Oil obsession

Energy appetite fuels Beijing’s plans to protect vital sea lines

The reason for skyrocketing gasoline prices isn’t the greed of oil-company executives — it’s something over which we have even less control: the Chinese economy.

China’s spectacular economic growth over the past two decades is a commonplace observation, but its familiarity doesn’t make it trivial. Indeed, it is the salient strategic fact of the 21st century. And every positive consequence of China’s rise — lifting Chinese people out of poverty, the hopes that the People’s Republic will become, in the Bush administration’s words, a “stakeholder” in the international system — has a potential downside.

The risk that China and the U.S. will clash over sources of fossil fuels in the Middle East and the other oil-patch states that are not models of stability or representative governance has increased. For China’s general economic growth has been matched by its spiraling demand for energy and an exponential increase in the number of Chinese automobiles. Since becoming a net oil importer in 1993, China has come to depend on foreign suppliers for 40 percent of its oil supplies, and, according to the International Energy Agency, will import some 80 percent of its oil supply by 2030.

This central fact has become a near-obsession for the Chinese leadership; almost as important as President Hu Jintao’s recent visit to Washington were his further stops in Nigeria — where China’s state oil company just completed a $2 billion deal — and Saudi Arabia. Beijing’s growing dependency on foreign energy supplies casts a shadow over its continued economic growth and, crucially, the future of a communist government whose legitimacy is tied to that growth’s sustainability. Chinese officials and scholars are concerned that the regime cannot survive a major disruption in imports and have begun taking steps to redress what they view as their greatest vulnerabilities.

In thinking through the problem of their energy insecurity, Chinese strategists are taking a page from the American book. Listening in on the conversations of these strategists as expressed in their internal papers and publications, they sound like no one more than Alfred Thayer Mahan, the godfather of the modern U.S. Navy. Seeing the maritime world through Chinese eyes begins to make sense of what the People’s Liberation Army Navy is doing in its frenetic modernization program.

A focus of Chinese concern has been on the security — or, more properly, the insecurity — of the sea lines of communication (SLOC) upon which almost all of China’s energy imports travel. China’s strategists are aware they do not exercise naval superiority through the seas linking their ports to the major oil producers in the Middle East, and that they remain dependent upon the willingness of other major powers not to disrupt their imports. In November 2003, Hu reportedly used a closed government working session to declare that “certain major powers” were trying to dominate the Strait of Malacca, through which 80 percent of China’s energy imports pass. In response, Hu called for the development of new sources of crude oil and the adoption of measures to overcome what the Chinese media termed China’s “Malacca Dilemma.”

It should come as little surprise that the certain major power Chinese strategists are most suspicious of is the U.S., which exercises control over the major choke points on the world’s SLOCs. As Zhao Nianyu of the Shanghai Institute of International Studies points out in “The Three Major Challenges to China’s Energy Strategy,” in the event of a crisis between Washington and Beijing over Taiwan, the U.S. could blockade the Malacca Strait and hold China’s oil supply hostage. As evidence of such a scenario, Zhao and his colleagues point to the April 2004 “Regional Military Security Initiative” as a first step by the U.S. military to “garrison the Strait” under the guise of “counterterrorist measures.”

Zhao also fingers Japan as one of the major obstacles to Chinese energy security, pointing out that it faces the same “energy bottleneck” in the zero-sum game of energy imports, a dilemma that will worsen over time. And if Japan is viewed as an immediate competitor, Chinese strategists are concerned about India’s intentions as well. In “Will India Become a New Barrier to Obstruct China?” Lan Jianxue of the Chinese Academy of Social Sciences voices his suspicions that the U.S. will use India as a “potential balancing force against China.” Beijing cannot be expected to welcome India’s measures to upgrade its naval facilities at the Andaman and Nicobar Islands or post-Sept. 11 joint patrols of the Malacca Strait with the U.S.

Even if China manages its relations with the great powers, it could still be at risk. Academy scholar Zhang Jie argues in “The Malacca Factor of China’s Energy Security” that the combination of Islamic terrorism and piracy could threaten maritime traffic in the Malacca Strait and even the stability of such Muslim littoral states as Indonesia and Malaysia.

As the U.S. did before it was unable to project global naval power, China’s first line of strategy has been diplomacy. In response to these myriad energy-security challenges, these scholars argue for a range of policies, most of which focus (in the near term) on diplomatic efforts to shore up stability in energy-producing regions and affect energy cooperation with other consumers. The main problem with these proposals is they are conceptually undermined by the paranoia that drives Chinese thinking on energy security.

The Academy’s Zhang Jie, for example, argues that China should oppose deployment of foreign soldiers to the Malacca Strait while developing an “ASEAN+3” (Association of Southeast Asian Nations plus South Korea, Japan and China) framework to maintain security in the Strait. She also suggests China take the lead in creating an “Energy Community” among China, Japan and Korea in order to manage energy competition in northeast Asia.

Likewise, Xia Liping of the Shanghai Institute argues in “The Current U.S. International Energy Strategy and Sino-U.S. Cooperation” that there is great potential for cooperation between the U.S. and China. He argues for a Sino-American led multilateral framework to coordinate international energy policies in order to stabilize international oil-market prices, joint anti-piracy and anti-terrorism efforts to ensure the safety of the SLOCs, and cooperation to develop nuclear energy and clean coal technology. But these ideas are countered by deeply rooted Chinese suspicions about the U.S. and its allies. Zhao of SIIS, for example, argues that the U.S. attempt to dominate the world’s energy artery would doom any prospects of Sino-American cooperation.

? AND BUILD A BIG STICK

China’s mistrust of America’s control of the SLOCs, and global leadership more generally, is on display when Chinese scholars debate long-term “solutions” to the energy-security problem. One part of Beijing’s answer is to build pipelines as an alternative to SLOCs, and the other is to create a 21st century “risk fleet,” a force capable of complicating, if not openly challenging, American maritime supremacy.

The most ambitious proposal is put forward by the Academy’s Zhang Jie, who proposes a comprehensive set of measures to bypass the Strait of Malacca by focusing on energy pipelines and development of the Kra Isthmus of Thailand. While these proposals would avoid the Strait of Malacca, Zhang admits that they remain dependent on the volatile Middle East region and susceptible to the intervention of major powers. Zhang suggests the only real solution that would give China a measure of energy independence is the diversification of energy providers. She credits the May 2004 Sino-Kazakhstan deal that would construct the Atasu-Alashankou oil pipeline between western Kazakhstan with China as a step in the right direction.

What these scholars gingerly avoid is the implicit challenge that their view of energy independence poses to the U.S.-led international system. If China truly does not trust the U.S. and its allies to provide for the security of the SLOCs and is too suspicious to join in common efforts over the long term, it must develop the military capabilities to challenge them.

Western analysts have documented China’s naval buildup over recent years, and some have suggested that China is attempting to develop naval capabilities that would allow it to provide security for its oil shipments and project power into the Indian and Pacific oceans. Some Chinese analysts refer to a shift in naval strategy from coastal and littoral defense to “maritime defense capabilities,” a goal Americans recognize as a blue-water navy. The key components of this navy appear to be an increasingly robust nuclear submarine force and exploration of an aircraft carrier. The Pentagon also identifies a Chinese “string of pearls” strategy, consisting of a network of naval ports and military relationships that project Chinese sea power into the Indian Ocean and the Middle East.

THE NEXT CHINESE CHALLENGE?

At the end of the 19th century, Mahan was taken with the link between great power status and sea control. He argued that for a commercial power — even a continental one — sea control and power projection were essential to secure access to foreign trade. His ideas were taken up by nationalists such as Teddy Roosevelt and Henry Cabot Lodge, and America embarked on the construction of a battleship navy that could compete with that of England.

By the Spanish-American War, that Navy contributed mightily to the acquisition of new American possessions stretching to the Philippines. Americans cheered as our Great White Fleet made its way around the world in a show of strength. A few years ago, the Chinese navy made a similar round-the-world expedition, to the delight of Chinese nationalists.

The combination of perceived military necessity and an intense sense of national pride may already be leading China to its own variant of sea control. American offers of cooperation or, as international-relations theorists put it, attempts to “reduce security dilemmas,” may well be overpowered by the nationalist instinct to control one’s own trade. If that is the case, attempts to convince China not to compete with America for sea control may be akin to convincing Roosevelt that America did not need a blue-water navy.

DAN BLUMENTHAL is a resident fellow in Asian studies, and JOSEPH LIN is a researcher at the American Enterprise Institute.