China is attempting to achieve its goals of food and energy security by securing favourable deals with Russia, as the country deals with severe Western sanctions over its war in Ukraine. Due to the high energy prices and following its “dual circulation” strategy, China is mulling over investing in energy as well as commodities companies in Russia. Russia has become an attractive cheaper option as it has been slapped with hefty economic sanctions by US and European countries following its ‘invasion’ into Ukraine, the International Forum for Rights and Security (IFFRAS) report said.
The “dual circulation” strategy involves a two-step process, of promoting “internal circulation” by boosting domestic production, and “external circulation” by boosting external demand through heavy investments like the Belt and Road Initiative (BRI), the report said. China’s supply chains, of both food and other products, have been severely impacted by the rift with the US. Being alienated from the Western world, China is focusing on developing its own technologies for agriculture. China’s energy production is largely dependent on coal, which it imports from Russia and Indonesia. In 2020, China imposed a ban on imports of coking coal from Australia after the latter supported calls for an investigation into the handling of the coronavirus by China. Coking coal is now imported from Mongolia but it is of a much lesser quality than Australia’s.
At the same time, the Covid-19 pandemic has escalated energy prices which in turn has impacted the production of chemical fertilizers, deepening food security concerns. A number of chemical fertilizer plants have shut down across China. Russia has the second-largest coal reserves, after the US, in the world. Talks are on between state-owned Chinese energy companies, such as China Petrochemical, Aluminium Corporation of China, China Minmetals Corporation and China National Petroleum. Sources say that any deals between China and Russia would be aimed at ensuring food security. However, Washington has already warned China against extending any support to Russia either military or otherwise, or even helping Russia recover from its losses amidst reports that Russia is seeking military equipment from China. This has fuelled fears that Beijing may face US sanctions which could adversely impact Chinese companies and investors in the already ongoing trade war. China, in recent times, has advised its companies to adopt a “cautious” approach towards deals with Russia as the country appears to be succumbing to the Western powers who have imposed severe sanctions on Russia.
Recently, Sinopec, Asia’s largest oil refiner moved to stop major investments in a gas chemical plant and a venture to market Russian gas in China in the wake of unexpectedly heavy Western-led sanctions against Moscow, The Standard Hong Kong reported. (