By allowing Beijing to construct a railroad in nearby Central Asia and agreeing to China’s proposal to reroute the Power of Siberia 2 gas pipeline through Kazakhstan rather than Mongolia, Russia has reached two significant agreements with China.
In the past several decades, falling global energy costs have dented Russia’s trade income. In December, petrol prices fell to about US$ 70 per barrel, over 18 % from this year’s top of US$ 87 in April, due to lower need in China and OPEC’s expectations to improve production.  ,  ,
These lower costs come in response to the G7 member states ‘ price caps of$ 60 per barrel on seaborne Russian oil, which have led to lower foreign currency flows in Russia and a decline in the ruble, the world’s reserve currency.
The ruble has declined by 17 % to 108 per US dollar in 2024. Since the start of the Ukraine conflict, the current pricing has fallen by 34 %.
On December 27, Zheng Shanjie, Chinese President Xi Jinping’s Special Envoy and director of the National Development and Reform Commission, attended the launch ceremony of the China-Kyrgyzstan-Uzbekistan ( CKU) railway project in Jalalabad, Kyrgyzstan.  ,
Sadyr Japarov, the president of Kyrgyzstan, and Xi and Shavkat Mirziyev, the president of Uzbekistan, wrote welcome letters.
China’s Communist Party-run Global Times said the resumption of the long-anticipated communication initiative, which has been under arranging for more than 20 years, may mark a new step in China-Central Asia assistance. It said that when completed, the venture may start a new European hall connecting China, Central Asia and perhaps Europe.  ,
According to China Railway, the task is scheduled to actually begin building in July 2025 with a development period of six years.
The railroad may begin from Kashi in China’s Xinjiang, go through Kyrgyzstan’s Torugart Pass and Jalalabad, and ending in the southeast Afghan city of Andijan. The Kyrgyz part may be built by China and Uzbekistan, while the Kyrgyz area will be built by a joint venture between the three governments, CKU Railway Co.  ,
The job was first put forth in the 1990s. In 1997, China, Kyrgyzstan, and Uzbekistan signed a memorandum of understanding, but nothing has changed.  ,
” Why was the CKU rail delayed for 27 years? The primary reason lied in Russia”, Li Shuyong, a Henan-based author, said in an essay. The Soviet Union ruled Central Asia for the entire duration of the Cold War. After the Soviet Union collapsed, Russia still controlled Central Asia” . ,
Li said Russia had disagreed with the CKU rail task for many years as it wanted to control the transport of Central Asia’s natural sources, such as Kazakhstan’s fuel and Uzbekistan’s cloth, to Europe. He said it’s not only a matter of transit fees but also Moscow’s controlling power in the region’s foreign trade.
The entire Central Asian foreign trade will no longer be monopolized by Russia once the CKU railroad is opened. China can also bypass Russia to reach Europe via Iran, Turkey and Greece”, he said. But why does Russia now approve of it?
He claimed that Russia has experienced rising fiscal deficits and inflation since the start of the Ukraine war and has attempted to increase energy exports to China as a result.  ,
Why should Russia buy more oil and gas from Russia? Russia must share its advantages with China in Central Asia, Li said. A 27-year obstacle related to the CKU railway is now gone because of this.
A Jiangxi-based columnist said Kyrgyzstan and Uzbekistan will build their railways in Russia’s standard gauge ( 1, 524 mm ), instead of China’s one ( 1, 435 mm ), as they do not have enough money to change their existing systems.
He claimed that China didn’t demand that the two Central Asian countries follow its standard because doing so might upset Russia.  ,  ,
Power of Siberia 2
Another Russian compromise with China, made by President Vladimir Putin, concerns the recent agreement to build the Power of Siberia 2 via Kazakhstan, instead of Mongolia, as per Beijing’s wish.  ,  ,
Russian Deputy Prime Minister Alexander Novak said in an interview with the Rossiya-24 TV channel on December 25 that the construction of a gas pipeline project from Russia to China is in progress.  ,
” This is a project to build a gas pipeline infrastructure with capacity for 45 billion cubic meters ( bcm ) per year, 10 bcm of it for the gasification of the northeastern regions of Kazakhstan, and 35 bcm for export to China”, he said. ” The negotiations and feasibility study are now kicking off.”
In his most recent comments, Novak’s latest assertions confirmed that Mongolia has abandoned its effort to build the Power of Siberia 2 via Mongolia.
In an article, Shi Jiangyue, a Shanxi-based writer and military commentator for Asia Pacific Daily, stated that Mongolia will not only lose hundreds of millions of US dollars in transit fees as a result of the rerouting but also have a chance to attract infrastructure investment and stronger diplomatic ties with Russia. Shi said Mongolia should blame itself for adopting a” third neighbor strategy” or “multi-pillared foreign policy”.
Mongolia’s Prime Minister Oyun-Erdene Luvsannamsrai announced in July 2022 that the Power of Siberia 2 feasibility study had been completed and construction would begin in 2024.  ,
Beijing, however, objected to this arrangement because it did not want Mongolia’s energy supply to pass through it, which it perceives to lean politically toward.  ,
In May this year, Dauren Abayev, Kazakhstan’s envoy to Russia, told Russia’s TASS news agency that Kazakhstan plans to transit about 35 bcm of Russian gas to China annually.  ,  ,
In fact, Russia had previously considered taking this route several years ago because the Russian portion of a hilly area would have resulted in higher construction costs.  ,
Yong Jian contributes to the Asia Times. He is a Chinese journalist who specializes in Chinese technology, economy and politics.  ,
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