When China last week set out a list of US exports threatened with retaliatory tariffs, almost all fossil fuels were covered, including oil, coal and liquefied petroleum gases such as propane. There was, however, one conspicuous exemption: liquefied natural gas. Beijing’s decision not to impose additional tariffs on US LNG shows the critical role that the fuel plays in the Chinese government’s plans as it attempts to curb the country’s reliance on coal.

China’s demand for LNG is soaring, and its imports of gas from the US have been rising fast: from nothing in 2015 to 17bn cubic feet in 2016 to 103bn cubic feet last year. By deciding not to restrict imports of US LNG, China has let its energy policy override its trade policy, for the time being at least. That is an encouraging sign for the companies including Venture Global LNG, Qatar Petroleum, LNG Ltd and Tellurian that are hoping to be part of the second wave of investment in US LNG export plants. For any would-be seller of LNG looking for buyers, China is the big prize. Already last year China was the third-largest destination for US LNG exports, behind Mexico and South Korea. Its demand for gas is expected to continue to grow rapidly, accounting for more than a quarter of all global consumption growth between 2015 and 2040 according to the US Energy Information Administration.

Rapid demand growth in China and other emerging economies meant 2018 was shaping up to be an exciting year for aspiring US LNG exporters. After three years without a single new plant being given the go-ahead, several companies say they are approaching final investment decisions to build their planned facilities. But the escalating trade dispute between the US and China casts a shadow over those plans.