IEEJ：March ©IEEJ 2023
Special Bulletin
A Japanese Perspective on the International Energy Landscape (629)
March 24, 2023
China-Russia Strategic Partnership Enhancement Attracts Attention in a Divided WorldKen Koyama, PhD
Chief Economist, Managing Director
The Institute of Energy Economics, JapanOn March 21, Chinese President Xi Jinping and his Russian counterpart Vladimir Putin heldtalks in Moscow and issued a joint statement that emphasized the enhancement of their countries’
collaboration and cooperation and their unity to counter the U.S.-led Western bloc. “The China-Russia
Comprehensive Strategic Partnership of Coordination for a New Era has reached the highest level inhistory and continues to move forward,” said the joint statement. It reaffirmed the promotion ofcooperation not only in security but also in the comprehensive economic area including trade, finance,energy, minerals and technology/innovation. As Xi visited Moscow for the first time since Russia’s
military invasion into Ukraine, the talks between the leaders of China and Russia enhancing theircooperation to counter the Western bloc were attracting global attention. The world focused attention
on what the two leaders who represent one pole of the divided world would discuss and achieve attheir talks.
“The formation of a multi-polar international pattern is accelerating,” said the joint statement,
clarifying the two countries’ attitude of being united to counter the United States that leads the current
international order. In a world where division has deepened under the Ukraine crisis, China and Russia
indicated their determination to enhance their strategic partnership to counter Europe and the UnitedStates. On the Ukraine war, the statement indicated responsible talks as the best way to find asustainable solution, while checking the Western bloc, which has stepped up military support forUkraine. It also raised objection to unilateral economic sanctions on Russia, demonstrating the ChinaRussia group’s stance on the international situation over the Ukraine crisis.
The world was also watching whether there would be any development regarding a Ukraine
peace plan that China announced in February, but no remarkable development was seen. The Russianside appreciated the 12-point plan as mostly similar to the Russian stance and becoming a base forpeace efforts if the West and Ukraine make relevant preparations. However, the Russian side criticized
the West and Ukraine for failing to be prepared for peace talks and indicating an attitude of fighting
against Russia thoroughly. China’s potential mediation between Russia and Ukraine became a focusof attention just after China successfully brokered a deal between Saudi Arabia and Iran to normalize
their relations. If China plays a key role as a mediator to end the Ukraine crisis, its presence mayincrease further. In this respect, the Western bloc might have been closely watching and nervous about
the China-Russia summit.
It has been important for Russia to secure China’s support for the continuation of the war inUkraine and avoid its international isolation. The joint statement noted that “China needs a strong andsuccessful Russia.” In this respect, the two countries called for promoting an eight-point
comprehensive economic cooperation plan. A joint statement on economic cooperation cited (1)bilateral trade expansion, (2) enhanced financial cooperation, (3) long-term energy cooperation, (4)long-term reciprocal supply of mineral resources and (5) cooperation in the technology and innovation
1

IEEJ：March ©IEEJ 2023
area. For Russia, where gross domestic product contracted under enhanced Western economicsanctions, economic cooperation with China is growing more important. Thanks to energy price spikes,
Russian energy export revenue in 2022 increased even under the Western economic sanctions. Whileenergy exports have contributed to narrowing the economic contraction from earlier forecast levels,
economic sanctions have been dealing a body blow to the Russian economy. While economic
cooperation with China is growing more important for Russia, it is strategically important for China
to avoid the weakening of Russia as its key partner to counter the West.
The promotion of economic cooperation is thus important for both China and Russia. In theenergy area, which is the most important for their economic cooperation, bilateral trade has expanded
substantially. In particular, crude oil trade expansion has been remarkable. China’s crude oil imports
from Russia in 2022 increased by 8% from the previous year to 86.25 million tons, according toChinese statistics. Russia was the second largest crude oil exporter to China, following Saudi Arabia,
which exported 87.49 million tons in crude oil to China in 2022. China’s total crude oil imports in
2022 decreased by 0.9% to 508.28 million tons. Imports from Saudi Arabia in 2022 remained almost
unchanged from the previous year.
The substantial increase in China’s crude oil import from Russia apparently indicates that
Russian crude oil prices became cheaper than international market prices under the Western economic
sanctions, allowing China to secure energy supply on advantageous conditions. For Russia, theexpansion of oil exports to China is important for securing sales channels and maintaining oil revenue
at a time when Russian oil is excluded from traditional sales channels under the Western economic
sanctions. Russia thus increases its dependence on China for oil revenue under the Western economic
sanctions, apparently meaning that as China gains the upper hand on Russia as the buyer of Russianoil, the bilateral balance of power tilts in favor of China. In fact, however, Russia has no choice but toincrease its dependence on China and India to secure oil sales channels and revenue. Russian oil
exports to China have increased sharply since the second half of last year, when Russia was required
to secure oil sales channels in the face of decreases in oil sales to Europe. China’s termination of its
zero-COVID policy late last year might have stimulated the Chinese economy and helped to expand
oil imports from Russia. Some media reports say that China’s oil imports from Russia in January hit arecord monthly high above the past record in April 2022 and would increase further in March.
In value, China’s imports from Russia in 2022 soared by 44% from the previous year to$58.3 billion for crude oil, by 2.6-fold to $3.9 billion for natural gas and by 2.4-fold to $6.7 billion forliquefied natural gas. Russia thus got $68.9 billion in energy export revenue from China. Bilateral
trade relations have thus deepened remarkably, focusing on energy trade.
At the same time, however, China-Russia energy relations face various challenges from thelong-term viewpoint. First, the economic sanctions may reduce Russian energy supply and production
capacity gradually. Traditionally, cooperation with European and U.S. energy companies has beenrequired for oil and gas development in frontier regions and technologically difficult areas (including
unconventional oil development) to maintain and expand Russian oil and gas production. China andIndia may enhance engagement and cooperation in Russian energy development. However, whether
China and India can replace European and U.S. energy companies to help Russia to develop energy
sources is uncertain. China’s long-term engagement and participation in the Russian energy sector still
includes unclear points. To make up for a substantial decline in money-making gas pipeline exports toEurope, Russia may have to build a new pipeline (or expand LNG exports) to increase exports to China.
In addition to the currently operating “Power of Siberia” Pipeline, “Power of Siberia 2” Pipeline may
have to be built. This might have been a topic at the latest China-Russia summit. While the Russian2IEEJ：March ©IEEJ 2023
side described all bilateral agreements as coordinated, the Chinese side provided no specifics.
While China and Russia demonstrate their unity to counter the Western bloc, their relations
include many complex elements. How China-Russia strategic cooperation would work as a key
bilateral relationship that has led to the division of the world should be watched closely as one of thekey factors to move the world.

Contact: report@tky.ieej.or.jp
The back issues are available at the following URL
http://eneken.ieej.or.jp/en/special_bulletin.html

3