The limits of Chinese-Russian friendship start appearing as Chinese energy giant pulls out of major investment in Siberia

Russia's invasion of Ukraine is testing the limits of Beijing's partnership with Moscow. Major oil refiner, Sinopec, has cancelled plans for a new petrochemical plant in Eastern Siberia due to Western sanctions. Nevertheless, political ties remain close between the two powers as their foreign ministers are set to meet later this week.

Sinopec is Asia’s largest oil refiner and forms part of the three Chinese energy giants. The energy company had plans to invest approximately 500 million dollars in a new gas chemical plant. A source told Reuters that Sinopec was in the middle of site selection when it finally decided to pull its investment plans. The company already has a 10 billion dollar joint venture with Russian energy company Sibur.

Earlier this month, officials of the Chinese Ministry of Foreign Affairs met with executives from China’s energy giants to discuss and review current and future operations in Russia. The companies have set up contingency plans to ensure their sustainability and to ensure they do not receive blowback from extensive Western sanctions. Although Beijing is opposed to sanctions and has repeatedly stated that normal trade will continue with Russia, the actions of Chinese companies tell a different story. An executive said that the sensitivity of China-Russia relations means that Chinese companies have to “rigidly follow Beijing's foreign policy in this crisis.” "There's no room whatsoever for companies to take any initiatives in terms of new investment”.

Discrepancies between the Chinese state's political line on Russia and the economic realities faced by private Chinese companies are starting to appear. after Hu Wei, vice-chair of a public policy research centre under China’s central government declared that Beijing should stop supporting Russia in their invasion of Ukraine. The website that published the statement was subsequently blocked. Moreover, the former editor-in-chief of the Global Times said that propositions to follow the West and sanction Russia were “very childish”.

Beijing and Moscow’s political links, described as having “no limits”, continue to be solid. Sergey Lavrov, Russia’s Foreign Minister, said that Russia’s relations with China are at their strongest level yet and is set to meet his Chinese counterpart Wang Yi later this week. Despite Lavrov's assertion, the decisions of companies demonstrate that there are real limits to the relationship.

Sources: CommonSpace.eu with Reuters (London), Financial Times (London), Nikkei Asia (Tokyo), and other media agencies
Picture: Sinopec (Reuters)

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