World News
China Is Aggressively Reselling Russian Gas To Europe
One month ago, we were surprised to read how, despite a suppressed appetite for energy amid its housing crash and economic downturn (for which “zero covid” has emerged as a convenient scapegoat for emperor Xi), China has been soaking up more Russian natural gas so far this year, while imports from most other sources declined.
In July, the SCMP reported that according to Chinese customs data, in the first six months of the year, China bought a total of 2.35 million tonnes of liquefied natural gas (LNG) – valued at US$2.16 billion. The import volume increased by 28.7% year on year, with the value surging by 182%. It meant Russia has surpassed Indonesia and the United States to become China’s fourth-largest supplier of LNG so far this year!
This, of course, is not to be confused with pipeline gas, where Russian producer Gazprom recently announced that its daily supplies to China via the Power of Siberia pipeline had reached a new all-time high (Russia is China’s second-largest pipeline natural gas supplier after Turkmenistan), and earlier revealed that the supply of Russian pipeline gas to China had increased by 63.4% in the first half of 2022.
What was behind this bizarre surge in Russian LNG imports, analysts speculated? After all, while China imports over half of the natural gas it consumes, with around two-thirds in the form of LNG, demand this year had fallen sharply amid economic headwinds and widespread shutdowns. In other words, why the surge in Russian LNG when i) domestic demand is just not there and ii) at the expense of everyone else?
“The increase in Russian LNG could be a displacement of cargoes going to Japan or South Korea because of sanctions, or weaker demand there,” said Michal Meidan, director of the China Energy Programme at the Oxford Institute for Energy Studies.
One thing that was clear: China wanted to keep its arms-length gas dealing with Russia as unclear as possible, which is why the General Administration of Customs of China stopped publicizing the breakdown in trade volume for pipeline natural gas since the beginning of the year, with spokesman Li Kuiwen confirming that the move was to “protect the legitimate business rights and interests of the relevant importers and exporters”.
Well, we now know the answer: China has been quietly reselling that evil, tainted Russian LNG to the one place that desperately needs it more than anything. Europe… and of course, it is charging a kidney’s worth of markups in the process.
As the FT reported recently, “Europe’s fears of gas shortages heading into winter may have been circumvented, thanks to an unexpected white knight: China.” The Nikkei-owned publications further notes that “the world’s largest buyer of liquefied natural gas is reselling some of its surplus LNG cargoes due to weak energy demand at home. This has provided the spot market with an ample supply that Europe has tapped, despite the higher prices.”
What the FT ignores, perhaps intentionally, is that it’s not “surplus” – after all, if it was Chinese imports of Russian LNG would collapse. No – the correct word to describe the LNG that China sells to Europe is Russian.
Going back to the story, the details are intuitive: with Russian pipeline gas to Europe effectively shuttered…
… Europe’s imports of LNG have soared 60% year on year in the first six months of 2022, according to research firm Kpler.
Some more details:
China’s JOVO Group, a big LNG trader, recently disclosed that it had resold an LNG cargo to a European buyer.
A futures trader in Shanghai told Nikkei that the profit made from such a transaction could be in the tens of millions of dollars or even reach $100mn.
China’s biggest oil refiner Sinopec Group also acknowledged on an earnings call in April that it has been channelling excess LNG into the international market.
Local media have said that Sinopec alone has sold 45 cargoes of LNG, or about 3.15mn tonnes. The total amount of Chinese LNG that has been resold is probably more than 4mn tonnes, equivalent to 7 per cent of Europe’s gas imports in the half year to the end of June.
Make no mistake: all of this “excess” LNG was soured in part or in whole in Russia, but since it has been “tolled” in China, it is no longer Russian. It is instead – drumroll – Chinese LNG.
The good news is that the 53 million tonnes that the bloc purchased surpasses imports by China and Japan and has brought Europe’s gas-storage occupancy rate up to 77%.If this continues, Europe is likely to reach its stated goal of filling 80% of its gas storage facilities by November (at which point it will start draining the reserves at a breakneck pace to keep warm during the winter). But while China’s economic slump has brought much-needed relief to Europe, it comes with a major footnote. As soon as economic activity bounces back in China, the situation will quickly reverse, and Beijing will no longer re-export Russia LNG to keep Europe warm.
Hilariously, it also means that instead of being dependent on Russia for gas, Europe is now becoming dependent on Beijing instead for its energy – which is still Russian gas, only this time imported from China – which makes a mockery of US geopolitical ambitions to defend a liberal international order with its own energy exports.
Worse, while Europe could buy Russian LNG for price X, it instead has to pay 2X, 3X or more, just to virtue signal to the world that it won’t fund Putin’s regime, when in reality is is paying extra to both Xi and to Putin, who is collecting a premium price thanks to the overall market scarcity.
Amusingly, without expressly stating it, the FT does imply that Europe is buying Russian LNG by way of China:
If Russia ends up exporting more gas to China as a means to punish Europe, China will have more capacity to resell its surplus gas to the spot market — indirectly helping Europe.
Why not just admit the obvious – that China is helping Russia skirt sanctions as both countries get very rich in the process? Because then the FT’s own judgment – after all, the newspaper is a conduit of the neoliberal thinking that demanded a complete embargo on Russian energy, an embargo which even the WSJ now admits (see “Russia Confounds the West by Recapturing Its Oil Riches“) has backfired spectacularly – would be put into question.
FT’s flaws aside, the newspaper is correct that the longer this kind of circuitous bypass of Russian sanctions by a hypocritical Europe (which signals its virtue so loudly when the adversary is Russia but doesn’t dare say peep when it’s China) continues, the bigger China’s influence on Europe will be:
The more desperate Europe becomes about its energy supplies, the more China’s policy decisions will have the power to affect the bloc. As Europe attempts to wrestle out of its dependence on Russia for energy, the irony is that it is becoming more dependent on China.
In the end, all Europe has done is replace one energy master (as Trump warned in 2018) with another, even though both are joined at the hip and laughing at the stupidity of Brussels which, under the sage advice of a petulant Scandinavian teenager, made all of this possible just in time for China – which together with Putin now determines Europe’s daily energy intake – to invade Taiwan without a peep from Europe’s virtuous signalers.
This post originally appeared at Zero Hedge
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In nearly every country in the world, youth unemployment is much higher than general unemployment.
Unfortunately, the pandemic only exacerbated matters. During a crucial stretch of their early careers, young adults were locked out of entry-level jobs, destroying their ability to pick up work experience and potentially impacting their long-term earnings.
Now, nearly three years after COVID-19 first hit, young adults from some countries, like China, are struggling to find jobs. Using data from the OECD and the National Bureau of Statistics of China, Visual Capitalist’s Pallavi Rao and Niccolo Conte chart out the youth unemployment rate for 37 countries.
Ranked: Countries With the Highest Youth Unemployment
At the top of the list, Spain has the highest youth unemployment in the OECD, with nearly one in three young adults unable to find a job.
ℹ️ Unemployed people are those who report that they are without work, are available for work, and have taken active steps to find work in the last four weeks. The youth unemployment rate is calculated as a percentage of the youth labor force.
A mismatch between educational qualifications and the labor market has been cited as a significant reason for Spain’s lack of employed adults between the ages of 15–24.
Meanwhile, the country’s reliance on temporary contracts and dependence on seasonal sectors—like tourism—to generate jobs are some of the many reasons for its persistently high reported unemployment across demographic groups.
Listed below is the youth unemployment rate for all the OECD countries, and China, as of the second quarter of 2023.
| Rank | Country | Average Youth Unemployment Rate |
|---|---|---|
| 1 | 🇪🇸 Spain | 27.4% |
| 2 | 🇨🇷 Costa Rica | 27.1% |
| 3 | 🇸🇪 Sweden | 24.9% |
| 4 | 🇬🇷 Greece | 23.6% |
| 5 | 🇨🇳 China | 21.3% |
| 6 | 🇮🇹 Italy | 21.3% |
| 7 | 🇨🇱 Chile | 19.8% |
| 8 | 🇱🇺 Luxembourg | 19.6% |
| 9 | 🇸🇰 Slovakia | 18.8% |
| 10 | 🇨🇴 Colombia | 18.7% |
| 11 | 🇵🇹 Portugal | 17.2% |
| 12 | 🇹🇷 Türkiye | 17.0% |
| 13 | 🇫🇷 France | 16.9% |
| 14 | 🇫🇮 Finland | 15.8% |
| 15 | 🇪🇪 Estonia | 15.6% |
| 16 | 🇧🇪 Belgium | 13.9% |
| 17 | 🇱🇹 Lithuania | 13.8% |
| 18 | 🇨🇿 Czech Republic | 13.7% |
| 19 | 🇭🇺 Hungary | 13.3% |
| 20 | 🇬🇧 United Kingdom | 11.4% |
| 21 | 🇱🇻 Latvia | 11.0% |
| 22 | 🇵🇱 Poland | 10.3% |
| 23 | 🇳🇴 Norway | 10.2% |
| 24 | 🇨🇦 Canada | 10.2% |
| 25 | 🇦🇹 Austria | 9.6% |
| 26 | 🇩🇰 Denmark | 9.3% |
| 27 | 🇳🇱 Netherlands | 8.3% |
| 28 | 🇺🇸 United States | 8.0% |
| 29 | 🇦🇺 Australia | 7.8% |
| 30 | 🇮🇪 Ireland | 7.4% |
| 31 | 🇮🇸 Iceland | 7.3% |
| 32 | 🇩🇪 Germany | 6.1% |
| 33 | 🇸🇮 Slovenia | 5.6% |
| 34 | 🇰🇷 Korea | 5.4% |
| 35 | 🇮🇱 Israel | 5.3% |
| 36 | 🇲🇽 Mexico | 5.2% |
| 37 | 🇯🇵 Japan | 4.2% |
Announced in June, China’s youth unemployment rate has climbed to 21.3%, a meteoric rise since May 2018, when it was below 10%. The Chinese economy is in the midst of a slowdown and its steadily climbing youth unemployment prompted the government to suspend age-specific unemployment data for the near future.
On the other side of the spectrum, in Japan, only 4.2% of young adults are without a job. A key reason for this is Japan’s shrinking and aging population that’s made for a tight labor market.
Youth Unemployment: Men vs Women
In most OECD countries, it’s common to see young men experiencing a higher unemployment rate compared to young women.
This contrasts with the trend across all age groups in the OECD, where the unemployment rate is 6.3% for women and 6% for men.
We visualize the countries in the dataset with the biggest gaps in youth unemployment below.
There is no singular reason that explains this common gap.
Across the OECD, more young women opt for tertiary education than young men, which may lead to better employment prospects. At the same time women are overrepresented in the health and social welfare sectors—both growing rapidly thanks to an aging population—that may make it easier for them to find jobs.
Why Does Tracking Youth Unemployment Matter?
Aside from being an indicator of general opportunities within a country, youth unemployment is a key metric to track, because it can be a bellwether for future economic prospects.
High rates of youth unemployment also correlate to brain drain within a country, as young adults move elsewhere to find better jobs.
Finally, large increases in unemployed youth have historically led to the potential of civil unrest, which makes it a politically-charged metric to identify and monitor for governments.
This post was originally published at Zero Hedge-
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