Russia-China gas pipeline deal hits snag

Good morning. In today’s newsletter we’re covering:

But we start with Russia’s effort to conclude a major gas pipeline deal with China, which has run aground over what Moscow sees as Beijing’s unreasonable demands on price and supply levels, according to three people familiar with the matter.

Beijing’s tough stance on the Power of Siberia 2 pipeline underscores how Russia’s invasion of Ukraine has left President Vladimir Putin increasingly dependent on Chinese leader Xi Jinping for economic support.

The people familiar with the issue said China had asked to pay close to Russia’s heavily subsidised domestic prices and would only commit to buying a small fraction of the pipeline’s planned annual capacity of 50bn cubic metres of gas.

A deal on the pipeline was one of three main requests Putin made to Xi when they met last month, the people said, along with more Chinese bank activity in Russia and for China to snub a peace conference being organised by Ukraine this month.

Here’s what’s at stake for Moscow, and why Beijing is playing hardball.

• Ukraine’s peace summit: Volodymyr Zelenskyy has accused China of helping Russia to pressure countries not to attend a planned peace summit this month, as Ukraine’s president urged other Asian leaders to join the event.

• China-Russia defence ties: A Chinese trade body sought to buy drone-jamming equipment for Russian buyers last month amid concerns in Europe and the US over China’s supply of dual-use technology to Moscow.

And here’s what I’m keeping tabs on today:

• Economic data: S&P Global publishes manufacturing PMI for China, Japan, India, South Korea, Vietnam, Taiwan, Indonesia, Philippines and Australia.

• India: Market analysts have predicted a rally in Indian equities today after exit polls projected a clear election victory for Narendra Modi’s Bharatiya Janata party.

Five more top stories

1. The online fashion giant Shein is planning to confidentially file for a London listing as soon as the coming days, laying the groundwork for a blockbuster initial public offering in the UK. The Singapore-domiciled company had been leaning towards a London listing after tensions between Beijing and Washington stalled its plans for an IPO in New York.

2. China’s defence minister has delivered a scathing attack on Taiwan’s new president Lai Ching-te, warning that Taiwan’s “aggressive” behaviour was eroding prospects for peaceful unification. Dong Jun’s speech at the the IISS Shangri-La Dialogue in Singapore also contrasted with China’s efforts to manage its military relationship with the US more carefully.

3. Tens of thousands of Tesla’s pivotal international retail investors may be unable to vote at its annual meeting because investment platforms have failed to put adequate cross-border systems in place. The electric vehicle maker faces tight votes at its June 13 meeting over chief executive Elon Musk’s $56bn pay award and another to reincorporate the company in Texas.

4. Benjamin Netanyahu has shied away from a US-backed plan to end the war with Hamas, as Israel’s premier sought space to quell a revolt in his ruling coalition. Despite White House pleas, officials close to Netanyahu made clear that any agreement to permanently halt the fighting in Gaza would be unacceptable.

5. Opec+ members have agreed to extend deep cuts in oil production, in some cases to the end of 2025, as they battle to shore up prices amid weak global demand and increased supply from other parts of the world. At its latest twice yearly meeting yesterday, the cartel conceded that it had no room yet to change stance on output cuts that began in November 2022.

Interview

Harvard-educated Pita Limjaroenrat’s Move Forward party came first in Thailand’s election last year but was blocked from power. Now, the party faces possible dissolution — and Pita himself a decade-long ban from public office — over its most controversial campaign pledge: to amend Thailand’s harsh lèse majesté law. Pita told the FT that the threatened ban of his party would “turbocharge” the progressive movement seeking to challenge the country’s military-royalist elite.

We’re also reading . . . 

• Conviction politics: Joe Biden’s re-election campaign is preparing to be more aggressive in targeting Donald Trump over his status as the first former president to be found guilty of a crime.

• Hotel pet peeves: Noisy air conditioning and “creative” towel arrangements made Jo Ellison’s hospitality gripe list.

• Hanwha Aerospace: South Korea’s largest defence company is developing a fighter jet engine as the country works to move up the arms exporter value chain.

Chart of the day

A scrap metal merchant and an electric vehicle maker that has sold just four cars top the list of so-called “penny” stocks that are out-trading the likes of Tesla and Apple, prompting some analysts to warn that markets are becoming overheated.

Take a break from the news

What did Shakespeare’s songs sound like? Which version of Hamlet is the right one? These are just two of the 28 greatest Shakespeare mysteries we’ve tried to untangle — as part of an FT Magazine special edition on the playwright’s enduring power.