And Now Back To Our Featured Presentation

Great Power Politics and Energy Insecurity

By Zachary Keck

Summary: China's growing needs for energy and natural resources will lead to some tension and strategic competition with the West, but that ultimately China's and the West's long-term interests are aligned.

ZACHARY KECK is a student at State University of New York at New Paltz.

The most interesting development in international relations over the next decade promises to be the rising role China will play as it tries to secure access to foreign energy and natural resources. Admittedly, the full effects of its search will not be felt in the ensuing decade, but its far-reaching consequences will make it international relations’ most important development. I will begin by describing China’s increasing reliance on foreign trade to maintain its economic growth. Then I will discuss its two strategies to secure this trade, both of which create the potential for increased cooperation as well as conflict with other global powers.

Despite China’s extensive domestic energy supply, its rapid economic growth has forced it to rely on foreign sources to meet growing demand. Consider, for example, that between 2000 and 2005, China’s energy consumption increased by 60 percent. After being Asia’s largest oil exporter throughout the 1970s and early 1980s, China became a net importer of oil products in 1993. By 2004, China was the third-largest importer of oil behind Japan and the United States, with imports accounting for 40 percent of its consumption. With its economic growth likely to continue, China’s domestic energy sources will become increasingly inadequate. In 2020, imports are expected to make up 60–80 percent of China’s oil consumption; by 2030, according to the International Energy Agency, China’s imports will increase 500 percent.

Similar, although less dramatic, realities exist for China’s domestic coal and gas reserves. China produces and consumes the largest amount of coal -- which currently accounts for two-thirds of its consumption -- in the world. Although imports only contribute a minimal amount of its coal consumption today, China will be a net coal importer as early as 2015. Similarly, although China is currently self-sufficient in natural gas, the U.S. Energy Information Agency (EIA) predicts that it will import 40 percent of its gas by 2025. In addition, China’s manufacturing industry requires a significant amount of natural resources, much of which comes from foreign sources. Between 1990 and 2000, China’s share of the world’s consumption of aluminum, copper, nickel, and iron ore more than doubled, from seven percent to 15 percent. By 2005, it reached 20 percent and is expected to double again before 2010. Given that these materials are needed for economic growth, something the Chinese Communist Party views as essential for social stability and the survival of the regime, the country’s foreign policy has become increasingly synonymous with securing energy and natural resources.

To ensure the supply of these materials at reasonable prices, China has significantly increased its diplomatic presence in the Middle East, Africa, and Latin America in recent years. For example, in 2000, Middle Eastern countries provided China with 54 percent of its crude oil imports. Between 2000 and 2008, trade flows from China to the Gulf Cooperation Council countries increased more than seven-fold, and trade flows the other way increased five-fold. By 2015, according to the EIA, 70 percent of China’s total oil imports will come from the GCC alone.

To diversify its energy sources and gain access to natural resources, China has increasingly turned to Africa. Although its known oil reserves are relatively small (just under ten percent of the world’s total), Africa holds vast potential for future oil discoveries. Chinese trade is strongest with oil-rich countries such as Angola, Sudan, and the Congo. Still, in 2006 it had oil agreements with over 40 African countries, and one-third of all its oil imports came from Africa. In 2000, China and the predecessor organization to the African Union created the Forum on China-Africa Cooperation. And meanwhile, China’s investments in Africa have increased significantly in recent years, suggesting a long-term strategy. In 2009, for example, China’s Ministry of Commerce reported that China’s investments in Africa rose 77.5 percent between January and October; Chinese firms began 14 new projects in Ghana alone.

Although China is not as established in Latin America, its trade with there has grown substantially as well. For example, between 1999 and 2004, imports from Latin America increased more than 600 percent, and China’s exports to Latin America grew by over 300 percent during the same period. Although it does import some oil from Venezuela and Brazil, China’s trade in Latin America is driven mostly by natural resources. In 2004, soya made up 75 percent of Argentina’s exports to China; copper made up 75 percent of Chile’s; soya, iron, and steel accounted for 66 percent of Brazil’s; and copper and fishmeal made up a similar amount of Peru’s.

China’s global reach could potentially contribute to the state’s peaceful rise by giving it a greater stake in global security. For example, China has played some role in the development of post-Saddam Iraq. Nonetheless, its search for resources also creates many circumstances in which Chinese and other global powers’ interests will conflict. China is driven by business interests and has consistently ignored Western concerns about the types of regimes with which it does business. Indeed, China’s investments, arms sales, and UN Security Council veto have helped regimes such as Zimbabwe and Sudan evade Western pressure. Chinese interests in Iran -- from which 23 percent of China’s oil imports came in 2004 -- have allowed Tehran to escape international pressure regarding its nuclear program. This phenomenon also extends to traditional allies of the United States and the West. The best example is Saudi Arabia, which is China’s largest source of foreign oil. Saudi Arabia has a number of reasons to favor increasing its ties with China: investment opportunities in China; China’s nonintervention policy; its nonideological foreign policy, which would protect autocrats from Western pressure to institute democratic reforms that would threaten their grip on power; China’s economic model; its popularity as a noncolonial, non-Western power in the developing world; and a general desire on the part of the Saudi regime to decrease its dependency on the United States. With oil and other resources increasingly scarce, U.S.-Chinese competition over procuring them will become more acute, increasing the potential for conflict.

Besides establishing trade relations with energy- and resource-rich nations, China must also ensure secure sea lines to ship these materials to the mainland. Chinese officials and academics have expressed vulnerability in this area. Specifically, they fear that the United States and India will use their naval superiority to disrupt China’s transit lines in times of disputes, or more generally, to contain China. Of particular concern to them is what Chinese President Hu Jintao has called the “Malacca dilemma” -- which refers to the Strait of Malacca in the Indian Ocean through which more than 85 percent of China’s oil imports must pass. China has taken a number of steps to protect its sea lines. First, it has been expanding and modernizing the People’s Liberation Army Navy considerably. This has allowed it to take on a more prominent role both in the region and globally. To allow the navy to have a forward presence globally, China has been following a “string of pearls” strategy, establishing bases in other countries from the South China Sea to the Middle East. China now has bases in Vietnam, Bangladesh, North Korea, Myanmar (also known as Burma), and Pakistan, where its new Gwadar base allows its navy to operate near the Strait of Hormuz. Further, to reduce its dependence on the sea, China has been building pipelines to connect Central Asian countries such as Kazakhstan and Turkmenistan to its Xinjiang region.

Again, China’s need to secure transportation routes presents opportunities for cooperation as well as tension with its neighbors and the United States. For example, a larger Chinese navy and China’s increased global interests are likely to convince it to accept more responsibility for protecting the seas. Already, the navy has joined with naval forces from the European Union and NATO to protect the Gulf of Aden from Somali pirates. At the same time, China’s increased naval strength has led it to be more abrasive toward its neighbors over disputed territories in the South and East China Seas and elsewhere. Additionally, Chinese officials have consistently expressed a desire to monopolize control over its first and second island chains, which would encroach on the U.S. Navy and leave Taiwan vulnerable. Any significant Chinese presence in the Indian Ocean would also be fiercely resisted by India, whose power and energy needs are also rising. A confrontation between China and India would potentially involve the United States. Finally, China’s “string of pearls” strategy helps protect rogue regimes such as North Korea and Myanmar from Western pressure.

In sum, although China’s increasing power and global presence create potential for increased cooperation, they are more likely to strain great power relations. No matter which scenario unfolds, however, the effects of China’s expanded portfolio will be the most interesting development during this next decade.