So much in terms of energy related issues will be driven by the direction the most populated country in the world goes.
China’s Quest for Energy
By Heinrich Kreft
Heinrich Kreft is Senior Foreign Policy Advisor to the CDU/CSU Parliamentary Group in the German Bundestag. He is a former Deputy Head of Policy Planning and Senior Strategic Analyst of the German Foreign Ministry. The views he expresses are his own.
China’s journey in just 25 years from the periphery to the center of the world economy is truly phenomenal. It took both Britain and the United States far longer to achieve the share of global output and trade that China has today.
China’s huge appetite for energy and resources — it is the world’s No. 1 consumer of coal, steel, and copper and as an oil and electricity consumer is second only to the U.S. — has contributed to the soaring of prices on global oil and commodity markets. At the same time, cheap Chinese goods of high and ever higher quality are flooding world markets and endangering jobs both in industrialized countries in the North and developing countries in the South. China features increasingly often on the agenda of U.S. congressional hearings and is an issue for politicians in European capitals as well as those of many developing countries. The Chinese challenge is of global dimensions. When Japan aspired in the late 1980s to take over from the U.S. as the world’s leading economic player, Washington and Brussels lost no time in responding. The fact is, however, that China’s growing economic and political clout poses a far greater challenge to the international status quo than Japan’s ambitions, which by the early nineties had suffered a severe setback. The rise of China has a global impact in a host of different ways and requires in-depth analysis. The purpose of this article is to examine how China is attempting — notably through an “energy-driven foreign policy” — to secure the fuel supplies it needs and to reflect on the implications this may have for the international community as a whole.
Growing demand for energy
In terms of energy consumption, the People’s Republic of China is now second only to the United States. Its growing appetite for energy is the product of the country’s 25-year-long economic boom, which has seen expanding external trade, rising incomes, a growing population, and increasing urbanization. Demand for energy has soared across the whole spectrum — coal, oil, gas, electricity, hydropower, and other renewables, as well as nuclear power. Thanks to its own vast reserves, coal is currently China’s No. 1 fuel and supplies two-thirds of its energy needs. The rapid pace of economic growth has led to spiraling demand, however, for oil in particular. Following the government’s decision to expand natural gas production, gas is likely in future to play a larger role in meeting the country’s energy needs. With dependence on fuel imports clearly set to increase, the government is making strenuous efforts to enhance security of supply. Beijing’s biggest worry at present is the security of oil supplies. Until recently China was self-sufficient in oil and into the early nineties even exported limited quantities. The country first started importing oil in 1993, and since then imports have risen steeply. Since the mid-sixties China has been Asia’s largest oil producer, producing in recent years some 3.5 million barrels per day (bpd). Despite the expansion of production, demand has continually outstripped supply. From 1984 to 1995 demand leaped from 1.7 million to 3.4 million bpd, and by 2005 it had doubled again to 6.8 million bpd. China overtook Japan as the world’s second largest oil consumer in 2003 and is now the third largest oil importer after the United States and Japan. Today China imports over 40 percent of its oil supplies
