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Thursday, November 11, 2004

The Thirsty Dragon

    Posted by Adam Crouch

Source: IAGSFabian's Hammer has a great new post about China's increasing thirst for oil:

The Peoples Republic of China's growing appetite for energy has stressed the global oil and gas industry and is posing the threat of new armed conflicts over limited resources. The PRC's oil imports have doubled over the past five years, surging nearly 40% in the first half of 2004 alone, and the country is now second only to the USA as the world's biggest oil consumer.

"The country's industrial base is gobbling up vast amounts of petrochemicals to make everything from fertilizer to Barbie dolls. The number of cars on mainland roads - about 20 million - is expected to increase by 2.5 million this year alone. Even if China's blazing GDP growth of 9.4% this year moderates to 8% in 2005 … the country is now a permanent major player in the global competition for oil," Time Asia reported.

He goes on to explain how China's need for natural resources has backed it up against a wall, leading it to many foreign policy decisions that may be detrimental in the long run. He covers the oil/gas-related territorial disputes with Japan, Vietnam, the Philippines, Malaysia, and Brunei, China's difficulties in gas pipeline route negotiations with Russia, and China's blocking of UN sanctions against Sudan as a quid-pro-quo.

China's quest for natural resources is definitely a trend to watch over the coming years. I am generally amused by people who automatically assume that if a foreign policy action involves a country with oil, it must be motivated solely/primarily by oil concerns. But China really does seem to be making energy security a very strong component of its foreign policy. There is certainly the prospect of an armed conflict arising from resource disputes, and Fabian points out that some Chinese officials have even talked of potential military conflict with Japan over gas rights. I think the chances of that are fairly remote, but it's something to keep an eye on.

I'm more concerned about some of the other effects of a resource-driven Chinese foreign policy. A Congressional commission concluded in June that China has been giving nuclear technology to Iran in exchange for oil, and there is evidence that China has provided information about nuclear technology to Saudi Arabia and Libya.

China's leaders seem to be so blinded by their desire to keep natural resources flowing in and to keep the economy growing at lightning speed, that they've created some real long-term problems for both themselves and the rest of the world.

Not that this phenomenon is unique to China -- I've written before about India's willingness to hand Pakistan the keys to the castle in order to get more natural gas.

Definitely something to watch over the next decade or two.

Further Reading
Fueling the dragon: China's race into the oil market - Institute for the Analysis of Global Security
China rocks the geopolitical boat - Asia Times

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