Vladimir Putin has left Beijing without a binding agreement on a major new gas pipeline, diplomatic sources have confirmed, in a significant setback for Russian energy strategy and a rare diplomatic failure for President Xi Jinping. The proposed Power of Siberia 2 pipeline, which would have delivered up to 50 billion cubic metres of natural gas annually from Russia’s Yamal fields to China, was the centrepiece of talks held during Putin’s two-day state visit. Yet despite lavish hospitality and weeks of preparatory negotiations, the two sides failed to resolve differences over pricing, financing, and the pipeline’s route.
The breakdown underscores the limits of the Sino-Russian alignment. While both nations have increasingly coordinated to counter Western sanctions and security architecture, economic interests remain stubbornly transactional. China has leveraged its position as the buyer to demand gas prices near domestic coal parity, a condition Moscow finds untenable given its own economic strains from the war in Ukraine. Furthermore, China’s slowing economy and aggressive energy transition have reduced its long-term gas demand forecasts. The International Energy Agency now projects Chinese gas consumption to peak by 2030, making the 30-year deal Russia sought increasingly difficult to justify.
The collapse of the pipeline deal has immediate geopolitical implications. Russia had counted on the route to replace lost European markets, which bought roughly 150 billion cubic metres of Russian gas before the invasion of Ukraine. Europe has since cut that to near zero. Without China, Russia’s options dwindle. The alternative routes across Central Asia are logistically challenging and vulnerable to sabotage. The Kremlin may now accelerate plans to build a gas hub in Turkey, though that too requires massive infrastructure investment and faces EU regulatory hurdles.
For Beijing, the failure is an unusual diplomatic black eye. Xi personally hosted Putin for a marathon four-hour dinner at the Diaoyutai State Guesthouse, and state media had hyped the visit as a historic deepening of ties. But Chinese negotiators held firm on commercial terms, reflecting a pragmatic realism that often surprises Western observers. “China does not do charity deals,” said one diplomat familiar with the talks. “Xi can offer friendship, but the National Development and Reform Commission controls the price.”
Environmental analysts see a silver lining. If China sticks to its decarbonisation pathway, avoiding new long-term gas contracts could prevent billions of tonnes of stranded assets. “Every year we delay new fossil fuel infrastructure, we reduce the risk of a high-carbon lock-in,” commented Dr. Lara Zhou of the China University of Petroleum. “This failure may inadvertently accelerate China’s renewable energy deployment.”
Yet the immediate consequences are stark. Putin returns to Moscow with a weakened hand, facing a European energy embargo that is biting harder than anticipated. China, meanwhile, has proved it can maintain strategic independence even from its closest partner. The bill for that sovereignty? A colder winter for Russian households, and a clearer picture of a multipolar world where energy flows follow hard economics, not statecraft.
