Prof. ST Hsieh
Director, US-China Energy Industry Forum
February 20, 2022
Even nations have committed to counter global climate changes, China, India, and some developing nations still have to depend on coal fired power plants for the near future. The announced Russia-China deal that Russia will supply 100 million tons of coal in the coming years may sound terrible for the environment. But China recently produces about more than 3 billion tons of coal per year, so it only amounts to about 3% of China’s annual production. As pf February 17, 2022, nominal price for coal is about US$183 per ton, so the Russia-China coal deal is worth about US$18 billion. Russia-China trade is around US$170 billion per year, it amounts to 10% of the annual trade. Because it will be stretched out “coming years,” economic impacts will be quite limited.
Coal industry in the US has been crushed by US government’s green policy. Otherwise, there is no reason why China would not be interested in US coal. On the other hand, US exports to China include oil and gas (LNG.)
Linking China into the current Ukraine crisis may be a stretch. Because will there be a bloody war in Europe? No one knows for certain! The real crisis is between Biden and Putin, not about Ukraine. Today, at all the major Sunday News Talk shows in the USA where Secretary Blinken covered with ominous war talks, Biden announced that he has agreed to another Summit with Putin. That means no war will break out before the Biden-Putin Summit!
Sun, February 20, 2022, 12:03 PM
Sergey Mochalnikov, the head of the Russian Energy Ministry, announced the deal on Friday. The new deal will add to an already lucrative deal Russia signed with India in Nov. 2021 to supply 40 million tons of coal.
“Now, an intergovernmental agreement with the People’s Republic of China is being developed and the figure is 100 million tons,” he said. “In the coming years, consumers should receive as much coal as they need.”
Russian news outlet TASS, which is owned by the government, reported on the deal, adding that Russia’s share of coal in the Asia-Pacific market has increased by 8% since 2010, with Russia now controlling around 12% of the market.
“We have good prospects until 2030, and Russia should take its share in this growing market,” Mochalnkov added.
Russia has amassed nearly 150,000 troops along its southwest border with Ukraine and conducted military drills over the weekend. Russia continues to claim that it has no intention of invading neighboring Ukraine, but President Biden said Friday that he is confident that Russian President Vladimir Putin has decided to invade Ukraine.
The U.S. has threatened to hit Russia with sanctions – both on the state itself and against individuals, including President Vladimir Putin – should it proceed to invade Ukraine.
Robert L. Wilkie, former undersecretary of defense for personnel and readiness during the Trump administration and visiting fellow at the Heritage Foundation, previously told Fox News Digital that China would play a role in mitigating any U.S. sanctions placed on Russia in the event Vladimir Putin authorizes any military action in Ukraine.
“A lot of the talk about economic sanctions is really a pie in the sky because China is now Russia’s banker,” Wilkie said. “Xi Jinping will back Putin if sanctions from the West come.”
Wilkie focused his argument on Beijing increasing its purchase of oil from Russia, which already stands as the second-largest exporter of oil to China, but the energy market appeared the easiest path for China to provide economic relief to Moscow.
“[China] would start buying a lot more energy from Russia,” Wilkie explained. “If we went to move on the SWIFT loan system that gives Russia access to western capital, China would pick up the slack with that.”
“Even if the Germans were to do an about-face on the Nord Stream 2, China would pick up the slack – they need the energy as much if not more than Europe does. That’s how I would see that playing out,” he said.