[chinawatcher] Nick Borst:

[chinawatcher at lists.powerblogs.com]

Posted by Nick Borst:

http://chinawatcher.powerblogs.com/posts/1133561227.shtml


   Napoleon is famously quoted as saying =E2Let China sleep. For when China
   wakes, it will shake the world.=E2 If one looks at the global energy
   markets, the world is indeed shuddering as a result of the massive
   demand for oil by China. China=E2s economy is growing at breathtaking
   rates and corresponding with this growth is an immense and ever
   growing demand for oil. In the last decade China has transformed from
   an oil exporting nation to one of the world's largest importers of
   oil. As imported oil becomes increasingly critical to the Chinese
   economy, securing access to energy supplies becomes a national
   security issue. China=E2s search for oil brings with it many unintended
   negative consequences. It has led China to form a host of alliances
   and entangling agreements with unsavory regimes that it otherwise
   might attempt to disassociate itself with. The quest for access to
   existing and potential energy supplies has also brought China into
   conflict with its two greatest rivals, Japan and the United States. If
   the three powers cannot find a way to accommodate each others energy
   needs, then the potential for conflict is high.
   The Chinese economy is undoubtedly one of the most dynamic in the
   world. China has managed to average double-digit growth rates for over
   a decade, and consequently China has shifted from an economic
   backwater to one of the global economy=E2s most important nations. With
   this unprecedented growth has come a skyrocketing demand for oil.
   China=E2s =E2oil demand doubled between 1995 and 2005=E2 and demand is
   expected to increase by =E27.5% per year, seven times faster than the
   U.S.=E2 (Bustelo 2)(Luft 1). During the 1970=E2s and 1980=E2s, China was
   =E2East Asia=E2s largest oil exporter,=E2 however during the early ninet=
ies
   it switched to the =E2world=E2s second-largest importer=E2 of oil (Zweig=
 1)
   (Luft 1). More tellingly, last year China =E2accounted for 31 percent of
   global growth in oil demand=E2 (Zweig 1). Further worrisome is that
   China=E2s need for natural gases and other energy sources has largely
   mirrored its demand for oil. These trends =E2have led to deep concern
   among Chinese leaders regarding their country=E2s energy security=E2
   (Bustelo 1). The Chinese government has done little to dampen demand
   for oil. The energy saving polices of Japan and Europe where =E2steep
   taxes are imposed to discourage gasoline use=E2 have been ignored (Luft
   1).
   Instead, China has decided to follow the path of the United States in
   seeking strong alliances with oil rich nations. Creating strong
   relationships with oil wealthy nations is a harder task than might
   first appear. China has sought =E2investment and development projects in
   Canada, Venezuela, Brazil, Ecuador, Iran, Saudi Arabia, Angola, Sudan
   (not to overlook Iraq), as well as in Russia=E2 (Gardner 2). However due
   to the geo-political status of many of these countries, China=E2s
   overtures have brought it into conflict with Japan and the United
   States. Often this occurs when China seeks ties with a nation that the
   other two powers (primarily the U.S.) have classified as a =E2rogue=E2 or
   unfriendly regime. The second situation is when China attempts to
   build ties with nations that Washington and Tokyo consider within
   there own sphere of influence. Finally, there are situations where
   China and one of the other powers (primarily Japan) both claim
   sovereignty over the same resource.
   Competition with the United States
   Faced with competition for energy supplies with the United States, a
   country that is the world=E2s largest energy consumer and vastly more
   wealthy and influential world-wide, Beijing has chosen quite logically
   decided to fill that gaps, seeking ties with nations Washington has
   shunned. Perhaps the most controversial region that China has
   attempted to improve its ties with other nations is in the Middle
   East. China is heavily dependent on the Middle East for its oil with
   as much as =E245 percent of China=E2s oil imports=E2 estimated to origin=
ate
   from the region (Zweig 3). Worrisome for Chinese leaders, is that this
   region is also an area where Beijing=E2s influence is modest as best.
   During the latter half of the 20th Century, the Middle East was a
   battleground for influence amongst the United States and Russia. With
   the collapse of the USSR and the subsequent evaporation of Soviet
   influence in the region, the United States has become the premier
   power in the region. Lacking the hard power of the United States,
   Beijing has employed its economic soft power to increase its regional
   influence and thus gain access to more energy resources.
   China=E2s main thrust has been towards Iran, a nation that has severely
   strained relations with the United States. Since the 1979 overthrow of
   the Shah, the United States has considered Iran to be a security
   threat and an egregious violator of human rights. China has channeled
   billions of dollars into to the country through investment projects,
   such as a $70 billion agreement to develop the massive Yadavaran oil
   field. Iran has become a critically important supplier to China,
   supplying nearly =E211 percent of China=E2s oil imports=E2 (Zweig 3). In
   turn, China has =E2become Iran=E2s top oil export market=E2 (Gundzik 1).
   China has also explored the possibility of building a pipeline across
   Iran in order to gain access to the Caspian Sea oil reserves. The
   issue of greatest concern to the United States is China=E2s refusal to
   cooperate in efforts to dismantle Iran=E2s nuclear arms program. In a
   recent agreement regarding energy supplies with Iran, China =E2promised
   to block any American attempt to refer Iran=E2s nuclear program to the
   UN Security Council=E2 (Luft 2). If tensions between the U.S. and Iran
   come to a head, Chinese support of Tehran could lead to a major breach
   in Sino-American relations.
   China has also sought to strengthen ties with Saudi Arabia. As the two
   nations move closer, the relationship is becoming worrying for the
   United States. Though Saudi Arabia and the United States both profess
   to have a cooperative relationship, relations have certainly been
   stronger in the past. The fact that the majority of the September the
   11th hijackers were Saudi nationals, in addition to Saudi
   obstructionism over base usage in the run up to the Iraqi War, has
   strained ties. Sensing opportunity, China has =E2taken advantage of
   cooler relations between both the US and Saudi Arabia to launch a
   diplomatic offensive aimed at developing closer ties with Riyadh=E2
   (Bustelo 16), China and Saudi Arabia have also become increasingly
   close partners in the oil market. Chinese and Saudi petrochemical
   corporations Sinopec and Saudi Aramco have joined forces to develop
   refining infrastructure in China (Calabrese 2). Saudi oil giant Saudi
   Basic Industries Corporation as well has expressed interest in Chinese
   refining investments (Calabrese 2). Chinese oil companies are also
   =E2seeking to acquire and expand their footholds in Saudi Arabia=E2
   (Calabrese 2). The unelected rulers of Saudi Arabia also welcome
   China=E2s advocacy of absolute national sovereignty at a time when
   America is pushing for democratic reforms across the region. Though
   Beijing is unlikely to replace Washington as Saudi Arabia=E2s chief ally
   anytime soon, the thought of China moving closer to such a critical
   exporter of oil is worrisome to the United States.
   China=E2s endeavors to gain access to energy supplies in the Western
   Hemisphere have primarily focused on Latin America. China has thrown
   around its economic weight in order to gain influence in the region
   (Zweig 3). In 2004 alone, China announced =E2$20 billion dollars in new
   investments for oil and gas exploration and other projects=E2 in Latin
   America. An impressive =E240 percent of China=E2s outgoing foreign direct
   investment went to Latin America=E2 (Zweig 3). One of the specific
   strategies China has employed in the region has been to strengthen
   ties with Brazil and Venezuela. Both countries currently have strained
   relations with Washington, leaving China again with the opportunity to
   move in the absence of the United States. Brazil=E2s development
   minister traveled to China to meet with government officials nine
   times between 2003 and 2004, and energy sales between the nations are
   increasing (Zweig 3). China recently signed a series of agreements
   that would =E2allow Chinese companies to explore for oil and gas and set
   up refineries in Venezuela=E2 (Luft 2). Though ties with Venezuela and
   Brazil are strained at present, these countries and the region at
   large are still enormously important exporters of oil to the United
   States. A rival power actively strengthening ties in an area that
   Washington views as its sphere of influence cannot be anything but
   harmful for Chinese-American relations. Further compounding
   Washington=E2s fear, a Chinese company is now contracted by the
   Panamanian government to operate and maintain the Panama Canal, a
   critical chokepoint for American naval movements and energy
   distribution. It begs the question as to how strong Washington China
   to become in Latin America before a 21 st Century version of the
   Monroe Doctrine comes into play.
   China=E2s efforts to gain access to energy supplies in Africa also evoke
   tensions with the United States. China has pursued energy agreements
   with a variety of African states including =E2the Central African
   Republic, Chad, Congo, Libya, Niger, and Sudan=E2 (Zweig 3) Beijing has
   additionally been =E2working closely with governments in the Gulf of
   Guinea, from Angola to Nigeria=E2 (Zweig 3). In the last five years,
   =E2more than 40 agreements have been signed between Beijing and African
   countries=E2 and trade between China and Africa has =E2doubled to more
   than $20 billion=E2 (Taylor 4). Despite the tremendous amount of money
   China funnels into Africa, it =E2turns a blind eye to the way
   petrodollars are used by the local governments=E2 (Luft 2). China is the
   =E2world=E2s fifth-largest arms supplier=E2 and many of these arms go to
   African nations, such as Sudan and Zimbabwe, to which other nations
   refuse to sell (Taylor 5). In Africa, the Chinese government seems
   consumed by the =E2chase for profits and oil=E2 and is =E2unmoved by
   ideological concerns=E2 or =E2fear of political consequences=E2 (Taylor =
6).
   Though Africa is one of the lesser regions of importance to American
   interests, China=E2s single-minded pursuit of oil there is seen as
   contrary to many of the human rights and democratization initiatives
   Washington is pushing.
   One African nation where tensions between Washington and Beijing have
   come to a head is Sudan. The Chinese government has =E2deployed
   thousands of military personnel disguised as oil workers=E2 and
   =E2provided arms to the Sudanese government=E2 in order to =E2consolidate
   and protect Chinese investment in Sudan=E2s oil reserves=E2(Luft 2)
   (Taylor 5).Chinese oil giant China National Petroleum Corporation
   =E2owns the largest share (i.e. 40 percent) in Sudan=E2s largest oil
   venture=E2 (Taylor 5). When hostilities between Muslim and Christian
   villagers broke out in the Darfur region of Sudan, many nations looked
   to the United States to intervene as it has in so many other parts of
   the world. Yet as the Americans began to pressure the Sudanese
   government to end its support of the genocidal Muslim militias, the
   Chinese not only refused to help, but actively worked towards
   derailing Washington=E2s efforts. When American diplomats pushed for
   enforcement of Security Council resolution 1564, a measure that would
   sanction Sudan for failing to suppress the genocide in Darfur, Beijing
   declared =E2very clearly that it would veto any bid to impose such
   sanctions=E2 (Luft 3). Chinese officials have tried to justify their
   obstructionism as part of their commitment to absolute state
   sovereignty, but real politik seems a more likely answer. Due to the
   Sudan=E2s human rights violations, the American government will not
   purchase oil from the nation, nor provide aid or arms. This creates a
   tremendous vacuum in which China can gain a stronghold. By providing
   the support that now other major powers will not, China ensures its
   access to the vast Sudanese oil reserves. Currently the situation is
   in a standstill, with a small and ineffective force of African Union
   troops trying to patrol the vast region. Should the violence escalate
   to the point where the United States feels forced to intervene, a
   major rift could open up between the United States and China. This
   tenuous situation is made all the more dangerous by the fact that
   Chinese troops are already deployed there. Should the Americans
   intervene, the Chinese government would have a very stark decision to
   make as to where its interests lay.
   Competition with Japan
   China=E2s efforts to gain energy resources also bring it into conflict
   with Japan. One country over which tensions are developing between the
   two nations is Russia. Beijing and Moscow have noticeably been moving
   closer recently. One very visible example of this rapprochement was
   the recent joint Sino-Russo war games. For Japan, a nation who is
   heavily dependent on Russian oil, it is extremely worrisome to see
   Russia closer ally itself with China, Japan=E2s largest rival. Japan=E2s
   fears have been further exacerbated by Chinese efforts to gain a
   larger share of Russian oil. There are ruminations that China is
   seeking to purchase =E220% of Yukos, the second largest Russian oil
   company=E2 (Gardner 2). The Japanese and Chinese have recently =E2been
   involved in a bidding war over a major pipeline deal to deliver
   Russian oil from Eastern Siberia=E2 (Luft 2). Though Japan won the
   bidding war, the competition between the two powers helped crystallize
   in the mind of many Japanese the nature of the growing rivalry between
   Beijing and Tokyo. As a result of this and several other conflicts,
   the post-war Japanese government =E2for the first time identified China
   as a potential security threat=E2 (Gardner 3). As Russia reforms its
   economy and increases oil production, competition for access to
   Russian energy reserves will only increase between the Japan and
   China.
   Japan and China have also come into conflict with one another in South
   East Asia, a region Japan views as its sphere of influence. The area
   is a major hub for oil transport with =E2over 9.5 million barrels of oil
   per day flow[ing] through the Strait of Malacca=E2 (Pumphrey 245). This
   is an area that the Chinese claim =E2exclusive sovereignty=E2 over and a=
re
   intensely fearful of a hostile power controlling the sea lanes in this
   region and thus being able to deny China oil supplies (Lee 24). As a
   result of this perceived threat, Beijing is strengthening the =E2war
   fighting capability through military modernization=E2 of its naval
   forces with the =E2goal of becoming a great sea power=E2 (Lee 24). Many =
of
   these new naval forces are patrolling the South China Sea, farther and
   farther from China=E2s own borders. As China=E2s naval forces move into
   the area, the Japanese are bound to watch carefully because as much as
   =E270% of Japan oil imports pass through the South China Sea=E2 (Mendl
   320). Not only are open sea lanes a major concern for Japan, China=E2s
   aggressive actions towards resources in the area are an anxiety. China
   has aggressively sought the oil reserves in the Spratly Islands that
   the Philippines, Taiwan, Vietnam, Brunei, Malaysia and China all claim
   rights to. While =E2Japan does not support the territorial claims of any
   particular country,=E2 Japanese leaders are apprehensive of Chinese
   intentions (Drifte 61). Incidents like the crisis in the mid-90=E2s when
   China =E2sent warships to blockade a Vietnamese oil-drilling rig
   operating in the disputed area=E2 further Japanese fears. (Sardesai155).
   Tokyo fears that China might attempt to use its power to overwhelm the
   region and deny Japan access oil there. Not far from the South China
   Sea, the status of Taiwan=E2s independence also worries the Japanese.
   The =E2Taiwan strait provides sea-lanes for the importation of 99% of
   Japan=E2s oil=E2 (Hsu 1005). Should China forcibly assimilate Taiwan, th=
is
   strategic sea lane would be completely under the control of Beijing.
   Any actions made by the Chinese in these areas, especially
   expansionary naval moves, will be viewed with intense suspicion by the
   Japanese.
   Perhaps the most bitterly contested area between the two nations is
   the East China Sea. The dispute revolves around Japan=E2s =E2territorial
   dispute with China over the Senkaku/Diaoyu Islands, and its oil and
   fishing interests in the East China Sea=E2 (Drifte 48). According to the
   UN Economic Commission for Asia and the Far East, =E2the seabed around
   the Senaku/Diaoyu Islands is one =E2of the richest oil and gas deposits
   in the world=E2 (Mendl 79). Most studies have come out in favor of
   China=E2s claim to the islands, as they are part of the Chinese
   continental shelf, but hardliners in Japan refuse to cede the islands.
   Both nations want access to this tremendous source of oil, and so far
   no agreement has been reached. Tensions over the dispute have been
   increasing recently with the Japanese air force scrambling =E230 times
   to turn away Chinese planes approaching=E2 airspace over the East China
   Sea that Japan claims as its own (Mainichi 1). With China feeling that
   it is entitled to the area and the Japanese refusing to budge, the
   situation has become quite dangerous. Provocative moves by both sides,
   such as drilling and sending in fishing boats, do nothing to help
   matters. The dispute remains a liability for both nations, and barring
   a major concession from either side, it is unlikely to be resolved in
   the near future.
   Conclusion
   From the perspective of a realist, the possibility for avoidance of
   conflict over oil looks rather slim. In virtually every region China
   seeks oil, it comes into conflict with either Japan or the United
   States. With demand rising, supplies dwindling, and ratios of power
   between the three nations rapidly changing, the situation appears ripe
   for an eruption of conflict. One might argue that conflict is not only
   likely, but inevitable. Surely China=E2s increasing power as compared to
   Japan in South East Asia will lead the Chinese to push the Japanese
   out of the region. Later, when China grows strong enough, it is only
   logical that will also begin to seriously challenge American strategic
   oil interests. The looming threat of China=E2s future ambitions will
   persuade Washington and Tokyo to preemptively limit Chinese influence
   in these regions. China, viewed with the scenario of being cut off
   from the critical oil supplies its economy requires, will only further
   its efforts to combat the other power's influence in these regions.
   Thus from the perspective of a realist, a vicious circle will emerge,
   spiraling into further tensions between the three nations.
   There is an alternative to this grim view of assured conflict, and
   surprisingly the solution has already been in effect for over five
   decades. The United States must step up and reassure the Chinese that
   it will continue to play the critical role as guarantor of the free
   flow of oil to all nations. The reason that there has been such little
   conflict between the United States and the rest of the world=E2s oil
   importing nations is due to Washington=E2s three unspoken but
   demonstrated assurances. The first is that the United States will
   promote stability in regions that supply oil, thereby assuring that
   oil production will continue. The second assurance is that the United
   States will use its naval forces to keep the sea lanes open, thus
   ensuring the smooth distribution of oil. Finally, Washington has
   assured the word that it will not use its power to deny oil to other
   nations. America has for the last half-century through world and deed
   offered these guarantees. Of course, there have been exceptions to
   this rule and nations who have been skeptical of America=E2s assurances,
   but for the most part the rest of the world has acquiesced to American
   leadership in this role. However, the Chinese have yet to accept these
   assurances, and until they do so the potential for conflict remains
   present.
   Works Cited
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   region." 9 May 2005. Real Instituto Elcano. 07 Nov. 2005
   http://www.realinstitutoelcano.org/documentos/226.asp>.
   Calabrese, John. "Saudi Arabia and China Extend Ties Beyond Oil."
   China Brief 5 (2005): 1-4.
   "China, oil and the Risks of Conflict in Asia." The Asianists' Asia.
   Spring 2005. Research Centre in Asian Studies. 09 Nov. 2005
   stateless.freehosting.net/AA4HallGardnerChinaOilConflictinAsia.htm>.
   Drifte, Reinhard. Japan's Security Relations With China Since 1989:
   From Balancing to Bandwagoning. London: RoutledgeCurzon, 2003. 61.
   Gundzik, Jephraim P. "The ties that Bind China, Russia and Iran."
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   www.atimes.com/atimes/China/GF04Ad07.html>.
   Hsu, Immanuel C. The Rise of Modern China. New York: Oxford UP, 2000.
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   "Japanese fighter jets scrambled 30 times to turn away Chinese planes
   in last 7 months." Mainichi Daily News. 9 Nov. 2005. MSN News. 20 Nov.
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   mdn.mainichi-msn.co.jp/national/news/20051109p2a00m0na013000c.html>.
   Lee, Jae-Hyung. China and the Asia-Pacific Region. Lincoln: IUniverse,
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   Luft, Gal. "Fueling the dragon: China's race into the oil market."
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   www.iags.org/china.htm>.
   Mendl, Wolf. Japan and South East Asia. London: Routledge, 2001. 320.
   Pumphrey, Carolyn. The Rise of China in Asia: Security Implications.
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   Taylor, Ian. "Beijing's Arms and Oil Interests in Africa." China Brief
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   Zweig, David, and Bi Jianhai. "China's Global Hunt for Energy."
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