‘Energy Chess’: What Trump Card can CHINA play with the U.S?


Beijing has a trump card up its sleeve in the trade war with the United States: importing US liquefied gas, which can be priced at any time.

But introducing US gas to the “blacklist” of high-priced products could worsen Washington’s relations not only with China but, interestingly, with Russia, writes the Russian magazine Expert .

One of the goals set by Donald Trump is to reduce the deficit of the US trade balance in general and China in particular. Beijing, for its part, needs large volumes of oil and gas, which it buys not just from the US, which Trump does not like.

To avoid the current trade war, Beijing suggested that Washington buy US $70 billion worth of goods and raw materials, including liquefied natural gas (LNG), which is very important for the White House. However, the Trump administration refused the Chinese proposal and introduced the first round of tariffs.

Following the negative response, China threatened to include US oil in the list of response measures, but the Chinese government eventually changed its mind. The special features of American oil together with the discounts offered by US companies make “black gold” a very attractive product. In addition, introducing tariffs in this case would hurt Beijing more than Washington, says Expert’s article.

But the gas the situation is different and this can enter the list of American products priced by China.

China’s struggle to get its citizens clean air means the country is gradually abandoning coal, which is being replaced by gas. Gas is currently 6% of the energy consumption of the Asian giant, but this indicator is expected to double in the coming years. At the moment, Beijing is the second largest importer of gas in the world, but in 2019, according to the magazine, should occupy first place.

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The Americans, for their part, consume only a little more than half of the gas produced in the country and need to export the rest. Of course, the size of the Chinese economy and its rate of growth make the country one of the main LNG markets. In this context, tariffs will radically change the situation, says the author of the article.

Due to disagreements with the Asian country, Washington is paying increasing attention to other gas markets, primarily to Europe.

The US is competing with Russia for this market of five hundred million consumers, where Russian gas giant Gazprom holds a dominant position. Gas is one of the main factors that worsen relations between Russia and the United States. That is why the Trump administration is trying to force Germany to abandon its plans to build the Nord Stream, a gas pipeline that will supply cheap fuel produced in Russia to Berlin.

“Washington looks enviously at the rich Europeans, which could largely help it cover the losses linked to the trade war with China,” says Sergei Manukov, an Expert analyst.

But despite all the efforts of the White House, it is unlikely, Manukov believes, that Berlin will change its position on a project that will be especially advantageous for Germany.

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