As a result of the combination of the 2022 energy price shock and increasing competition from China, industrial production is declining not only in Germany but across the entire Eurozone, while China’s industrial output has surged significantly in recent years. One of China’s competitive advantages is its ability to secure a pool of energy suppliers offering lower prices.
In 2022, China purchased pipeline gas from four neighboring countries at prices ranging from $200 to $250 per thousand cubic meters (at the lower end of this price corridor—including gas from Myanmar, which is not shown in the chart). At the same time, Europe was buying pipeline gas at peak prices of $1,200–1,400 per thousand cubic meters. The trend continued in 2023. That year, the average annual price of pipeline gas for Europe was $480, while, for example, Russia sold gas to China at a peak price of just $284 per thousand cubic meters.
Interestingly, among China’s four major pipeline gas suppliers, Russia has historically offered the lowest prices. In 2023, the average annual gas price per thousand cubic meters was $321 from Turkmenistan, $283 from Uzbekistan, $265 from Kazakhstan, and just $248 from Russia.
Another advantage for China is its ability to purchase oil at steep discounts from sanctioned countries—Russia, Iran, and Venezuela—with the latter two possibly selling at prices below $60 per barrel.
