The decision will come as a huge shock to Russian President Vladimir Putin, who had been counting on Beijing’s help in overcoming Western sanctions. Until now, China’s president has been a staunch supporter and key ally of Russia’s strongman in his fight against the West. Prior to Putin’s invasion of Ukraine, the two leaders met in Beijing ahead of the Winter Olympics to reaffirm their friendship.
Both Xi and Putin declared in a joint statement that there were “no limits” between Moscow and Beijing.
However, there are indications that Beijing is reconsidering its relationship with Moscow.
Due to concerns about being sanctioned, China’s state-owned Sinopec Group has backed out of a $500 million (£380 million) deal to market Russian gas for Sibur in China.
Gennady Timchenko, a long-time Putin ally, is one of Sibur’s directors and investors.
The West has already sanctioned Mr Timchenko in the aftermath of Russia’s annexation of Crimea in 2014.
Following Putin’s decision to deploy forces to the Donestk and Luhansk breakaway republics in eastern Ukraine, the UK imposed new sanctions on the Russian billionaire in February.
Sinopec made the decision following a meeting at the Ministry of Foreign Affairs.
China National Petroleum Corp (CNPC) and China National Offshore Oil Corp (CNOOC) were also present, as company executives were asked to assess their ties to Russia and err on the side of caution in their business dealings with the country.
“Companies will rigidly follow Beijing’s foreign policy in this crisis,” a Sinopec executive told Reuters.
“There is absolutely no room for companies to take any new investment initiatives.”
The cancellation of the investment is a significant setback for Putin and the Russian economy.
The Kremlin’s war machine is primarily funded by the sale of fossil fuels.
In recent years, Beijing has assisted Russia in expanding and developing its energy sector.
Chinese investors aided in the development of liquid natural gas (LNG) projects in Russia’s Far North.
Chinese entities, in particular, played a critical role in assisting Novatek, Russia’s largest independent natural gas producer, in delivering Yamal LNG on time and on budget in December 2017, despite Western sanctions.
Yamal LNG development contributes to Moscow’s goal of diversifying Russia’s natural gas exports through LNG.
During a recent phone call with President Xi Jinping, Joe Biden attempted to persuade Beijing to abandon its support for Moscow.
“I made no threats, but I made it clear to him – made sure he understood the consequences of helping Russia,” the US president told reporters last week.
