MOSCOW (MRC) - China's omission of liquefied natural gas (LNG) from its vast list of U.S. products that face hefty import duties has preserved a potential weapon should the trade war with Washington deepen, as per Hydrocarbonprocessing.
It also underscores Beijing's desire to ensure supplies of gas as it pushes to switch millions of households and businesses away from using coal as a key part of its 'war on pollution'.
China will on Friday impose tariffs on USD34 billion of U.S. goods from pork to soybeans to cotton in retaliation for a similar move by Washington as trade relations sour between the world's top two economies.
"If the (trade) war escalates, (I expect) the government will not hesitate to add LNG," a state oil and gas company executive said, declining to be identified due to the sensitivity of the issue.
Although U.S. LNG supplies to China have so far been tiny in volume and value compared with the around USD12 billion per year of U.S. crude that arrives in the country, analysts say those levels could be set to shoot up as Beijing forges ahead with its battle to clear its skies.
Morgan Stanley has estimated annual Chinese imports of U.S. LNG could rise to as much as USD9 billion within two or three years, from USD1 billion in 2017. The amount could be even larger if the United States resolves a logistics bottleneck.
That would go a long way to helping balance China's trade surplus with the United States, a major bugbear of Washington's in the trade dispute. But the strategy also hands Beijing another weapon in its arsenal if the spat deteriorates further.
China's Commerce Ministry did not immediately respond to requests for comment.
MRC