The Kremlin’s winter is getting colder. Vladimir Putin flew home from Beijing last night without the prize he had come for: a final agreement on the Power of Siberia 2 pipeline. Xi Jinping, China’s paramount leader, refused to budge on pricing and terms. The message was clear. China holds the upper hand. The deal is deadlocked.
Sources close to the negotiations tell me the talks grew heated. Putin’s delegation arrived expecting a swift signature. They left with nothing but a joint statement full of platitudes. Xi’s position is simple: Russia needs the revenue more than China needs the gas. And with Europe closing its doors, Moscow has no alternative buyer.
The pipeline is existential for Putin. It would divert gas from the West to the East, locking in a thirty-year supply deal worth billions. But Xi is playing the long game. He knows Putin is weakened. The war in Ukraine has drained Russia’s coffers. Sanctions are biting. China can afford to wait.
This is a humiliation for the Kremlin. Putin has staked his legacy on pivoting to Asia. Now that pivot is stalling. The Chinese side is demanding a discount of up to 30% on the price Beijing pays for gas from Central Asia. They also want Russia to finance the pipeline’s construction on Chinese territory. Putin offered concessions. Xi held firm.
Back in Moscow, the silence is deafening. The state media is spinning the visit as a success. But the lobby knows better. This is a defeat. The spectre of a cold winter without a deal is real. Russia’s budget is already strained. Without the pipeline, the economic pressure will only mount.
What happens next? The Kremlin will try to save face. They will send lower-level delegations to Beijing. They will leak stories of progress. But the core problem remains: Xi has Putin over a barrel. The Russian president needs a win. He didn’t get one.
Domestically, this failure will fuel hardliners who argue China cannot be trusted. Already, voices in the security council are questioning the wisdom of dependency on Beijing. But there is no Plan B. Europe is out. India is not big enough. The pipeline is the only game in town.
I am told the Chinese side was surprised by Putin’s desperation. They expected a tough negotiator. Instead, they saw a leader in retreat. One diplomat described the atmosphere as “frosty but not hostile.” The Chinese know they have the power. They are in no rush.
For the West, this deadlock is a strategic gift. It deepens the rift between Moscow and Beijing. It shows China is not a reliable partner for Russia. It also buys time for Europe to wean itself off Russian gas entirely.
But the immediate impact is on Putin. He returns to Moscow empty-handed. The narrative of a resurgent Russia is crumbling. The reality is a leader isolated, his grand strategy in tatters. The pipeline was supposed to be the symbol of a new Eurasian order. Now it is a symbol of Russian weakness.
The next few weeks will be critical. Putin must decide whether to accept China’s terms or walk away. Walking away means economic pain. Accepting means swallowing his pride. Neither option is good. And Xi knows it.
This is politics at its rawest. The game is power. And right now, Xi Jinping holds all the cards. Watch this space. The story is far from over.
