion of Ukraine.

China accounted for 20 percent of the EU’s imports of goods and nine percent of the EU’s exports of goods in 2022. Beijing cannot afford to lose Europe as its major consumer and European advanced technologies it badly needs. So shifting to Central Asia is a safe alternative for China in the current global context.

China’s imports of food and resources from Central Asia last year increased tremendously by over 50 percent from a year earlier. 

“Beijing hopes to side with the EU in terms of economy,” Lu told The Epoch Times, “That’s why Beijing’s Belt and Road projects skirt around Russia.”

Beijing Looks West

China held a Central Asia Summit from May 18 to May 19 in its western historic city of Xi’an, inviting five heads of state from Central Asian countries. 

The five states—Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan, and Turkmenistan—cover a vast region of Asia that stretches from China’s western borders to the Caspian Sea in the west, Afghanistan in the south, and Russia in the north. Being former Soviet republics, these states are regarded to be within Russia’s traditional sphere of influence.

The summit is part of Beijing’s efforts to establish closer ties with the five states in the region amid Moscow’s involvement in the prolonged war in Ukraine. Beijing discussed with its Central Asian counterparts topics such as the acceleration of the construction of a fourth natural gas pipeline (Line D), connecting China and Central Asia for trade and national security interests—some of which are opposed or disliked by Russia.

“Obviously, China hopes to use Line D as leverage to negotiate with Russia on oil prices,” said Liou Shiau-shyang, an associate research fellow at Taiwan’s Institute for National Defense and Security Research on Russia & Eurasian studies, arctic geopolitics, and China’s “One Belt One Road.” 

“If viewed geographically from the layout of China’s natural gas, the western pipeline [Line D] competes with Russia’s PS-2, which is a northeastern [gas] channel,” Liou told the Chinese language edition of The Epoch Times on May 27.

The three parallel Central Asia pipelines—dubbed Lines A, B, and C—deliver natural gas from Turkmenistan,  Kazakhstan, and Uzbekistan to Horgos, a city in China’s western Xinjiang region that borders Kazakhstan. 

A fourth line—Line D—was proposed by China in 2014 to to transport gas from Turkmenistan’s Galkynysh, the world’s second-biggest of its kind, to Wuqia County of Xinjiang. Upon completion and once in operation, Line D is expected to deliver 30 bcm of gas a year to China. But the line has been dogged by price issues and construction hurdles since 2014.

China, Kyrgyzstan, and Uzbekistan signed an agreement on Sept. 14, 2022, on the construction of a railroad linking the three countries. The 280-kilometer-long railroad that runs from Torugart pass on China’s border to Jalalabad in Western Kyrgyzstan, will cost $4.1 billion and is expected to shorten the journey from China to Europe by 900 kilometers and eight days of travel time. The railroad, bypassing Russia, gives China a safe and direct path to enter Europe.

The railroad is reported to kick off this year, according to a Chinese state-run financial news outlet Yicai Global.

Workers inspect railway tracks, which serve as a part of the Belt and Road Initiative freight rail route linking Chongqing to Duisburg, at the Dazhou railway station in Sichuan Province, China, on March 14, 2019. (Reuters)

In addition, Beijing is encouraging Central Asian businesses to trade on China’s e-commerce platforms. Nearly 300 Central Asian enterprises are selling their products on Chinese e-commerce platforms.

Attempt to Replace Moscow in Central Asia 

Xi voiced his ambition to set up China’s clout in the strategic region at the Central Asia Summit.

“The sovereignty, security, independence, and territorial integrity of Central Asian countries must be defended,” Xi told the heads of state of the five countries in a speech at the Summit in mid-May. 

“China would help Central Asian countries strengthen capacity building on law enforcement, security, and defense, support their independent efforts to safeguard regional security and fight terrorism, and work with them to promote cyber-security,” he said.

The Chinese leader also showed his interest in Afghanistan, which is a vacuum after the U.S. withdrawal from the country, adding that China and the five countries should “jointly promote peace and reconstruction of Afghanistan.”

Xi and the heads of state of the five countries signed the Xi’an Declaration of the China-Central Asia Summit. They agreed on the establishment of a meeting mechanism for the heads of the six states biennially. 

Liou Shiau-shyang believes that these are very important moves by Xi Jinping in this summit, indicating Xi’s intention of bypassing Russia and directly bridging with the five Central Asian countries, setting up China’s influence in the region.

Overseas observers and experts hold similar views of the CCP’s ambition to replace Russia in Central Asia.

With the U.S. having retreated from Afghanistan and Russia being entangled in Ukraine, China views this as “an opening to expand its influence” in Central Asia, according to The Economist. 

Jennifer Brick Murtazashvili, director of the Center for Governance and Markets at the University of Pittsburgh, believes that China is particularly concerned about the instability in Afghanistan, reported CNN. 

Among the five Central Asian countries, Kazakhstan is of particular significance to China, said Lu Sibin, as Kazakhstan borders China’s Xinjiang region and is connected closely with Xinjiang in logistics and water resources. 

Lu believes that Xi hopes to stabilize the political and social situations in the five countries to ensure the safety of its own territory. 

“Xi may start by establishing cooperation in financial crimes, money laundering, and international crimes [with the five Central Asian countries],” Lu said, adding that the CCP’s sole objective is to target those rendered as a threat by the CCP, such as Uyghurs and anti-CCP forces in these regions. 

“There will be intelligence sharing [with these five countries] in this regard, and it is possible that the CCP will establish a connection between the security units of Central Asian countries and the CCP’s military and national security system,” Lu said.

Temporary Cooperation But Widening Divergence

With China attempting to gain more dominance in Russia’s traditional domain of power, Moscow reportedly arrested Alexander Shiplyuk, head of Siberia’s Khristianovich Institute of Theoretical and Applied Mechanics (ITAM), and two other hypersonic missile technology experts, accusing them of betraying secrets to China. 

Liou believes that Russia’s move is a signal of its discontent over China’s moves in Central Asia to warn China off. However, Russia will temporarily tolerate certain grievances and is unlikely to seek out additional enemies at this time amid its muddle over Ukraine and sanctions by the West.

“Neither China nor Russia will fight over Central Asia when they face bigger threats,” Liou said. “Now the biggest threat China is facing is the containment of the U.S. in the Indo-Pacific region. For Russia, the current major threats are NATO and the Russia-Ukraine conflict.”  

Lu Sibin believes that Russia and China will maintain a comparatively cooperative relationship on the condition that China fulfills its commitment to PS-2 and the investment in Russia’s Far East.

“If China fails that, Putin will be disappointed by China. He will tighten his grip over Central Asian security and further upgrade Russia’s cooperation with India and Vietnam, which are on very bad terms with China at the current stage,” Lu said.

“China and Russia face many challenges in their relationship in the coming future,” Lu added. 

Song Tang and Yi Ru contributed to this report.