Academic journal article Insight Turkey

Growing Links in Energy and Geopolitics: China and the Middle East

Academic journal article Insight Turkey

Growing Links in Energy and Geopolitics: China and the Middle East

Article excerpt

This paper attempts to analyze the expanding energy linkages between China, one of the most dynamic major consumers, the Middle East, a leading petroleum producer, and the CIS, a core non-OPEC emerging producer, not only because they are well established oil exporting regions, but also because of their geopolitical relevance to China as key players in a possible energy corridor linking China with the Gulf at some point in the future. The paper concludes that the economics and geopolitics of energy supply for China dictate different approaches to each of these regions, with the CIS territory ensuring that its energy to be transported across the ocean where China could be vulnerable to potential maritime disruption in the event of serious international disputes, and with the Gulf offering more flexible commercial arrangements.

Introduction

China's energy challenges are monumental. The economy is in the midst of a highly energy-intensive stage of growth, but domestic reserves--especially of oil and gas--are far from adequate to meet burgeoning demand. As a result, the government faces a series of policy challenges: to expand supply while increasing efficiency, to allow fuel prices to increase and risk more social unrest, and to acquire energy assets overseas while China's international conduct is under close scrutiny. If the government fails in any of these delicate tasks, in the medium to long term the resulting energy crunch could pose a serious threat to China's economic growth and political stability--and hence to the global economy as well.

China's dependency on imported energy has surged in recent years and is expected to grow at a similar or increasing rate in the coming decades, driven by an unprecedented industrialization mobilization and urbanization process. As a result, the Chinese leadership feels increasingly insecure and vulnerable as greater dependency has exposed the country to the risks of global supply disruptions, chronic instability in energy exporting regions, and the vagaries of global energy geopolitics. As access to sustainable and secure energy at a reasonable cost is perceived by the leadership as critical for China's continued development, political endurance, and social stability, the energy issue has become a matter of the "high politics" of national security and no longer just the "low politics" of domestic energy policy (1).

Securing energy resources is no doubt a highly political matter. This was the case for Japan before the Second World War. It is also the case for China today with its growing energy demand. Just like other governments with a long history of central planning economy, the Chinese government believes that security is too important to be left entirely to the markets. Instead, it combines governmental approaches with market measures to secure the needed energy, as demonstrated by the ambitious shopping behavior of the Chinese national oil companies and the high-profile energy diplomacy conducted by the government. This is undoubtedly going to have a profound impact on the international market, particularly on the major energy exporters, namely the Gulf, the CIS, and Africa.

This paper attempts to analyze the expanding energy linkages between China, one of the most dynamic major consumers, the Middle East, a leading petroleum producer, and the CIS, a core non-OPEC emerging producer, not only because they are well established oil exporting regions, but also because of their geopolitical relevance to China as key players in a possible energy corridor linking China with the Gulf at some point in the future. The paper concludes that the economics and geopolitics of energy supply for China dictate different approaches to each of these regions, with the CIS territory ensuring that its energy to be transported across the ocean where China could be vulnerable to potential maritime disruption in the event of serious international disputes, and with the Gulf offering more flexible commercial arrangements. …

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