China and Russia May Be Expanding Natural Gas Cooperation – Just Not Via Power of Siberia 2

Russia’s invasion of Ukraine has left Moscow with few trade alternatives other than China. Beijing thus continues to enjoy the upper hand in the bilateral relationship, including in negotiations over the long-planned Power of Siberia-2 (PoS-2) Russia-to-China natural gas pipeline. Beijing will dictate the tempo and outcome of the negotiations, which are highly unlikely to conclude prior to the “freezing” of the war in Ukraine, due to China’s desire to maintain functional economic relationships with the United States and, especially, Europe. Financing risks and a lack of mutual trust will also continue to constrain the project.

While PoS-2 negotiations will likely remain in stasis for the near term, and probably longer, it doesn’t represent the only or even most important vector of natural gas cooperation between Russia and China. Moscow and Beijing show signs of increasing bilateral natural gas flows via alternative routes, including indirect routes through Central Asia and via liquefied natural gas (LNG).

The West shouldn’t be too concerned about PoS-2, but must proceed cautiously in Central Asia. Washington and Brussels should actively oppose Sino-Russian LNG cooperation, but not before Europe’s winter heating season of high natural gas demand concludes in April 2024.

Why China Imports Natural Gas

Natural gas has improved China’s urban air quality, enhancing performance legitimacy and providing critical political security benefits for the Chinese Communist Party (CCP). From 2013 to 2019, the last full year of data prior to COVID-19, concentrations of particulate matter in Beijing fell by about 38 percent. Natural gas played a major role in reducing Chinese urban air pollution, and, more importantly from the CCP’s perspective, subduing a growing environmental movement.

Environmental concerns, especially over tangible problems like urban pollution, can be dangerous for authoritarian regimes. Taiwan’s democratization struggle was closely linked to improving urban air quality, while Poland’s Solidarity movement enjoyed critical support from environmental groups. China experienced a growing – and for the CCP, dangerous – social environmental movement in the early and mid-2010s.

Although observed pollution levels in Beijing were actually higher in 2013 and 2014, according to air quality data from the U.S. Embassy in Beijing, popular and elite concerns over urban pollution in China likely peaked in early 2015, when the highly influential documentary, “Under the Dome,” was published and received upwards of 147 million views. The documentary was ultimately censored. As during the anti-COVID lockdown protests, the CCP responded to unrest by implementing policies that quelled public opposition but resulted in secondary consequences.

To reduce urban air pollution, the CCP applied stronger emission standards and control technologies while also displacing coal with natural gas, at least in metropolitan areas such as Beijing. While natural gas emits carbon and other greenhouse gasses, it also burns much cleaner than coal. Accordingly, China’s imports of natural gas more than quadrupled from 2011 to 2021, playing a major role in reducing its urban air pollution.

It’s unclear if the CCP’s perspective on the need for cleaner urban air – and natural gas – is shifting, however. As seen in the chart below, Beijing’s urban air quality index, or AQI, in 2023 has risen sharply in the post-COVID era and is even exceeding same-period levels from 2019, indicating that air pollution has increased (in AQI, higher scores are worse).