China Plans to Buy Stakes in Russian Energy Companies

China requires raw materials to develop, and Russia possesses the raw minerals but lacks the financial resources. It would also promote non-dollar transactions between the two countries, eroding the dollar's global supremacy and, over time, protecting the two countries from further sanctions.
Publish Date
11th March 2022
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Read Time
2 minutes

According to Bloomberg sources, the Chinese government is in talks with four state-owned enterprises to buy shares in Russian oil and metals firms. China National Petroleum Corp (CNPC), China Petrochemical Corp, or Sinopec, the country’s largest refiner, Aluminum Corp, and China Minmetals Group are the four companies that were mentioned.

According to Bloomberg, conversations between the corporations are underway, but it is too early to determine whether they would result in a contract. Deals, on the other hand, have a decent possibility of happening.

Excerpt from the article “China has vowed to continue normal trade relations with Russia despite a massive corporate exodus from European and American firms. BP Plc, Shell Plc and Exxon Mobil Corp. took the energy industry by surprise by walking away from Russian assets worth billions of dollars.”

CHINA AND RUSSIA

It is an example of mutual gain and a win-win situation. China requires raw materials to develop, and Russia possesses the raw minerals but lacks the financial resources. It would also promote non-dollar transactions between the two countries, eroding the dollar’s global supremacy and, over time, protecting the two countries from further sanctions.

After Visa and Mastercard withdrew from the country, several Russian banks are considering switching to China’s UnionPay card payment system, and Chinese firms acquiring shares in oil and metals companies would only strengthen this process. Both presidents, Xi Jinping and Vladimir Putin, had already been tightening ties, signing a series of agreements last month to increase Russian gas and oil supplies, as well as wheat.

China has a high demand for fossil fuels, and this might be an opportunity to satisfy it. The country is not rushing to reduce emissions as its target year for reaching net-zero is 2060.

China has been expanding its investments in other countries for years, and the acceptance of the Yuan as a form of payment has increased in several countries.

The conflict between Russia and Ukraine, as well as Western sanctions on Russia, may give rise to a new alliance that may alter the global power structure in the coming years.

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