| China is emerging as the fastest economic growing power in the 21st century and exerting crucial impact in the global economic structure. As a developing country, however, China is still developing with an energy-driven model. Despite the rich underground reserves, the statistics of China's natural gas per capita remains depressing due to its 1.3 billion populations. Therefore, natural gas importing is doomed to be a solution to the shortage of China's reserve in the long run.In this situation, Russia, with one third of the global natural gas reserves has been highly involved in the energy-trading relationship with China since the two countries formed a strategic partnership, Russia being China's 11th largest trading partner and China being Russia's biggest during Jan.-May 2009,2nd largest in Jun.2009,3rd largest for the next month and again rose to the 2nd largest place in the 1st Quarter in 2010. The percentage of energy trading between two countries reaches up to 54% of the total excluding natural gas and that figure is still sparkling.There are two ways of shipping for natural gas, sea-shipping after liquefaction and pipeline shipping. With a 4300km shared border between China and Russia, pipeshiping is a more suitable option to deliver natural gas from Russia to China for several reasons. First, by applying this method, the gas transport doesn't necessarily pass through any other countries and will be safe and reliable. Second, pipeshipping characterized as bulk shipping capacity, less space-occupation, fast rolling out, strong continuity, low energy-consumption and low cost is widely accepted across the world.Russia and China signed their first gas project agreement in 1996. as of today it has walked through 14 years of work to deliberate on detailed measures. However, seldom agreement settles the natural gas price discrepancy and pipeline project. It therefore appears to be a big knowledge gap.To address this gap, this dissertation intends to explore the underlying problems of Russia-China gas trading by acknowledging those set-backs which appeared to be achievements and provide applicable measures based on the trends.The first chapter gives a general introduction to the background, purpose, analysis structure, contents, and unsolved problems based on the research work home and abroad.The second chapter "Natural Gas and Energy Economy" explains the relationship between energy economics and socioeconomic development; connections among prices of alternative energies; How does Russia's energy production impact its economic development. Euro-Russia political economy relationship in the natural gas trading and challenges China is facing under the new energy framework worldwide. Theories will be running through the whole paper and shall be internally linked to each chapter and part.The third chapter ''Status Quo and Existing Problems of China and Russia's Natural Gas Industry" will be divided into two parts. The first part briefly reviews the development of China's natural gas industry by focusing on different features in different stages from the primary establishment of People's Republic China to the post-reform-and-opening-up. During this period, Chinese economic model shifted from the Planned Economy to the Market Economy. The whole industry gained some achievements and encountered some problems simultaneously. it also stresses the necessity and urgency to push China's natural gas price reform under the current circumstances after digging into the pricing pattern and price features of natural gas in China. The second part plays a fundamental role in the whole dissertation. It analyzes Russia's natural gas production and sales after the disintegration of Soviet Union as well as its price issues. Also the achievements and problems embedded in this industry are basically explained in this part.The fourth chapter "Russia-China Natural Gas Trade" discusses the problems and causes of Russia-China natural gas trade based on its history and current status.The fifth chapter "Characteristics of China and Russia Natural Gas Pricing Pattern and the Effects upon the Bilateral Trading" illustrates the necessity for the price reform of China's natural gas by going into its pricing pattern and price features. This chapter also analyzes the pricing pattern and price features of Russia's natural gas, the role of export revenue in Russia's economic development, and the impact of different price features on price negotiation between the two countriesThe sixth chapter "Analysis on the Problems Faced by Russia-China Natural Gas Trading" analyzes the initiation of China-Russia natural gas trade and finds that contract price is the biggest obstacle.The seventh chapter "Trend on Russia-China Natural Gas Trade" presents a future look into Russia-China natural gas trade and raises countermeasures based on the in-depth analysis of the former five chapters.The basic conclusions of this dissertation are:The Russia-China natural gas trading is both complementary and mutually beneficial, which is the basis for the trading and goes along with the principle of the international division of labor. It wields great importance in both China and Russia's energy security, bilateral trade and economic growth. Due to complex economic and political factors, China-Russia natural gas trade only made little progress. To tackle these problems, it needs more strengthened political trust between the two countries, harmonious environment in the regional level and stable political-economic patterns across the world. So far only price discrepancy remained as an unsolved issue. this problem will be solved through continued negotiation in the near future and the price shall be fixed in the range between the natural gas market price of CIS and that of Europe.
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