Accessibility links

Breaking News

China In Eurasia

Tuesday 7 February 2023

February 2023
Sun Mon Tue Wed Thu Fri Sat
29 30 31 1 2 3 4
5 6 7 8 9 10 11
12 13 14 15 16 17 18
19 20 21 22 23 24 25
26 27 28 1 2 3 4
A liquefied-natural-gas storage tank owned by PetroChina in Nantong, China.

Nearly a month into 2023, Europe’s energy outlook is far more positive than many analysts predicted at the onset of winter.

Unseasonably mild winter temperatures across the continent and a successful pivot by the European Union away from Russian pipeline gas has seen supplies stabilize and prices fall from a previous peak.

Also helping to defy the gloomy predictions of energy shortages and stalled economic growth in the EU were increased imports of liquefied natural gas (LNG) and a new Baltic pipeline from Norway – developments that have allowed the continent to begin to replenish its gas reserves.

But European leaders are already turning their attention to next winter, where they could face a perfect storm of extreme weather, a reopened China with greater energy demands, and more volatile prices for consumers.

“When the Chinese economy picks up, it will not be easy to buy the planned volumes on the world market,” Fatih Birol, the head of the International Energy Agency (IEA), warned in a late January interview with the German magazine Handelsblatt. “No Russian gas, China’s comeback as an importer, little supply growth: these three factors make next winter a challenge.”

A segment of the new Baltic pipeline, which opened in September, in Budno, Poland. (file photo)
A segment of the new Baltic pipeline, which opened in September, in Budno, Poland. (file photo)

China, reopening after years of COVID lockdowns, will be competing for a limited supply of LNG in an already tightening market, analysts forecast, which when coupled with rising global prices for energy -- from oil to coal -- will likely hit consumers hard and contribute to soaring food and services inflation.

This leaves the world’s second-largest economy as a crucial but unpredictable wild card for the next European winter that leaders and officials will be watching closely.

“The situation is more about uncertainty and how hard next winter is to plan for,” Agathe Demarais, global forecasting director for the Economist Intelligence Unit, told RFE/RL. “There is concern about Chinese demand, the weather, and how to refill gas storage in Europe -- all of which can be difficult to predict. But the main concern here is about prices.”

A 'Lucky' Europe

Europe moved quickly following Russia’s February invasion of Ukraine to buy up global supplies of LNG as the EU pledged to cut Russian gas imports. According to the Oxford Institute for Energy Studies, European countries increased LNG imports from 83 billion cubic meters (bcm) in 2021 to 141 bcm in 2022.

In hopes of shielding consumers, governments across Europe have taken up vast energy bill support payments to consumers and businesses -- totaling a whopping $768 billion, according to Bruegel, a think tank focused on European policies.

People protest high energy prices in Madrid in March 2022.
People protest high energy prices in Madrid in March 2022.

Consumption within the 27-country bloc has also dropped due to rising prices and a warm winter. Europe has so far used about half as much gas from storage facilities at this point as in the preceding two winters, with forecasts pointing to continued mild temperatures ahead.

Yet, even with replenished storage facilities, concern is still high for next year.

An LNG tanker docks at a terminal in Zhoushan, China, in August 2018.
An LNG tanker docks at a terminal in Zhoushan, China, in August 2018.

Asian -- not just Chinese -- demand for gas is increasing, and will rise further as China’s economy -- and its consumption of LNG -- returns to its former pace. Timera Energy, a global consultancy, says the gas market is still operating on the edge of supply capacity, meaning sharp price fluctuations and volatility are still in the cards.

'Crunch Time'

As Demarais notes, Europe has been “extremely lucky” so far in terms of weather and has successfully moved to buy up LNG and replace its dependency on Russian gas with pipeline supplies from Algeria and Norway.

But questions around Chinese demand could be a key factor for determining inflation and pricing that could make next winter “crunch time” for Europe, she adds.

As gas prices spiked last year after Moscow cut supplies to Europe following its invasion, the bloc began to import record amounts of LNG that in turn pushed Asian spot LNG prices to historical highs.

This places China in a unique position to impact Europe next winter.

If China recovers relatively quickly from its COVID lockdown economic slump that saw its gross domestic product (GDP) growth slow to 3.3 percent last year, its demand for commodities will quickly pick up.

China is responsible for almost one-fifth of global oil consumption and surpassed Japan in 2021 as the world’s largest importer of LNG. The country also fills more than half of the world’s demand for copper, nickel, and zinc.

If the Chinese economy recovers rapidly, it could put commodity prices under intense upward pressure and keep inflation high in Europe and elsewhere in the West.

The Chinese Wild Card

But analysts also contend that there are many variables related to China that could determine what kind of ripple effects will be felt in Europe.

Alicia Garcia-Herrero, the chief economist for Asia-Pacific at the investment bank Natixis, says China has and will continue to buy energy resources and the country's economy is poised to grow at a far faster rate than in recent years, with Chinese government targets sitting above 5 percent of GDP for 2023.

But she adds that China has managed to secure its energy supplies through discounted deals with countries such as Russia, Malaysia, and Qatar that could lessen the impact that its resurgent energy appetite could have on Europe in 2023.

“There will no doubt be competition, but perhaps less than is being feared, especially for the impact on prices,” Garcia-Herrero told RFE/RL.

China is currently grappling with natural-gas shortages due to a mix of unusually cold temperatures and weak energy regulations and infrastructure, including provincial and municipal officials reducing gas subsidies that used to keep heating bills in check.

People grapple with tough winter temperatures in Jiujiang, China.
People grapple with tough winter temperatures in Jiujiang, China.

In response, Beijing has told local governments to supply heat, but hasn’t provided extra funds to pay for it. This has led to rationing, with many households receiving only enough for cooking needs.

With domestic interests in mind, Garcia-Herrero adds that Beijing will be cautious to avoid pushing up the price for gas, which could have less of an effect on Europe next winter than some are predicting. With COVID infections still spiking across the country, the full reopening of the Chinese economy is also not imminent.

This may give Brussels added time to insulate itself from potentially severe shocks next winter.

“In the long run, Europe may be in a much better position due to all the steps that the EU is taking now to get rid of its dependency on Russia and invest in renewables,” said the Economist Intelligence Unit's Demarais. “But from the short-term perspective, there is lots of concern about the wider impact on inflation and price.”

Former Chinese Foreign Minister Wang Yi stands next to the EU and Chinese flags as he waits for the arrival of European Council President Charles Michel in Brussels in 2019.

Welcome back to the China In Eurasia briefing, an RFE/RL newsletter tracking China's resurgent influence from Eastern Europe to Central Asia.

I'm RFE/RL correspondent Reid Standish and here's what I'm following right now.

Beijing, Moscow, And The New Europe

China is aiming to improve relations with the West, particularly its ties with Europe, which have been hurt by Beijing's support for Russia throughout Moscow's invasion of Ukraine.

But as I reported here, the Chinese charm offensive is getting a skeptical reception in Brussels.

Finding Perspective: In a move that has been gathering steam since late last year in the aftermath of Beijing's Chinese Community Party congress, China is looking to mend fences as it emerges from the isolation of its strict COVID-19 policies and shift from the aggressive "wolf warrior" rhetoric of recent years.

This was on display at the World Economic Forum in Davos, where Chinese officials like Vice Premier Liu He offered a gentler tone as part of a foreign policy rebrand targeting Western governments and investors.

Can China Win Back Europe?
please wait

No media source currently available

0:00 0:34:55 0:00

On a similar note, Politico reported that Wang Yi, the former Chinese foreign minister who now oversees foreign affairs on the 24-person Politburo, is slated to go on a European tour in February that could also see a meeting in Brussels with the EU's top brass.

Beyond that, there are also attempts from Beijing to signal disapproval with Moscow's war in Ukraine, including recent anonymous comments to the Financial Times from senior Chinese officials who called Russian President Vladimir Putin "crazy" and said that Russia will emerge as a "minor power" from the war.

Why It Matters: Beijing faces an uphill battle in repairing its image in Brussels.

EU officials who spoke to RFE/RL say that Brussels is in "wait and see" mode with China and so far hasn't seen much that signals a true change in policy or any new daylight between it and Moscow.

That's not to say that the EU won't engage with China -- especially after years of limited contacts -- but rather that so far Beijing's rebrand is largely viewed as cosmetic with very little substance to it.

This is particularly true for signals of newfound distance between China and Russia.

Both countries' economies continue to become more integrated and a recent report from Bloomberg that the Biden administration confronted Beijing with evidence suggesting some Chinese state-owned companies may be providing assistance for Russia's war in Ukraine points to ties getting even stronger.

Read More

● Europe's China policy is hardening, but there is still a gap between how Brussels and Washington approach Beijing. Read the interview with French Finance Minister Bruno Le Maire here.

● Another change for how Europe approaches China set off by Russia's invasion of Ukraine is a wider reevaluation of dependencies. One of the largest is a reliance on China for lithium-ion battery cells for electric cars. A new report by the renewable energy campaign group Transport and Environment said that Brussels was on track to produce enough battery cells by 2027 to meet demand and cut China from its supply chains.

Expert Corner: Ukraine And China After One Year

Readers asked: "After nearly a year of war in Ukraine and China sticking with Russia, how has Kyiv changed its policy towards Beijing?"

To find out more, I asked Yurii Poita of the Kyiv-based Center for Army, Conversion, and Disarmament Studies:

"First, Ukraine's expert community and media have become more critical of China, especially over its so-called 'pro-Russian neutrality,' where China does not provide military and military-technical assistance to Russia, but still deepens relations and provides economic, informational, and diplomatic support to Moscow.

"Second, there has been a reassessment of China as a driver of economic growth and a potential safety cushion for Ukraine. Despite a strategic partnership and growing economic ties between Beijing and Kyiv, Ukraine has not been able to change China's position on the war in its favor. Attempts by the Ukrainian leadership to reach China through diplomacy and the media and convince it to influence Russia or to act as a security guarantor in some sort of postwar deal have completely failed. Ukrainian President Volodymyr Zelenskiy has not even been able to get a phone call with Xi.

"At the moment, the opinion that China cannot be a strategic partner is becoming stronger in Ukraine. A search is now under way for a new formula for relations with China that would meet Ukraine's national interests while also taking into account strategic competition between Beijing and Washington and China's position regarding the Russian-Ukrainian war. The office of the president still hopes to involve China in resolving the war, however, these hopes are gradually fading."

Do you have a question about China's growing footprint in Eurasia? Send it to me at or reply directly to this e-mail and I'll get it answered by leading experts and policymakers.

Three More Stories From Eurasia

1. Whitewashing Xinjiang

The former grand mufti of Bosnia-Herzegovina is facing accusations of helping to whitewash Beijing's human rights abuses in Xinjiang after he visited China's western province and praised the Chinese Communist Party's policies, Meliha Kesmer and Predrag Zvijerac of RFE/RL's Balkan Service reported.

The Details: Mustafa Ceric, who served as grand mufti from 1999 to 2012, attended a well-publicized tour of Xinjiang with Islamic clerics and scholars earlier this month where he and others praised Beijing's harsh policies to Chinese media.

The comments echoed Beijing's justification for its treatment of Uyghurs, ethnic Kazakhs, and other Muslim groups in Xinjiang, which has been the site of a brutal crackdown launched by Beijing in recent years that swept up more than 1 million people in detention camps and prisons.

Ceric has since found himself in hot water at home, with Bosnia's Islamic authorities looking to distance themselves from his comments. The current grand mufti's office said they don't agree with Ceric and that they "have different views, based on the information that we have."

2. Looking At China's Coming Year In Central Asia

After a year where Russia's invasion of Ukraine upended the status quo in Eurasia and saw Xi Jinping secure a new five-year term as China's leader, what can we expect from the coming year and how might China adapt to a changing reality on the ground?

What You Need To Know: We explored this in the latest episode of Talking China In Eurasia, RFE/RL's new podcast that I host.

Along with RFE/RL Central Asia correspondent Chris Rickleton and Bradley Jardine from the Wilson Center, we looked ahead at what this year could hold for Beijing in the region as it navigates Central Asian governments trying to distance themselves from Moscow and a quickly changing security situation.

Take a listen and don't forget to subscribe on Apple Podcasts, Spotify, or wherever else you like to listen.

3. Minerals, China, And Afghanistan

Taliban officials arrested five men, including two Chinese nationals, for allegedly trying to smuggle an estimated 1,000 metric tons of lithium-bearing rocks out of Afghanistan.

What It Means: Authorities said that the Chinese nationals and their Afghan counterparts were planning to illegally transport the valuable minerals to China through Pakistan.

The Taliban banned extraction and sale of lithium since reclaiming power in Afghanistan in August 2021 and Afghanistan reportedly sits on an estimated $1 trillion worth of rare-earth minerals, including huge deposits of lithium.

Afghanistan's resources are of key interest to Beijing and Chinese companies have secured the rights to several mines and valuable deposits. Most recently, China's Xinjiang Central Asia Petroleum and Gas Company (CAPEIC) signed a deal earlier this month to extract oil from the Amu Darya Basin located in the northern part of Afghanistan, RFE/RL's Radio Azadi reported.

CAPEIC will invest $150 million in one year and $540 million in the next three years. The deal fits with a wide trend of China exploring low-risk and long-term deals in Afghanistan.

Time will tell on how the investment bears fruit, but expectations should remain low. Despite owning rights to other resource deposits in the country, China is still hesitant about the security situation in the country and the safety of its own citizens, who are increasingly becoming a target for extremist groups like the Islamic State-Khorasan (IS-K).

Across The Supercontinent

Cold Snap: Central Asia is grappling with a cold winter and worsening energy crisis, RFE/RL's Chris Rickleton reports.

Unlike in past years, energy shortages are also hitting major cities and beginning to spark pushback. Already the mayor of Tashkent -- Uzbekistan's capital -- has been removed from office, as have several other top officials.

Drilling Down: Miners protested over working conditions at the Bor copper mine in Serbia, which is owned by Zijin, China's largest gold miner and one of its top copper producers. Watch the video from RFE/RL's Balkan Service here.

Blocked: The European Court of Human Rights ordered Malta to stop the forcible removal of a Uyghur couple that has been trying to claim asylum in the country since 2016.

According to the Spanish NGO Safeguard Defenders, Maltese immigration authorities were planning to deport the couple to China and did not accept their legal case that a return to Xinjiang would place them in imminent harm.

Editorial Control: As outlined in a new report from the European Parliament's special committee on foreign interference, Russia, China, and corruption are the biggest threats to European democracy.

The report, which was seen by RFE/RL's Hungarian Service, takes aim at China's growing stake in the continent's media. According to the document, state-linked investors have spent nearly 3 billion euros ($3.3 billion) in European media companies in the last decade, where they often have a controlling stake.

One Thing To Watch

Chinese policymakers have recently unveiled potential stimulus for property developers to support a sector that has been hit by a wave of defaults over the past 18 months, but questions remain whether Beijing can avert a nose dive.

In China, about 90 percent of new homes are sold before they are built. This presale model allows developers to raise cash quickly, but shifts much of the risk to buyers. The dynamic sparked widespread protests and mortgage boycotts last year as many prospective buyers felt the financial crunch.

The government tightened financing rules for developers in the hope of preventing a housing-sector collapse and in a positive sign, bonds issued by China's highly indebted real estate developers have rebounded sharply over the past two months.

With the Chinese economy slowing down and facing added pressures, how the authorities navigate the property sector -- which accounts for roughly a quarter of the economy -- will play a major role in shaping its future outlook.

That's all from me for now. Don't forget to send me any questions, comments, or tips that you might have.

Until next time,

Reid Standish

If you enjoyed this briefing and don't want to miss the next edition, subscribe here. It will be sent to your inbox every other Wednesday.

Load more

About The Newsletter

In recent years, it has become impossible to tell the biggest stories shaping Eurasia without considering China’s resurgent influence in local business, politics, security, and culture.

Subscribe to this biweekly dispatch in which correspondent Reid Standish builds on the local reporting from RFE/RL’s journalists across Eurasia to give you unique insights into Beijing’s ambitions and challenges.

To subscribe, click here.