The Anatomy of Asymmetric Dependence: ‘Power of Siberia 2’ in Russia-China Energy Relations and the Reconfiguration of Global Power Balances

The statement made by Yuriy Ushakov, the Kremlin’s Foreign Policy Adviser, on 20 May 2026 in Beijing—that “we have agreed on something very important”—may be veiled in the ambiguity of diplomatic language, but the underlying geopolitical reality is crystal clear: During their talks in Beijing, Russian President Vladimir Putin and Chinese President Xi Jinping reached a general framework agreement on the key parameters of the “Power of Siberia 2” natural gas pipeline project; thus, this massive infrastructure investment—which had been delayed for years—has effectively been placed on a diplomatic footing. Kremlin Spokesperson Dmitry Peskov’s statement on the same day, emphasising that “a general understanding has been reached regarding the route and construction method, though certain nuances still need to be clarified” and that “details retaining their commercial nature will not yet be shared with the public”, highlights both the scale and the fragility of the emerging picture. To assess this development in isolation would be to reduce a multi-layered phenomenon of international relations; for this agreement gains meaning within the global context created by two separate Beijing summits held in quick succession over a few days — first Donald Trump’s visit on 13–15 May, followed by Putin’s meetings on 19–20 May.

From the Depths of History to the Present: The Pipeline’s History and Political Background

The “Power of Siberia 2” project first entered the public agenda in 2020; it is a magnificent infrastructure initiative designed to connect Russia’s natural gas reserves in Western Siberia to the Chinese market via Mongolian territory, with a total length of 6,700 kilometres. The conceptual foundation of the project actually dates back much further, rooted in Russia’s strategy to reduce its dependence on European customers and diversify its energy exports. However, with the invasion of Ukraine in 2022 and the subsequent implementation of comprehensive Western sanctions, this project ceased to be merely a strategic choice for Moscow and became a matter of existential necessity. The dramatic closure of the European market — the destruction of the Nord Stream pipelines, the effective end of transit through Ukraine, and the EU’s acceleration of its decoupling from Russian energy — has forced Russia to turn to China as the sole serious alternative for energy exports.

In this context, Gazprom’s signing of a legally binding memorandum of understanding with the China National Petroleum Corporation (CNPC) in September 2025 marked the first tangible diplomatic outcome of long-standing technical negotiations. During the same period, the increase in annual gas shipments via the existing Power of Siberia 1 pipeline from 38 billion cubic metres to 44 billion cubic metres, and the planned increase in capacity on the Far East route—currently under construction—from 10 billion cubic metres to 12 billion cubic metres, were also brought to the fore as part of this process. Gazprom CEO Aleksey Miller stated that once Power of Siberia 2 reaches full capacity, it will be able to transport 50 billion cubic metres of gas per year, and that these deliveries could continue for thirty years. However, the fact that price negotiations remain unresolved, the question of whether China will purchase the pipeline’s full capacity or flexible volumes of gas remains unanswered, and the construction schedule remains uncertain, all of which continue to make it difficult to conduct a comprehensive assessment of the project’s true nature.

Asymmetric Dependency: Who Needs Whom?

Perhaps the most critical aspect of Russia-China energy relations is the structural asymmetry between the parties. Although this relationship may appear, at first glance, to be a partnership based on mutual interest, it actually harbours significantly different power positions. In 2025, Russia exported approximately 101 million tonnes of oil and 49 billion cubic metres of natural gas to China; based on these figures, China has established itself as Russia’s largest energy customer. On the other hand, the deepening of Russia’s budget deficit — reports suggesting the government budget was exhausted by the first quarter of 2026 have reached the public — is dramatically increasing Moscow’s dependence on oil and natural gas revenues. Under these circumstances, Putin’s decision to sit down at the negotiating table in Beijing is the clearest indication that Russia’s negotiating position is weak.

Looking at the Chinese side, it is clear that Beijing has adopted an extremely strategic and calculated stance from the outset. The fundamental doctrine guiding China’s energy procurement is built on the principle of not importing more than fifteen per cent of total demand from any single source; this principle enables Beijing to maintain its negotiating advantage over Russia. Moreover, China has turned Russia’s loss of market position in Europe into an opportunity, gaining the ability to purchase Russian energy at prices significantly below market rates. Gazprom CEO Miller’s admission that Russia will sell gas to China at a lower price than to its European customers is an official expression of this asymmetrical power dynamic. It is estimated that the pipeline will be less profitable than Power of Siberia 1 due to high construction costs and low sales prices; however, it is anticipated that a positive cash flow could be achieved if tax incentives are applied.

Meanwhile, China has effectively turned Russia into a market for its own goods and services by exporting industrial products, cars and technology to the country. It has been reported that trade between Russia and China reached $85.24 billion in the first four months of 2026, marking a 19.7 per cent increase. Within this growth, China’s exports to Russia rose by 23.1 per cent, whilst Russia’s exports to China increased by 17 per cent. The fact that 99.1 per cent of trade payments between the two countries are conducted in roubles and yuan reflects a deliberate shift towards a parallel financial ecosystem that excludes the dollar. However, this structure continues to undermine Russia’s reliance on a single economic actor; for the reality that China acts as a power driven by strategic calculations rather than a rule-bound trading partner casts a shadow over every step Moscow takes.

Beijing’s Chessboard: Post-Trump Putin, or China’s ‘Two-Table’ Diplomacy

The fact that Xi Jinping hosted the leaders of the US and Russia within the space of about a week as of 20 May 2026 carries not merely symbolic, but profound strategic significance. During Trump’s state visit on 13–15 May, the high tension in China-US relations was transformed into “controlled competition”; China’s agreement to purchase US oil and the mutual tariff reductions demonstrated flexibility on the commercial front. With Putin’s arrival in Beijing, China’s capacity to manage a relationship of a different nature—a strategic partnership—was once again demonstrated. China has hosted four of the five permanent members of the UN Security Council—France, the United Kingdom, the US and Russia—within just a few months; this unique position substantiates the claim that Beijing is the true centre of the global order.

This picture demonstrates just how consistently China has implemented its ‘flexible multipolarity’ strategy, which operates outside any formal bloc and maintains separate negotiation channels with every major power. China has never elevated Russia to the status of a sole saviour ally; rather, it has positioned Moscow as a supplier that accepts asymmetrical terms favourable to China in the energy sector. Indeed, Lavrov’s statement during his April 2026 meeting with Xi—that Russia could “compensate” for China’s energy shortfall should the conflict in the Middle East negatively impact global energy supplies—is a direct expression of the strategic guarantee Moscow is seeking to offer Beijing. The fluctuations in energy prices fuelled by the Strait of Hormuz crisis, coupled with China’s 100 per cent reliance on energy transported by sea, have made land routes a strategic priority; this has transformed Power of Siberia 2 into not merely a commercial but a geostrategic infrastructure.

China’s Energy Security Doctrine and the Pipeline’s Role in the System

In global energy literature, the concept of ‘diversification of supply’ is widely accepted as a fundamental policy reflex for major importing economies. China is at the forefront of countries that meticulously implement this reflex. As of 2026, China is securing simultaneous energy supplies from the Middle East, Africa, Central Asia and Russia; it does not allow any single partner to gain a dominant position in total supply. This policy serves as the most effective means of building resilience against political pressure and securing the lowest possible energy prices. Once completed, Power of Siberia 2 will have an annual capacity of 50 billion cubic metres, meeting a significant portion of China’s total natural gas consumption; however, Beijing will maintain other supply channels to ensure this dependency does not exceed a certain threshold.

The technical scale of this project is also of immense importance in the history of energy infrastructure. In the words of Gazprom CEO Miller, the pipeline claims to be “the world’s largest, most comprehensive and capital-intensive gas project”. Spanning 6,700 kilometres and requiring it to traverse the Mongolian steppes and Siberian permafrost regions, this pipeline represents a groundbreaking endeavour in terms of both civil engineering and geological risk management. Technical experts have raised the possibility that construction costs may exceed projected levels, given the warming of permafrost regions combined with the new risks created by global climate change in this area. Considering that economic profitability calculations are based on the assumption that “the selling price will be lower than expected”, this potential cost increase seriously calls into question the project’s long-term financial sustainability.

Negotiation Dynamics: Why Are ‘Basic Parameters’ Insufficient?

Upon careful analysis of Kremlin Spokesperson Peskov’s statement, the actual outcome of the May 2026 Beijing summit becomes clearer: ‘There is a general understanding regarding the route and construction method; certain nuances need to be clarified.’ This statement points to a stage within the lifecycle of international trade agreements known as a “framework agreement”. A framework agreement indicates that the parties have developed a common understanding, but that the core elements of a binding contract—namely price, capacity commitments, financing structure and construction timetable—remain on the negotiating table. Peskov’s emphasis that “a definitive timetable has not yet been set” and that this constitutes “commercial information” suggests he is seeking to obscure the technical uncertainties underlying this step, which has been presented to the public as a success.

The issue of price has historically been the most intractable sticking point in negotiations between the two sides. It is known that China wishes to purchase Russian gas at a price well below the market rate — approximately $350 per 1,000 cubic metres, according to some expert estimates. This figure is significantly lower than the price level Gazprom demands from its European customers. From Russia’s perspective, the budgetary constraints created by the war are effectively eroding its bargaining power at the negotiating table; indeed, Moscow’s structural dependence on energy revenues may make concessions on price inevitable. This dynamic raises questions about how much the project actually contributes to Russia’s coffers.

The War in Ukraine, Western Sanctions and Russia’s Strategic Dilemma

The war in Ukraine, which has been ongoing since February 2022, has forced Russia to fundamentally redraw its energy export map. Western sanctions packages have effectively cut Russia off from the European market, compelling Moscow to seek alternative markets. Under these conditions, China has risen to become both the largest buyer of oil and gas and the largest supplier of intermediate goods and consumer products required by industry. The fact that bilateral trade between Russia and China is projected to rise by 26.3 per cent to $240 billion in 2023 and exceed $244 billion in 2024 underscores this trend. However, the 6.9 per cent decline in 2025 — attributed to factors such as the volatility of the rouble-yuan exchange rate and a contraction in Russia’s import capacity — has also highlighted the fragility of this growth. Whether the recovery observed in the first four months of 2026 will prove sustainable remains uncertain.

Another dimension of the strategic impasse Russia finds itself in is the growing dominance of Chinese cars in the Russian market. Chinese manufacturers, rapidly filling the void left by the withdrawal of Western brands from Russia, have effectively become the sole option for Russian consumers; this situation crystallises the contradiction between ‘salvation’ and ‘structural dependence’ from Moscow’s perspective. As an energy exporter, Russia simultaneously imports a significant proportion of its industrial goods from China; consequently, the economy is becoming integrated with Beijing on both the supply and demand sides. How this situation will constrain Russia’s foreign policy choices over the next decade is being examined with growing interest in the literature on international relations.

Mongolia’s Quiet Role: The Strategic Value of a Transit State

The use of the Mongolia route by Power of Siberia 2 brings not only Russia and China but also a third actor into the project. Although Mongolia has limited capacity in terms of both demographic and economic size, this transit function confers upon it a geopolitical weight that cannot be underestimated. Sandwiched between Russia on one side and China on the other, Mongolia lacks the potential to transform this position into either soft or hard power; nevertheless, the transit revenues it could derive from the pipeline have moved to the centre of economic development debates. The fact that the ‘Soyuz-Vostok’ transit route passing through Mongolia is being considered in tandem with the project demonstrates that Ulan Bator is a permanent part of this equation. On the other hand, it is known that the choice of route has most likely shelved plans for an alternative pipeline passing through Kazakhstan; this situation signals a significant shift in Central Asian energy geopolitics.

Tipping Points in the International Energy Order: The Post-Dollar Ecosystem

Russia-China energy relations must be examined not only in terms of physical infrastructure but also in terms of financial architecture. The fact that 99.1 per cent of commercial payments between the two countries are conducted in roubles and yuan stems not merely from practical necessity but from the deliberate bypassing of the SWIFT system and dollar-based payment channels. This development is concrete evidence that a bilateral alternative has been constructed in opposition to the fundamental principles of the international financial system—namely, dollar hegemony and multilateral payment platforms. Russian Finance Minister Anton Siluanov’s statement in November 2025 confirms this transformation. This trend opens the door to a new phenomenon discussed in academic circles as the “financialisation of energy geopolitics”: energy trade now acquires political significance not only through its sources and infrastructure but also through the currency in which it is conducted.

In this context, the “Power of Siberia 2” project goes far beyond a mere technical infrastructure investment. The project is, in effect, a massive infrastructure element poised to form the backbone of a non-dollar energy trade ecosystem, and as such, it represents a step that indirectly challenges the global financial order. Given China’s progress in the digitalisation of the yuan and the expansion of the rouble-yuan currency corridors, the potential implications of this trend for the distribution of global reserve currencies over the next decade emerges as a critical research question in the field of international economic policy.

Assessment: The True Value of “Something Important”

What Kremlin adviser Ushakov meant when he said “we have agreed on something very important” following the Putin-Xi summit was the agreement on the basic parameters of “Power of Siberia 2”. This framework agreement is, from Russia’s perspective, the product of diplomatic pressure that has built up over the years; from China’s perspective, it is a calculated strategic investment—still in the negotiation phase—that both strengthens energy security and establishes an alternative structural axis against the West. Given the uncertainties regarding price, timetable and financing, it could be argued that this development constitutes a political declaration of intent designed to accelerate concrete negotiations rather than a historic agreement.

However, it would be incorrect to underestimate the potential impacts of this declaration of intent on global energy geopolitics. Once the project is completed, China will possess a large-scale, secure land-based supply route far exceeding Europe’s current position in onshore natural gas; Russia, meanwhile, will secure a critical source of revenue to sustain its post-war economy. On the other hand, it appears inevitable that the asymmetrical power dynamic will deepen: the entire construction and operational phase of the pipeline will pave the way for Beijing to assume a decisive role in energy pricing; whilst further restricting Moscow’s negotiating capacity. This reality necessitates analysing Russia’s economic dependence on China not only through the prism of the trade balance but also from the perspective of strategic infrastructure lock-in.

In conclusion, with this news reaching the world from Beijing on 20 May 2026, the global energy equation has entered a process of reshaping. ‘Power of Siberia 2’, regardless of whether a final agreement is reached or not, is the physical infrastructure manifestation of one of the most profound geopolitical ruptures of our time — Russia’s disengagement from the Western system and China’s rise as a global power. As a living experiment in one of the fundamental debates of international relations theory—namely, how dependency relationships transform power dynamics—monitoring this process holds great significance from both an academic and a practical policy perspective. The ambiguous statement from the Kremlin serves as yet another reminder of the immense geopolitical significance that thousands of kilometres of steel can carry in the energy world.