16 - China's Energy Security: Geo-politics versus Interdependence

Summary

China has followed the rules of international oil market in its oil interactions and that China has no intention to scramble for world energy supply with other countries.

— Chinese President Hu Jintao (People's Daily, 31 August 2005)

INTRODUCTION

Since the loss of its energy self-sufficiency in 1993, China's thinking and practice of energy security has evolved from one of primarily unilateral acquisition of oil to one of greater inter-dependence on the global energy market, characterized by bilateral and multilateral cooperation and the increasing emphasis, domestically, on sustainable energy usage and efficiency. This chapter examines this shift in Chinese energy thinking by analysing three related sets of development. First, the constraint and limitations that China face in its oil diplomacy of domestic petroleum exploration and equity purchase overseas. Second, the domestic pressures in China that are influencing the government to align its energy policy in line with the practices of more established economies. Third, arising from the influences of the two sets of forces, China has become increasingly more receptive towards greater cooperation bilaterally and multilaterally, as evidenced in various initiatives towards sustainable energy development.

GROWING DEMAND, STAGNATING SUPPLY

China is an energy-thirsty and an energy-dependent country. Its rapid economic growth during the past two decades has fuelled an insatiable demand for energy that has outstripped domestic sources of supply. As Michael Klare (2004, p. 161) notes, “China is a rising power, and its surging economy is generating an ever-expanding thirst for imported energy.” China is the world's sixth largest economy with a GDP of US$1,932 million in 2005, surpassing the economies of Italy and Spain, and will overtake France and the United Kingdom in the near term (World Bank 2005). In 1993, China reached a turning point when it lost its self- sufficiency in energy to become the second largest net oil importer after the United States. China's communist leadership has already sought to maximize the country's economic self-reliance.