China’s New Energy-Security Debate - Crawford School of ... · China’s New Energy-Security Debate | 139 Middle East, crossing the Indian Ocean and passing through the narrow Malacca

Over the past ten years, China’s soaring demand for energy has compli-cated its foreign relations on many fronts. China’s growing oil imports have sparked criticism that this demand puts upward pressure on world oil prices.1 Investments by China’s national oil companies have vexed governments trying to isolate regimes such as Iran, Sudan and Myanmar. China’s growing energy-related interests abroad have raised concerns that Beijing will build a powerful navy that could challenge the United States for control of the seas.2 And China, continuing to rely heavily on coal, has become the world’s top emitter of greenhouse gases.3 As the December 2009 Copenhagen conference revealed, this last development may pose the most difficult challenge of all.

While Chinese leaders seem increasingly self-assured on the world stage, Beijing has watched the growth of China’s energy needs with considerable concern. Indeed, the past decade has seen a surge of interest in the problem of energy security in China, with a growing number of government officials, military officers, think-tank experts and academics publicly pontificating on the subject.4 Traditionally, Chinese commentators have been preoccu-pied with the country’s mounting oil imports and the external dependence these imports imply. This focus reflects a wariness of international energy markets and institutions, which are seen as heavily influenced by the United States.5 But alternative perspectives have become more noticeable in

China’s New Energy-Security Debate

Andrew B. Kennedy

Andrew B. Kennedy is a Lecturer in the Crawford School of Economics and Government at the Australian National University.

Survival | vol. 52 no. 3 | June–July 2010 | pp. 137–158 DOI 10.1080/00396338.2010.494881

138 | Andrew B. Kennedy

China’s domestic energy-security debate in the past five years. While exter-nal dependence remains a concern, some Chinese analysts now take a more sanguine view of the challenge it presents, and have openly criticised many of Beijing’s more mercantilist policies, urging a more positive approach to international markets and institutions. At the same time, as the weak-nesses of China’s domestic energy system have become more apparent, an increasing number of analysts have argued that their country’s biggest energy-security challenge lies not in growing imports, but in internal disar-ray. In this view, China should worry less about external dependence and more about reforming its domestic energy sector, making it more reliable, more efficient and less polluting.

The evolution of China’s thinking about energy security presents an opportunity for the outside world, and in particular the United States and its allies, as they respond to China’s rise. To appreciate the nature of this oportunity, a more thorough understanding of China’s deliberations about external dependence and domestic energy challenges is needed.

Rethinking external dependenceIn the early years of the twenty-first century, most commentators on energy security in China had a traditional view of what ‘energy security’ means. Commentary tended to be state-centric, focused on energy supply more than demand, infused with the belief that insecurity arises from external dependence, and fixated on oil in particular.6 This preoccupation with oil was no accident. While coal meets more than two-thirds of China’s total energy consumption, the country has abundant reserves with which to meet this demand. In contrast, China became a net oil importer in 1993, and within a decade it was importing more than a third of its supply.7 At the same time, renewed tension with the United States over Taiwan from the mid-1990s highlighted the possibility of conflict with a state that seemed well positioned to exploit China’s growing reliance on oil imports.

Worries about external dependence remain prevalent, as Beijing has come to rely more and more on imported energy. China now imports more than 50% of its oil, and if present trends continue, that figure that may reach 80% by 2030.8 Most of these imports are likely to come from Africa and the

China’s New Energy-Security Debate | 139

Middle East, crossing the Indian Ocean and passing through the narrow Malacca Strait. China has also recently begun importing natural gas, and imports are projected to comprise nearly 50% of the country’s gas supply by 2030.9 China is even becoming a net importer of coal, though the country’s extensive domestic supplies will limit external dependence.10 This growing reliance on imported energy has increased concern about vulnerability to supply disruptions and price spikes, whether due to piracy, terrorism, embargoes or the machinations of other powers. Oil remains the primary worry, and there is particular concern that the United States, possibly in concert with India or Japan, could exploit China’s heavy reliance on the Malacca Strait to cut off oil supplies in a crisis.11

China’s efforts to address the challenge posed by its growing energy imports have sparked a lively domestic debate that is playing out in several distinct arenas. For example, the Chinese government has attracted consid-erable attention for supporting the overseas expansion of its national oil companies. While the companies themselves are primarily motivated by commercial considerations, Beijing’s support for what is known as their ‘going out’ reflects a belief that oil produced by Chinese companies abroad is a more secure source than that purchased on international markets.12 This view was never universally shared, however, and it has come under attack from a growing number of more market-friendly Chinese analysts in recent years.13 In fact, some analysts have charged that the national oil companies’ overseas investments actually undermine China’s national interests in some cases. One caustic analysis predicted that the relentless pursuit of equity stakes in foreign oil fields would inevitably lead to ‘increasingly intense competition, increasingly scarce opportunities, and increasingly great risks’.14 Others have charged that China’s foreign policy has sometimes been hijacked by the national oil companies, whose investments overseas have pulled the Chinese government closer to states that are international pariahs.15 The National Development and Reform Commission, which oversees China’s energy sector, showed sensitivity on this point when it excluded Sudan from a list of countries in which Chinese oil companies were encouraged to invest in 2007. Yet in a sign of just how

Oil remains the primary

worry


much difficulty Beijing has controlling its own oil companies, the China National Petroleum Corporation acquired new assets in Sudan anyway.16

Despite the controversy surrounding China’s overseas energy invest-ments, Chinese leaders remain committed to intervening in commercial energy deals abroad. In a series of ‘loans for oil’ deals concluded in 2009, for example, China used its financial clout to facilitate long-term supply agree-ments and new investments in a number of oil-producing states outside the Middle East. The deals with Russia and Kazakhstan are noteworthy because they promise to reduce China’s reliance on seaborne oil imports while deepening its cooperation with overland suppliers.17 China will rely heavily on pipelines in both cases, and China has also concluded an agree-ment with Myanmar to build oil and gas pipelines from the Burmese coast to China’s Yunnan province.18 While the China–Myanmar oil pipeline will not transport locally produced oil, it will allow some of China’s imports from the Middle East and Africa to bypass the Malacca Strait. If the pipe-lines from Russia, Kazakhstan and Myanmar are all completed and operate at full capacity, they would carry 1.1 million barrels of oil per day, about 14% of China’s projected imports in 2015.19

Aside from increasing the diversity of suppliers and supply routes, however, the extent to which these pipelines will enhance China’s energy security is a matter of dispute. Some Chinese energy analysts doubt that pipelines are a more secure means of transporting oil than tankers, and some argue that pipelines are actually less secure since they are immobile and comparatively easy to disrupt.20 It has also been noted that pipelines imply a long-term supply relationship and that Russia’s reliability as an energy supplier remains open to question.21 In fact, Chinese analysts expect that Beijing and Moscow will continue to wrangle over the specifics of their agreement, which was reached only after Russia came under pressure from the global economic crisis.22 Finally, the pipelines currently under construc-tion will meet only a relatively modest fraction of China’s import needs.23 It is thus unclear how reassuring overland supplies will be for China as its oil imports continue to grow.

China’s engagement with international energy institutions is also a subject of debate. Beijing participates in a variety of forums that deal with energy


issues at global and regional levels, though not always as a full member or signatory. Most significantly, China has taken part in various activities organised by the International Energy Agency (IEA) in recent years as a ‘major dialogue partner’. Although IEA membership has traditionally been limited to OECD countries, in 2008 the United States expressed support for China to join the organisation as a non-OECD member, and IEA Executive Director Nobuo Tanaka has actively sought to bring China into the organi-sation more fully.24 To date, however, China has not sought to join. Energy analysts at state-run think tanks in Beijing report continuing misgivings about joining the organisation, since full membership would require China to become more transparent in the energy sphere and to give up some autonomy in the management of its strategic petroleum reserve.25 China has recently completed filling the first phase of the reserve, which holds roughly 100m barrels of crude (about one month of net imports at current consump-tion rates), and the government eventually plans to build a national system that can meet 90 days of net import demand.26 Despite these reservations, however, some Chinese analysts argue that joining the IEA would amplify Beijing’s voice on international energy issues, while also reassuring other states about China’s impact on energy markets and institutions as it rises.27 It thus remains possible that China’s position will become more cooperative in the future.

Finally, China is debating what kind of presence it needs on the high seas to ensure access to energy supplies and to protect its other maritime interests. It is well known that China is actively considering building several aircraft carriers and associated ships by 2020, with much public support for the move.28 Yet it remains unclear just how large a navy China will seek to acquire, and more specifically, what kinds of carriers it might build and what kinds of missions they would undertake.29 The acquisition of several medium-sized, conventionally powered carriers would improve China’s leverage in its territorial disputes in the East and South China seas, helping it gain control over natural and energy resources in these areas. Some Chinese naval and energy analysts, however, see the need for naval forces that can range much more widely and that can compete with the United States for sea control.30 In fact, officers of the People’s Liberation Army Navy (PLAN)


now cite China’s rising energy imports to call for greater investments in capabilities for ‘Far Sea Defense’ (yuanhai fangwei) and to assert their serv-ice’s centrality in defending the country. Yao Wenhuai, the PLAN deputy political commissar, has argued that China’s growing dependence on sea-borne energy imports means that the navy has a ‘special status and utility’ within China’s armed forces:

Maritime transport and strategic passageways for energy resources have

already become lifelines for the development of the national economy

and society. Particularly for oil and other key strategic supplies, our

dependence on sea transport is very great, and ensuring the security of

strategic seaways is extremely important. We must fully recognise the

actual requirements of protecting our country’s developmental interests

at sea, fully recognise the security threats our country faces at sea, and

fully recognise the special status and utility of our navy in preparing for

military conflict.31

In keeping with this view, Yao argues that it is time for China’s army to receive a lower proportion of defence spending, and for the navy to ‘bear the brunt’ of the burden of national defence.

Yet there is also opposition to such a far-reaching naval build-up. Not surprisingly, there is considerable resistance to the idea of building aircraft carriers among Chinese army and submarine commanders, who believe the navy should focus on access denial rather than sea control.32 More broadly, Chu Shulong of Qinghua University, one of China’s pre-eminent experts on US–China relations, has criticised the notion that China can or should try to match US military power, whether to protect the sea lines of communica-tion through which energy shipments flow or for other reasons. In his view, such a goal would be unrealistic, unnecessary and provocative.33 Taking a less direct approach, Zhao Hongtu, deputy director of the Institute of World Economics Studies at the China Institutes of Contemporary International Relations, has argued at length that the threat of an oil blockade by the United States is overblown.34 Zhao notes that such a blockade would only be likely to occur in wartime, that the United States would not be able to


insulate itself from the disruption of the world oil market (and the world economy) that would result, and that it would be impossible to blockade the Malacca Strait effectively without cutting off oil to Japan and South Korea as well. Zhao thus sees an American-led blockade of China as unlikely.35

The idea of an ambitious naval build-up has also raised questions to which China does not yet have answers. Beijing’s recent deployment of warships to conduct anti-piracy operations in the Gulf of Aden, for example, has stirred debate among Chinese military analysts over the kind of overseas support infrastructure the PLAN would need to sustain operations in the Indian Ocean, as well as how such infrastructure can be reconciled with China’s long-standing opposition to foreign military bases.36 Chinese security analysts have also suggested that a comprehen-sive effort to secure China’s foreign oil supplies would not merely entail securing the sea lines of communication, but also developing the ability to intervene in oil-producing states themselves, a capability that China is far from possessing at present.37 Finally, there is no clear consensus as to how China should approach Washington and its allies as it expands and mod-ernises the PLAN, with some writers noting opportunities for collaboration in patrol of sea lines of communication and others emphasising wariness and competition.38

The challenge withinEven as China debates how to manage its increasing dependence on energy imports, some officials and analysts are taking a less traditional view of the energy-security challenge. In particular, they contend that worries about external dependence have obscured a more important source of national energy insecurity: China’s unreliable, inefficient and heavily polluting energy system. In 2003, Chen Xinhua, a former programme manager for China at the IEA, helped pioneer this point of view, pointing out that ‘energy security does not only include oil supply’ and arguing that China’s energy-security efforts ‘must attach importance to internal factors’.39 In recent years, this critique has become more widespread. In 2007, for example, Zhao Hongtu of the China Institutes of Contemporary International Relations emphasised the challenge of cleaning up China’s energy sector:


As for quickly developing countries, compared with the problem of

ensuring adequate supply, the environmental challenges that come from

energy consumption are much more difficult to solve, and the domestic

and international pressure they generate is much greater, and they deserve

greater attention.40

In 2008, Zha Daojiong, a prominent energy-security specialist at Beijing University, extended this argument, publicly chastising his colleagues for worrying too much about ‘wars, blockades, and embargoes’. Instead, Zha argued, more attention should be paid to the many ‘domestic, non-war/non-adversarial challenges’ that China faces in the energy sphere.41 That

same year, Zhu Chengzhang, who served in China’s Ministry of Energy until it was disbanded in 1993, argued that ‘electric power security is the most important energy security problem’ for China.42 Zhu proceeded to call for a variety of administrative and market reforms to make electricity generation more reliable and envi-ronmentally sustainable. To be sure, these writers are not completely unworried by China’s growing reliance on imported oil – there is some concern in this regard,

particularly since price spikes have the potential to undermine China’s eco-nomic growth.43 They are more concerned, however, with broadening the focus beyond oil supplies and directing more attention to China’s internal challenges.

The emergence of this domestically oriented view of Beijing’s energy-security challenge is not hard to understand, given how apparent China’s domestic problems have become over the past ten years. In the first half of this decade, a boom in heavy industry caused the energy intensity (the amount of energy consumed per unit of GDP) of the Chinese economy to rise for the first time in the reform era.44 The booming demand for elec-tricity that ensued led to crippling power shortages across China in 2004, with shortfalls in 24 of the country’s 31 provinces.45 In early 2008 and 2010, power shortages again plagued southern and central China. The immediate cause of these latter failures was severe winter weather, which disrupted

A boom in heavy industry caused energy intensity to rise


coal deliveries to power plants. But the shortfalls also reflected artificially low, state-set electricity prices, which give power generators an incentive to keep their on-site coal inventories small.46 Finally, the massive expansion of China’s energy system in recent years, coupled with its heavy reliance on coal, has exacerbated the toll that economic development is taking on China’s environment and people. In 2007, for example, the World Bank estimated that outdoor air pollution in China was causing between 350,000 and 400,000 premature deaths each year, more than Chinese historians esti-mate their country suffered in the Korean War. Sensitive to the outrage such figures could produce, the Chinese government insisted that the World Bank not publish the figures, citing threats to ‘social stability’.47

China’s booming energy demand has also helped make it the world’s most prolific emitter of greenhouse gases in recent years. Generally speak-ing, this development, and the threat of climate change more generally, has not been a driving force behind new thinking about energy security in China. While Chinese government reports have made the case that climate change is under way and that it is already damaging China’s economy, most Chinese analysts see power supply and local pollution as more pressing problems.48 But even before the Copenhagen conference a clear sense was emerging that climate change is altering the international context in which China operates. Many analysts worry that other countries will impose ‘carbon tariffs’ on Chinese exports if Beijing is seen as insufficiently coop-erative on the climate-change issue, a concern that came to the fore after the US House of Representatives passed legislation authorising such tariffs in mid-2009.49 More broadly, many Chinese officials and analysts are focused on the idea that countries are now competing to develop and produce low-carbon technologies, and there is a determination to see China succeed in this race.50 In short, while fighting climate change is not the top priority for most Chinese analysts, the emergence of climate change as a high-profile international issue is reinforcing the sense that China must modernise, and even revolutionise, its domestic energy system if it is to prosper.

While China’s top leaders remain concerned about external depend-ence, it is also clear that their conception of energy security has broadened considerably in recent years. At a central economic work conference in late


2003, President Hu Jintao reportedly expressed concern about the security of China’s oil imports, reflecting a traditional conception of China’s energy-security challenge.51 By 2006, however, Hu was talking about energy security in broader terms. Speaking at the G8 Summit in St Petersburg, Hu proposed a ‘new energy security concept’.52 While Hu’s ‘new concept’ called for greater international cooperation to increase oil and gas supplies, he also stressed the need to control domestic demand and for ‘sustainable development of human society’. Hu has continued to tout his new energy-security concept at subsequent international meetings, and other Chinese leaders, including Premier Wen Jiabao, have echoed his call for a ‘resource-conserving and environmentally friendly society’.53

While this rhetoric may sound like self-serving propaganda, it is not merely cheap talk. Hu and Wen have set demanding targets over the past several years in an effort to control China’s energy demand and modernise its system. In late 2005, the leadership set an ambitious goal of reducing the energy intensity of China’s economy by 20% between 2006 and 2010, which was then incorporated into the government’s 11th five-year plan. After a slow start, China has made considerable progress toward this target, thanks to new regulations and investments that have targeted the most energy-intensive segments of the economy.54 In 2007, the leadership set a further goal of generating 15% of China’s energy from renewable sources by 2020, and it has pursued this target through mandates on power companies, investments in the power grid and subsidies for consumers. As a result, China is expected to exceed its renewable-energy goal, and it has emerged as the world’s leading producer of solar panels and wind turbines.55

China has also begun to set targets for its greenhouse-gas emissions. In the run-up to the Copenhagen conference in 2009, the government announced a voluntary goal of reducing the intensity of China’s carbon-dioxide emis-sions (that is, emissions per unit of GDP) by 40–45% between 2005 and 2020.56 Critics have charged that this pledge merely extends China’s current efforts to reduce the energy intensity of its economy out to 2020.57 But while China could probably accomplish more than it has promised, more impor-tant is the fact that its stated goal will require substantial new programmes


to increase energy efficiency in enterprises, buildings and transportation, all of which are likely to be incorporated into the next two five-year plans.58 In fact, Hu Jintao was subsequently compelled to reaffirm the target before the politburo in an effort to stifle complaints that it was too demanding.59 Although China’s intensity goal will allow its absolute emissions to increase as its economy does, albeit more slowly, models of climate-change mitiga-tion typically do not assume reductions in China’s absolute emissions until after 2020.60 In short, China’s pledge is significant, and for the time being sufficient. Indeed, more worrying than China’s emissions pledge was its clumsy and uncooperative diplomacy at Copenhagen, where it resisted efforts to set emissions targets for 2050 and refused to support a call for a binding global treaty in the coming year.61 China will probably be less mala-droit in the future, but it will likely continue to resist external constraints on its development.

Ultimately, China will have to rely on more than a series of national targets to address its internal energy-security challenges. Indeed, despite the progress that has been made in recent years, Beijing has been too slow to take on some of the more fundamental challenges in energy reform. Most importantly, the central government’s ability to govern the energy sector remains too weak.62 While there was talk in 2008 of re-establishing a Ministry of Energy, a move that would have begun to redress this problem, China’s leaders have instead created two inadequate entities: the National Energy Commission and the National Energy Administration. The former is tasked with overall policy guidance and coordination, while the latter provides the manpower and expertise for day-to-day work. In truth, neither possesses the personnel to adequately monitor China’s energy sector and ensure that central policies are implemented.63 China’s leaders have also been slow to liberalise downstream prices for oil and gas, as well as electricity rates, though it has developed a more flexible approach to setting oil prices.64 Notwithstanding these obstacles, however, it is clear that Beijing’s thinking about energy security has widened considerably over the past decade, and that external dependence is no longer the sole concern. Given the scale of the domestic challenges that remain, it is unlikely that this change will be reversed any time soon.


Engaging China on energy securityChina’s changing thinking about energy security represents an opportunity for the outside world, and in particular, for the United States and its allies as they respond to China’s rise. While the ability of foreign governments and organisations to influence Beijing’s approach to energy issues has its limits, the unsettled nature of China’s domestic debate means that there are real opportunities to shape how it evolves in the future. Two broad objectives ought to be kept in mind in this regard.

The first entails shaping China’s approach to external dependence. Beijing remains uncomfortable with international energy markets and institutions,

and it would prefer not to rely so heavily on other coun-tries to secure the sea lines of communication on which it depends. These anxieties, in turn, serve to increase support for policies and proposals that arouse ire in foreign capitals. China’s support for energy investments in pariah states, its wariness of deeper cooperation with the IEA, and its interest in nationalistic naval develop-ment plans are all strengthened by Beijing’s distrust of the international energy order. Washington and its partners thus have a strong interest in reducing China’s

anxieties about external dependence and increasing its comfort with the existing system.

Some progress has recently been made in this regard. China’s participa-tion in anti-piracy operations in the Gulf of Aden, for example, has led to unprecedented interaction and cooperation between the PLAN and other navies, including that of the United States.65 Yet much work remains to be done, and not just in the military arena. One recent analysis has highlighted the difficulties of bringing China more formally into the IEA, noting that some existing members fear that their influence within the organisation would be diluted as a result.66 In this view, it would be more profitable to focus on the development of a new institution, which would be more open to China and which would focus on particularly pressing problems, such as the development of shared standards for overseas energy investments. Nonetheless, downplaying the IEA in favour of a new institution would

Beijing remains uncomfortable with international energy markets


be premature. The biggest obstacle to deeper multilateral cooperation with China on energy issues lies not in the fears of IEA members, but in Beijing’s own hesitation. And China is likely to be wary of a new energy institu-tion that aims to regulate how it invests abroad, not only because Beijing will fear that it is designed to constrain China but also because Beijing’s control over the national oil companies’ foreign operations is imperfect. In contrast, it is clear that China’s views regarding deeper cooperation with the IEA are in flux, and as international interlocutors continue to stress the benefits of greater transparency and cooperative stockpile management, it is possible that China will become more interested in joining the organisa-tion in the future. Indeed, it is worth noting that current National Energy Administration chief Zhang Guobao, who has been particularly wary of increasing transparency in keeping with IEA norms, is now of retirement age and will likely be replaced in the next few years. Washington should thus continue to support Chinese membership in the IEA to make clear that Beijing is welcome, and it should encourage its allies to voice such support as well.

Secondly, even as the United States and other powers try to shape Beijing’s approach to external dependence, they should also find ways to support those calling for greater attention to China’s internal challenges. This will be difficult to do. While China’s leaders are clearly concerned about the domes-tic energy challenges they face, there is no organisation within the Chinese political system that can effectively champion reform. The National Energy Commission/Administration combination is a poor substitute for an actual Ministry of Energy, and the Ministry of Environmental Protection remains a relatively weak player. Foreign governments should encourage Beijing to develop the National Energy Administration into a full Ministry of Energy with sufficient staff and the authority to liberalise downstream prices in the energy sector.67 For its part, the Ministry of Environmental Protection needs the authority and resources to enforce central environmental regulations when local authorities fail to do so.68 Foreign encouragement to strengthen these institutions must be given carefully, of course, to avoid provoking a domestic backlash. For that reason, foreign governments should not present these efforts as demands that are being made upon China, but rather as


offers to help China’s leaders accomplish what they say they want to do: make China a ‘resource-conserving and environmentally friendly society’. The US Environmental Protection Agency, for example, recently concluded a Memorandum of Cooperation with China’s National Development and Reform Commission to boost the latter’s capability to monitor greenhouse-gas emissions. Similar agreements might be concluded between foreign energy ministries and the National Energy Administration, raising its profile and enhancing its ability to formulate and monitor the implementation of central energy policies.

International efforts to promote energy and environmental reform in China will have limited success, however, unless the rest of the world sets a better example. The United States, in particular, must become a more cred-ible advocate of demand management and pollution control. The Obama administration’s decision to push health-care reform over energy legislation in 2009, even as the Copenhagen conference approached, sent an unfortu-nate signal to Beijing about the president’s priorities. As of May 2010, new energy legislation was being discussed in the US Senate, offering the admin-istration another opportunity to burnish its green credentials. Yet even if such legislation becomes law, the United States will still have much work left to do. American fuel-economy standards are significantly weaker than China’s and are likely to remain so for some time, notwithstanding recent improvements.69 More broadly, the medium-term greenhouse-gas emis-sions target that Washington has proposed (a 17% cut between 2005 and 2020) is less ambitious than those of other industrialised countries. While this is a concession to domestic political realities, Washington must begin setting the stage for more ambitious actions after 2020 to take a leadership role on this issue.

* * *

The outside world must strive to keep abreast of China’s changing think-ing about energy security. China’s energy-security debate is now broader and more sophisticated than ever before, and it will undoubtedly continue to evolve in the future. Whether the specific issue is security of sea lines of


communication, IEA membership or climate change, outsiders will better understand Chinese behaviour if they are up to date on China’s evolving thinking about what energy security is and how it can be achieved. And while opportunities to shape China’s debate are not unlimited, keeping up with its domestic deliberations is essential if other countries wish to influ-ence Beijing’s approach to energy challenges.

AcknowledgementsThe author gratefully acknowledges comments, criticism and assistance from Joshua Busby, Thomas Christensen, Erica Downs, Andrew Erickson, Michael Glosny, Stuart Harris, Iain Johnston, Donald Keyser, Alexander Liebman, Edward Steinfeld, Haibin Wang and Andrew Winner. He also thanks the participants in the China and the World Workshop and the Fairbank Center Director’s Seminar at Harvard University in April 2009.

Notes1 On the relative contribution of the

United States and China to oil-demand growth in recent years, see Kenneth Lieberthal and Mikkal Herberg, ‘China’s Search for Energy Security: Implications for U.S. Policy’, NBR Analysis, vol. 17, no. 1, April 2006, pp. 19–20.

2 Office of the Secretary of Defense, Military Power of the People’s Republic of China 2009, Annual Report to Congress, pp. 17–18.

3 Elisabeth Rosenthal, ‘China Clearly Overtakes U.S. as Leading Emitter of Climate-Warming Gases’, International Herald Tribune, 13 June 2008, http://www.iht.com/articles/2008/06/13/ business/emit.php.

4 Renmin Ribao electronic database.5 Lieberthal and Herberg, ‘China’s

Search for Energy Security’, pp. 13–16.6 Erica Downs, ‘The Chinese Energy

Security Debate’, China Quarterly, no. 177, March 2004, p. 23.

7 BP Statistical Review of World Energy 2009, pp. 8, 11.

8 World Energy Outlook 2009, pp. 81, 84. 9 Ibid., pp. 366, 429.10 Ibid., pp. 90–91.11 For examples, see Dou Chao, ‘Pojie

Shiyou Kunju [Analyzing and Explaining the Oil Predicament]’, Jianzai Wuqi [Shipborne Weapons], no. 12, 2008, pp. 10–13; Ni Jianmin, Guojia Nengyuan Anquan Baogao [Report on National Energy Security] (Renmin Chubanshe, 2005), pp. 151–2. Ni Jianmin was head of the Chinese Communist Party’s Policy Research Department when the report was published. No affiliation was given for Dou Chao. For a more extended discussion of this concern, see Andrew Erickson and Lyle Goldstein, ‘Gunboats for China’s New “Grand Canals”? Probing the Intersection of Beijing’s Naval and Oil Security Policies’, Naval War College Review, vol. 62, no. 2, Spring 2009, pp. 55–7.

12 On the motivations behind the national oil companies’ overseas


expansion, and their complex relation-ship with the Chinese government, see Trevor Houser, ‘The Roots of Chinese Oil Investment Abroad’, Asia Policy, no. 5, January 2008, pp. 141–66.

13 Author’s interviews with energy spe-cialists at state-run think tanks and the National Development and Reform Commission, Beijing, March 2009. For an example of the traditional view, see Zhang E, ‘Shiyou Bianju [The Oil Crisis]’, Zhongguo Shiyou Shihua [China Petrochem], 15 October 2008, p. 22. For an example of a more mar-ket-friendly view, see Zha Daojiong, ‘Nengyuan Yilai Jinkou Bukepa [Energy Import Dependence is not Scary]’, Shijie Zhishi [World Affairs], no. 9, 2006, pp. 47–9. For an argument that market-friendly analysts will ulti-mately prevail in this debate, see Alex Liebman, ‘China’s Energy Security in Historical Perspective: Natural Resources and the Rise of the United States, Japan, and China’, paper deliv-ered at the ISA Annual Convention, New York, February 2009, pp. 29–46.

14 Chen Weidong, ‘Maoyi Nengli: Guoyou Gongsi de Biran Xuanze [Trading Capability: State-Owned Energy Companies’ Inevitable Choice]’, Zhongguo Shiyou Shihua [China Petrochem], 1 April 2006, p. 73.

15 Richard McGregor, ‘Chinese Diplomacy “Hijacked” by Big Companies’, Financial Times, 16 March 2008.

16 Erica Downs, ‘China’s “New” Energy Administration’, China Business Review, November–December 2008, p. 43.

17 On these deals, see Stuart Elliott and Naubet Bisenov, ‘Chinese Expand

Presence in Kazakhstan’s Oil Sector’, Platt’s Oilgram News, 26 November 2009; Nadezhda Roumiantseva, ‘Russia and China Finally Sign Off on Oil-for-Loans Agreement’, International Oil Daily, 22 April 2009. Note that China did not apparently fix a price for the Russian oil, but is expected to pay the market price at the time of delivery. See Wenran Jiang, ‘China Makes Strides in Energy “Go Out” Strategy’, China Brief, vol. 9, no. 15, 23 July 2009, p. 8.

18 ‘China, Myanmar Sign Pipe Deal’, International Oil Daily, 30 March 2009.

19 Erica Downs, ‘China’s Energy Rise’, unpublished manuscript, 17 June 2009, p. 17. For a recent overview of China’s pipeline projects, see Andrew Erickson, ‘Pipe Dream: Beijing Seeks Land and Sea Energy Security’, Jane’s Intelligence Review, August 2009, pp. 54–5. For a broader discussion of pipe-lines in Asia, see Bernard D. Cole, Sea Lanes and Pipelines: Energy Security in Asia (Westport, CT: Praeger Security International, 2008), pp. 52–72.

20 Author’s interviews with energy specialists at state-run think tanks, Beijing, March 2009. For a public and fairly pessimistic analysis of pipeline security, see Zhao Hongtu, ‘Maliujia Kunju yu Zhongguo Nengyuan Anquan Zai Sikao [Rethinking the Malacca Dilemma and China’s Energy Security]’, Xiandai Guoji Guanxi [Contemporary International Relations], no. 6, 2007, pp. 40–41.

21 Ibid., p. 41. 22 See for example Ma Yujia, ‘China–

Russia Loan-for-Oil Negotiations Stall on Price’, 19 February 2009, http://www.china.org.cn/business/


news/2009-02/19/content_17304691.htm.

23 China currently has much greater latitude to meet its demand for natural-gas imports through pipeline deliveries, given its lesser import dependence in gas and the recent opening of the Turkmenistan–China pipeline. See Stephen Blank, ‘The Strategic Implications of the Turkmenistan–China Pipeline Project’, China Brief, vol. 10, no. 3, 4 February 2010, p. 11.

24 Phil Taylor, ‘Energy Policy: IEA Chief Calls for Expanded Dialogue with China, India’, E&E News, 13 February 2009; ‘IEA’s Tanaka Urges OPEC to Keep Investing’, Platts Oilgram News, 28 April 2009.

25 Authors interviews with energy specialists at state-run think tanks, Beijing, March 2009.

26 Note that IEA requires its members to have national and commercial reserves sufficient to meet at least 90 days of net import demand. While visiting Beijing in July of this year, IEA head Tanaka stated that China’s current petroleum reserves, including commercial stocks, were sufficient to meet 86 days of net imports. Chinese officials promptly disputed this claim, saying it was much too high, and Tanaka later noted that the data were ‘unverifiable’. See ‘Chinese Official Denies 86 Days Oil Reserve Claim by IEA’, Asia Pulse, 6 July 2009; and ‘IEA to Pursue China, India, and Russia Ties’, Platts Oilgram News, 9 September 2009.

27 For enthusiastic endorsements of China joining the IEA, see Zhao Hongtu, ‘Guoji Nengyuan Zuzhi

yu Duobian Nengyuan Waijiao [International Energy Organisations and Multilateral Energy Diplomacy]’, Guoji Shiyou Jingji [International Petroleum Economics], no. 10, 2008, pp. 12–17; Wang Lianhe, ‘Zhongguo yu Guoji Nengyuan Jigou – Yi Xiang Guifan Yanjiu [China and the International Energy Agency – a Normative Analysis]’, Guoji Guancha [International Survey], no. 4, 2009, pp. 11–17.

28 On Chinese public support for acquir-ing aircraft carriers, see Robert Ross, ‘China’s Naval Nationalism: Sources, Prospects, and the U.S. Response’, International Security, vol. 34, no. 2, Fall 2009, pp. 60–65.

29 For more discussion of the possi-bilities in this regard, see Nan Li and Christopher Weuve, ‘China’s Aircraft Carrier Ambitions: An Update’, Naval War College Review, vol. 63, no. 1, Winter 2010, pp. 13–32.

30 For more on these arguments, see Gabriel B. Collins, Andrew S. Erickson and Lyle J. Goldstein, ‘Chinese Naval Analysts Consider the Energy Question’, in Gabriel B. Collins, Andrew W. Erickson, Lyle J. Goldstein and William S. Murray (eds), China’s Energy Strategy: The Impact of Beijing’s Maritime Policies (Annapolis, MD: Naval Institute Press, 2008), pp. 299–335.

31 Yao Wenhuai, ‘Jianshe Qiangda Haijun Weihu Woguo Haiyang Zhanlue Liyi’ [Build a Powerful Navy to Protect Our Nation’s Strategic Maritime Interests], Guofang [National Defense], no. 7, 2007, p. 6.

32 Ross, ‘China’s Naval Nationalism’, p. 75.


33 Chu Shulong and Lin Xinzhu, ‘Zhongguo Junli, Ganchao Meiguo Bushi Mubiao [China’s Military Strength, Overtaking the US Is Not the Goal]’, Huanqiu Shibao [Global Times], 26 June 2008.

34 Zhao Hongtu, ‘Maliujia Kunju yu Zhongguo Nengyuan Anquan Zai Sikao [Rethinking the Malacca Dilemma and China’s Energy Security]’, Xiandai Guoji Guanxi [Contemporary International Relations], no. 6, 2007, pp. 36–8. The China Institutes of Contemporary International Relations produces reports for China’s top leadership and plays a role in the Chinese govern-ment similar to that played by the CIA’s Directorate of Intelligence in the United States.

35 Notably, a recent study by scholars at the US Naval War College con-curs with many of Zhao’s points. See Gabriel B. Collins and William S. Murray, ‘No Oil for the Lamps of China?’ in Collins et al., China’s Energy Strategy, 387–407.

36 Michael S. Chase and Andrew S. Erickson, ‘Changes in Beijing’s Approach to Overseas Basing?’, China Brief, vol. 9, no. 19, 24 September 2009, pp. 8–11.

37 Author’s interview with security spe-cialist at state-run think tank, Beijing, March 2009.

38 For an overview of the diversity of views in this regard, see Erickson and Goldstein, ‘Gunboats for China’s New “Grand Canals”?’, pp. 64–6.

39 Chen Xinhua, ‘Nengyuan Anquan Yao Zhongshi Neibu Yinsu, Qiangdiao Zhengce Tizhi Baozhan [Energy Security Must Attach Importance

to Internal Factors and Stress the Safeguarding of the Policy System]’, Zhongguo Nengyuan [China Energy], no. 5, 2003, http://www.china5e.net/dissertation/policy/20050718121240.html. Chen is currently vice-president of BP China and is affiliated with a variety of foreign and domestic institutions.

40 Zhao Hongtu, ‘Nengyuan Weiji: Shenhua yu Xianshi [The Energy Crisis: Myth and Reality]’, Xiandai Guoji Guanxi [Contemporary International Relations], no. 9, 2007, p. 48.

41 Zha Daojiong, ‘Tuozhan Zhongguo Nengyuan Anquan Yanjiu de Keti Jichu [Expanding the Underlying Question in Research on China’s Energy Security]’, Shijie Jingji yu Zhengzhi [World Economics and Politics], no. 7, 2008, p. 80. See also Zha Daojiong, ‘China’s Energy Security: Domestic and International Issues’, Survival, vol. 48, no. 1, Spring 2006, pp. 185–7.

42 Zhu Chengzhang, ‘Dianli Anquan Shi Zui Zhongyao de Nengyuan Anquan Wenti [Electric Power Security is the Most Important Energy-Security Problem]’, Zhong Wai Nengyuan [Sino-Global Energy], vol. 13, no. 5, 2008, pp. 1–7. Emphasis added.

43 For example, see Zhou Dadi, ‘2020 Nian Zhongguo Nengyuan Zhanlue Fenxi [Analysing China’s Energy Strategy for 2020]’, Zhongguo Gaoxiao Keji yu Chanyehua [Chinese University Technology Transfer], no. 11, 2007, p. 53.

44 Dan Rosen and Trevor Houser, China Energy: A Guide for the Perplexed (Washington DC: Peterson Institute for International Economics, 2007), p. 6.


45 Paolo Hooke, ‘China’s Power Sector: Can Supply Meet Demand?’, Asia Times, 7 October 2005, http://www.atimes.com/atimes/China_Business/GJ07Cb01.html.

46 See ‘Analysis: Unreasonable Pricing Mechanism Triggers Seasonal “Coal Shortage” in China’, Xinhua Economic News Service, 20 January 2010; and David Victor, ‘Asia’s Achilles Heel’, Newsweek, 28 February 2008, http://www.newsweek.com/id/117004.

47 Joseph Kahn and Jim Yardley, ‘As China Roars, Pollution Reaches Deadly Extremes’, New York Times, 26 August 2007, p. A1. For a Chinese estimate of their country’s casualties in Korea, see Xu Yan, Diyici Jiaoliang [The First Trial of Strength] (Beijing: China Broadcast Television Press, 1990), p. 322. Note that American estimates of China’s casualties in Korea are much higher.

48 This is not to suggest that there is no concern about climate change in China, merely that other energy-related problems are usually seen as more immediate priorities. There are, to be sure, some Chinese analysts who argue that mitigating climate change should be a high priority for Beijing. See, for example, Hu Angang and Guan Qingyou, ‘Zhongguo Yingdui Quanqiu Qihou Bianhua de Si Da Kexingxing [Four Big and Feasible Things China Should Do to Combat Global Climate Change]’, Qinghua Daxue Xuebao [Qinghua University Academic Journal], no. 6, 2008, pp. 120–32. For Chinese government assessments of the impact of climate change on China, see Information Office of the State Council of the People’s Republic of China, ‘White

Paper: China’s Policies and Actions on Climate Change’, October 2008, Section II, http://www.gov.cn/eng-lish/2008-10/29/content_1134544.htm; and PRC National Development and Reform Commission, ‘China’s National Climate Change Program’, June 2007, pp. 16–19, http://www.ccchina.gov.cn/WebSite/CCChina/UpFile/File188.pdf.

49 For examples, see Zhang Liping, ‘Meiguo Weihe Yao Zhengshou Tan Guanshui [Why the US Wants to Levy Carbon Tariffs]’, Shishi Baogao [Report on Current Affairs], no. 9, 2009, pp. 59–60; Liu Dongguo, ‘Ri Ou Mei Xin Nengyuan Zhanlue Ji Qi Dui Zhongguo de Tiaozhan [New Energy Strategies from Japan, Europe, and the US and their Challenges for China]’, Xiandai Guoji Guanxi [Contemporary International Relations], no. 10, 2009, p. 38.

50 Author’s interviews with energy specialists at state-run think tanks, Beijing, March 2009; Xie Zhenhua, ‘Speech at Beijing University’s Guanghua School of Management’, 9 January 2010, avail-able in Chinese and English at http://www.chinafaqs.org/blog-posts/what-does-china-think-about-climate-change-and-copenhagen.

51 Shi Hongtao, ‘Nengyuan Anquan Zaoyu “Maliuya Kunju” ZhongRiHan Nengfou Xieshou [Energy Security Runs Up against the “Malacca Dilemma”: Will China, Japan and Korea Cooperate?]’, Zhongguo Qingnian Bao [China Youth Daily], 15 June 2004, http://business.sohu.com/2004/06/15/49/article220534904.shtml.


52 See ‘Hu Jintao’s Address at the G8 Outreach Session’, 17 July 2006, Constantine Palace, St Petersburg, http://www.fmprc.gov.cn/eng/wjdt/zyjh/t26461.htm.

53 See for example ‘Text of Chinese President’s Speech at APEC Summit 22 Nov’, BBC Worldwide Monitoring, 24 November 2008; and ‘Wen Jiabao Zhuchi Zhaokai Guowuyuan Changwu Huiyi [Wen Jiabao Presides Over State Council Executive Meeting]’, Renmin Ribao [People’s Daily], 19 December 2008.

54 Wen Jiabao reported in March that China reduced the energy intensity of its economy by 14.38% in the first four years of the 11th five-year plan. See Wen Jiabao, Report on the Work of the Government, delivered at the Third Session of the Eleventh National People’s Congress, 5 March 2010, http://online.wsj.com/documents/WorkReportEnglish.pdf.

55 Keith Bradsher, ‘China Leading Global Race to Make Clean Energy’, New York Times, 31 January 2010, http://www.nytimes.com/2010/01/31/business/energy-environment/31renew.html.

56 China also reiterated its 15% renew-able energy target, as well as previously announced targets for increasing forest cover and forest volume. The text of the announce-ment is available on the website of China’s State Council at http://www.gov.cn/ldhd/2009-11/26/content_ 1474016.htm.

57 See for example Michael Levi, ‘Assessing China’s Carbon-Cutting Proposal’, Expert Brief, Council on Foreign Relations, 30 November 2009, http://www.cfr.org/publication/20862/

assessing_chinas_carboncutting_ proposal.html.

58 ‘Statement of the China Energy Group, Lawrence Berkeley National Laboratory on China’s Recently-Announced Carbon Intensity Target’, Environmental Energy Technologies Division, Lawrence Berkeley National Laboratory, 15 December 2009, http://china.lbl.gov/news/statement-china-energy-group-lawrence-berkeley-national-labora-tory-china%E2%80%99s-recently-announced-c.

59 ‘Hu Jintao Qiangdiao Jinyibu Zuohao Yingdui Qihou Bianhua Ge Xiangmu Gongzuo [Hu Jintao Emphasises the Need to Successfully Complete Every Project in Climate Change Work]’, Xinhua News Service, 23 February 2010, http://news.xinhuanet.com/poli-tics/2010-02/23/content_13034269.htm; Stephen Chen, ‘Politburo Set on Carbon Emissions Target; Party Leaders Rule out Further Debate on Goal Promised at Copenhagen Meeting’, South China Morning Post, 26 February 2010.

60 See for example Ross Garnaut, The Garnaut Climate Change Review (Cambridge: Cambridge University Press, 2008), pp. 207, 209.

61 On China’s diplomatic manoeuvr-ing at Copenhagen, see Kenneth Lieberthal, ‘Climate Change and China’s Global Responsibilities’, John L. Thornton China Center, The Brookings Institution, 23 December 2009, http://www.brookings.edu/opinions/2009/1222_china_climate_lie-berthal.aspx.

62 On the pronounced weakness of China’s energy-governance system, see Erica Downs, The Brookings Foreign


Policy Studies Energy Security Series: China (Washington DC: The Brookings Institution, December 2006), pp. 16–24; and Edward A. Cunningham, ‘China’s Energy Governance: Perception and Reality’, MIT Center for International Studies, Audit of the Conventional Wisdom Paper Series, March 2007.

63 On the inadequacy of the National Energy Administration, see Downs, ‘China’s “New” Energy Administration’, pp. 42–5. On the National Energy Commission, see Julian Wong, ‘The National Energy Commission: Myth-busting the “New Energy Super Ministry”’, 9 February 2010, http://greenleapforward.com/2010/02/04/the-national-energy-commission-myth-busting-the-new-energy-super-ministry/#more-260.

64 On downstream oil prices, see ‘China Explains Details of New Oil Pricing Mechanism’, and ‘Analysis: China’s Product Oil Pricing Mechanism Needs to be More Sensitive to Markets’, Xinhua Economic News Service, 10 May 2009 and 12 March 2010, respectively. Note that China was expected to unveil price reforms for natural gas earlier this year, but as of this writing had not done so. See ‘China Delays Gas Price Reform on Dispute over Pricing Measures’, Xinhua Economic News Service, 18 March 2010.

65 On China’s activities in the Gulf of Aden, see Gaye Christoffersen, ‘China and Maritime Cooperation: Piracy in the Gulf of Aden’, lecture deliv-ered at the International Conference on Comprehensive Security in the Asia-Pacific Region, 30 November–1 December 2009, Tokyo, Japan, http://

www.isn.ethz.ch/isn/Digital-Library/Publications/Detail/?id=111041.

66 David G. Victor and Linda Yueh, ‘The New Energy Order: Managing Insecurities in the Twenty-first Century’, Foreign Affairs, vol. 89, no. 1, January–February 2010, pp. 61–73.

67 Note that the World Bank called for these and other measures in a 2007 report that was published in coopera-tion with China’s State Council. See Noureddine Berrah, Fei Feng, Roland Priddle and Leiping Wang, Sustainable Energy in China: The Closing Window of Opportunity (Washington DC: World Bank, 2007), esp. pp. 163–5.

68 On this point, see Alex Wang, ‘Environmental Enforcement Ideas from Sunny California. Episode #1 – Give MEP Stronger Authority over Local Environmental Performance’, Greenlaw, 23 February 2009, http://www.greenlaw.org.cn/enblog/?p=655.

69 On China’s fuel-economy standards, see Hongyan H. Oliver, Kelly Sims Gallagher, Donglian Tian and Jinhua Zhang, ‘China’s Fuel Economy Standards for Passenger Vehicles: Rationale, Policy Process, and Impacts’, Discussion Paper 2009-03 (Cambridge, MA: Belfer Center for Science and International Affairs, March 2009). On recent improve-ments in the United States, see ‘Obama Speeds Up Fuel Economy Standards, Sets First Carbon Limit’, Bloomberg.com, 19 May 2009. For an international comparison of fuel-economy standards, see the website of the International Council on Clean Transportation at http://www.theicct.org/reports_live.cfm.


China’s New Energy-Security Debate - Crawford School of ... · China’s New Energy-Security Debate | 139 Middle East, crossing the Indian Ocean and passing through the narrow Malacca

Documents