Energy Security in China | Energy Management

In this article we will discuss about:- 1. China’s Growing Import of Oil and its Impact on Prices 2. Energy, Stability and Security 3. Sino-Japanese Energy Competition 4. Dispute in the East China Sea 5. Potential International Conflicts 6. Central Asia- The New Great Game 7. Middle East-China Expands Relations, US Pulls Back 8. Russia’s Revival of the Strategic Triangle and Other Details.

China’s Growing Import of Oil and its Impact on Prices:

A notable feature of 2004 was its volatility in oil prices – New York light sweet crude prices reached a peak of US$55.67 on 25 October ending the year upto 33.6 per cent at US$43.45 per barrel. While a number of supply-side and supply-chain factors have contributed to this situation, the most significant long-term factor contributing to rising oil prices is an increase in Asian demand, most notably from China. China’s unprecedented growth not only makes it a driver of a long- term increase in energy prices, but also the most vulnerable to rising oil prices.

China, which has been a net oil importer since 1993, is the world’s number two oil consumer after the US and has accounted for 40 per cent of the world’s crude oil demand growth since 2000. China’s proven oil reserves stand at 18 trillion barrels and oil imports account for one-third of its crude oil consumption.

China has initiated numerous policies to cope with its increasing energy needs, including stepping up exploration activities within its own borders, diversifying beyond oil to access other energy resources such as nuclear power, coal, natural gas and renewable energy resources, promoting energy conservation and encouraging investment into energy-friendly technologies such as hydrogen-powered fuel cells and coal gasification.

China has also joined the United States and Japan in developing strategic petroleum reserves, with the creation of 75 days of emergency reserves in four locations in Zhejiang, Shandong and Liaoning provinces.

Energy, Stability and Security:

Nevertheless, in the presence of sporadic power shortages, growing car ownership and air travel across China and the importance of energy to strategically important and growing industries such as agriculture, construction, and steel and cement manufacturing pressure is going to mount on China to access energy resources on the world stage.

As a result, energy security has become an area of vital importance in China’s stability and security. China is stepping up efforts to secure sea lanes and transport routes that are vital for oil shipments and diversifying beyond the volatile Middle East to find energy resources in other regions such as Africa, the Caspian, Russia, the Americas and the East and South China Sea region.

However, just as China has for centuries engaged in competition for leadership of Asia, the developing world and status on the world stage, the need for energy security has now raised the possibility of further competition and confrontation in the energy sphere.

This competition has so far been limited to the economic sphere through state-owned oil and gas companies such as China Petroleum & Chemical Corporation (Sinopec), China National Petroleum Corporation (CNPC), its subsidiary Petro China and China National Offshore Oil Corporation (CNOOC).

However, as oil price rise and since China imports an increasing amount of its energy needs, the competition is likely to spill over into the political and military spheres. There are already indications of there. China’s quest for energy resources on the world stage is creating a destabilising effect on international and regional security.

Fuelled by the lack of a coherent multilateral approach to energy security in Asia and by China’s already tense relations with neighbouring states, the competition for energy resources may prove to be the spark for regional and international conflict. In many cases, China is vying for energy resources in some of the most unstable parts of the world. Its involvement in regions with raging conflicts could potentially draw it into the disputes, escalating a regional conflict into an international conflict.

Sino-Japanese Energy Competition:

While Sino-Japanese trade has reached unprecedented levels in recent years, the economic progress could be unravelled by political and military confrontation and by energy competition. China continues to have tense relations with Japan as a result of a number of issues.

These issues include, but are not limited to, Chinese opposition to a Japanese permanent seat on the UN Security Council, former Taiwanese President Lee Teng Hui’s visit to Japan at the end of 2004, and Japanese Prime Minister Junichiro Koizumi’s annual visits to the Yasukuni Shrine that honours war-dead including 14 Class A war criminals.

There has also been discussion in Japan about cutting its overseas development assistance to China in the presence of China’s improving standard of living, high growth levels and confrontational relations with Japan. These tensions are likely to be further enflamed by both states’ quest for energy security. Both states are net oil importers with Japan importing as much as 80 per cent of its oil needs.

In an attempt to access energy resources closer to home and diversifying beyond the Middle East, Japan and China have been actively lobbying Moscow for an oil pipeline. Beijing is pushing for a 2’400-kilometre route from Angarsk in Siberia to Daqing in China’s northeast Heilongjiang province while Tokyo favours a 4’000-km pipeline from Taishet to the Pacific port of Nakhodka.

The Japanese-backed proposal was announced the winner at the end of 2004. However, at times with the tense relations between Japan and Russia, as seen most recently over Japanese Prime Minister Koizumi’s sail around the disputed Northern Territories/Southern Kurils on 2 September, and Japan and Russia not having signed a formal peace treaty ending the hostilities of World War II, the construction of the pipeline may still experience several delays. Furthermore, China is not yet out of the picture as there are still discussions to build a branch from the Japanese pipeline to China by 2020.

Dispute in the East China Sea:

Closer to home, a territorial dispute between China and Japan in the East China Sea, which both sides claim as their Exclusive Economic Zone (EEZ), is being further fuelled by reports of vast supplies of oil and gas in the region. The disputed territory includes the Diaoyu or Senkaku islands and the Chunxiao gas field northeast of Taiwan, which according to a 1999 Japanese survey holds 200 billion cubic meters of gas. Japan regards the median line as its border while China claims jurisdiction over the entire continental shelf.

In 2003, China began drilling in the area after the Japanese rejected a Chinese proposal to develop the field jointly. Although the Chunxiao gas field is on the Chinese side of the median line, Japan claims that China may be siphoning energy resources on the Japanese side. The competition recently took the form of a military confrontation following the incursion of a Chinese nuclear-powered submarine into Japanese water off the Okinawa islands on 10 November 2004.

The intrusion was followed by a two-day chase across the East China Sea. While China offered a swift apology for the incursion, this was soon followed by the intrusion of a Chinese research vessel into Japanese water near the island of Okinotori. The vessel is believed to have been surveying the seabed for oil and gas drilling purposes.

This was the 34th maritime research exercise by Chinese vessels within Japan’s EEZ in 2004, up from eight in 2003, with China not giving prior notification in 21 of the 34 cases. Adding to these tensions is Japan’s shift from its post-war pacifist and defensive posture towards a more active military role in the region, as seen with the current deployment of its Self Defence Forces to Iraq.

Furthermore, Japan has for the first time identified China as a potential security threat in its National Defence Programme Outline released in December 2004. Three issues have been identified that could spark a conflict between China and Japan- natural resources in the disputed East China Sea, the disputed status of the Senkaku or Diaoyu islands and Japanese support for the US in a conflict with China over Taiwan.

Mistrust and animosities rooted in Japanese atrocities during World War II combined with a confrontation over tangible issues such as territory and energy resources and a more active role by both states on the world stage creates a recipe for a volatile situation.

Securing Sea Lanes:

To China’s south, another long-standing maritime territorial dispute in the South China Sea over the Spratly and Paracel islands threatens to be further enflamed by China’s quest for energy security. The 130 islands making up the Paracel islands, which have been occupied by China since 1974, are also claimed by Vietnam and Taiwan.

The 400 islands of the Spratly islands are claimed partially by the Philippines, Brunei, and Indonesia, and are fully claimed by Vietnam, Taiwan and China. Relations between China and the Association of Southeast Asian Nations (ASEAN) have improved with China signing up to ASEAN’s Treaty of Amity of Friendship and Cooperation in 2003 and all sides signing the Declaration of the Conduct of Parties in the South China Sea in 2002.

Nevertheless, tension remains. In violation of the 2002 agreement, five states have permanent military garrisons on the atolls in addition to surveillance facilities under the guise of ‘bird watching’ towers, weather huts and tourist facilities. The fact that Taiwan is not a signatory to any of these agreements is also a cause for concern. A particular source of tension derives from the sometimes volatile relations between China and Vietnam.

Most recently, China has commenced joint pre-exploration studies with the Philippines in the South China Sea, which has been openly opposed by Vietnam. China, meanwhile, has protested to Petro Vietnam welcoming international bids for drilling and exploration activities in the disputed water and Vietnam starting commercial flights and tours of the disputed territory.

Both states have engaged in sporadic clashes on atleast four occasions, the most violent of which took place in 1988 in which the Chinese sank three Vietnamese naval vessels, killing 76 sailors. Sino-Vietnamese tensions have recently taken a back seat to the burgeoning trade relationship between both states, with China now becoming Vietnam’s third largest trading partner.

A hotline was also established between both states in August 2004 as part of a commitment to resolve land and sea border disputes by peaceful means. However, as China expands its naval power projection capabilities and becomes increasingly desperate to access potential energy resources in the region, conflict may once again overtake cooperation.

Potential International Conflicts:

These regional territorial disputes also have the potential to escalate into international conflicts, given the importance of the waterways to international trade and the number of bilateral security commitments between regional states and major world powers, such as between the US and the Philippines, Singapore and Thailand, and between numerous Western powers and their former colonies (e.g., the British to Malaysia and Singapore, French to Vietnam).

For example, following the Chinese occupation in February 1995 of the Mischief Reef, which is 216 kilometres west of the Philippine islands of Palawan, the US conducted naval exercises with the Philippines close to the disputed territory. The joint exercises may be regarded as a warning to China’s increasingly aggressive posturing in the region.

Also in Southeast Asia, China is pushing to secure the narrow Straits of Malacca, which experiences 40 per cent of the world’s piracy. As much as 80 per cent of China’s oil imports flow through the 1008-km-long straits, which is just 2.4 km wide at its narrowest point.

Like Japan and the US, China is pushing to acquire a national fleet of Very Large Crude Carriers, or VLCCs, that could be employed in the case of supply disruptions brought on by an accident or terrorist attack along the Malacca Straits or a US-led blockade during a conflict over Taiwan. Currently, only ten per cent of China’s crude oil imports come aboard Chinese vessels.

China’s growing anxiety over the security of its oil imports was demonstrated in June 2004, when China conducted its first anti-terror exercise simulating an attack on an oil tanker. China is also looking into bypassing the straits with discussions for a pipeline to Myanmar as well as possibly Bangladesh, Pakistan or Thailand.

Pakistan looks like an unlikely candidate given the threat of terrorist attacks on pipelines traversing its territory. A pipeline through Bangladesh would have to cross the territory of strategic competitor India. Increasing sectarian violence in southern Thailand coupled with the country’s close relationship with the United States making a pipeline through Thailand is unlikely as well.

This leaves Myanmar as the most likely option, with a 1250 km pipeline from the deep-water port of Sittwe on the Bay of Bengal to Kunming in Yunnan province. Coupled with India’s desire to access energy resources within Myanmar and Myanmar’s proximity to India’s troubled northeast insurgencies, Myanmar has become a potential stage for Sino-Indian energy competition.

Central Asia- The New Great Game:

On its western borders, China has been an active player in the new great game. As part of its ‘Go West’ development policy, China’s longest pipeline, the 4,200km Tarim Basin to Shanghai gas pipeline, came online in August 2004. China’s west-to-east pipeline could potentially be extended to Kazakhstan and Turkmenistan and even further to Iran and the Caspian Sea.

In October 2004, construction began on a 988 km pipeline from Atasu in north-western Kazakhstan to Alataw Pass in China’s Xinjiang province, which will carry ten million tons of oil a year once it is completed in 2005. The Chinese are also helping to develop oil fields in Uzbekistan and hydroelectric power projects in Kyrgyzstan and Tajikistan. China’s growing engagement with Central Asia has been motivated by a number of strategic interests.

China led the creation of the Shanghai Cooperation Organisation (SCO), which began as the Shanghai Five in 1996. This body was formed in the presence of a civil war in Tajikistan, Taliban rule in Afghanistan, a series of terrorist attacks in Xinjiang, and Islamist revivalism in Uzbekistan under the Islamic Movement of Uzbekistan/Turkestan (IMU/ IMT).

The organisation has moved from resolving border disputes to fighting the ‘three evils’ of extremism, terrorism, and fundamentalism and promoting greater economic integration and development in Central Asia and China’s West.

The Central Asian states have agreed to China’s Five Principles of Peaceful Coexistence, as well as subscribing to China’s viewpoint on numerous regional and international issues including Taiwan, Tibet, Xinjiang, and the need for a multipolar world. Under the aegis of the SCO, China has also expanded its military presence in Central Asia, establishing an anti-terror centre in Tashkent and engaging in its first joint military exercises with a foreign army in Kyrgyzstan in 2002.

However, China’s increasing presence in Central Asia has been accompanied by a Russian re-engagement with the region, an increasing US presence following 9/11 as well as an increasing role by India (using its historical links), Saudi Arabia and Pakistan (using their religious links), Turkey and Iran (using their cultural links) and South Korea and Japan (that are relying on economic links to the region). Numerous overlapping power blocs are emerging in the region, spilling over into the energy arena.

For example, improving Sino-Indian relations have manifested in the energy sphere with the chairman of Xinjiang autonomous region, Ismail Tiliwandi, making a trip to India in October 2004 to discuss transport links and a Sino-Indian natural gas pipeline project. With a growing military presence in the region and increasing desperation to access the region’s energy resources, it is conceivable that Central Asia could re- emerge as the stage for future great power conflicts.

Middle East-China Expands Relations, US Pulls Back:

China has also attempted to improve relations with its already-established oil suppliers, such as Saudi Arabia and Iran, by selling them military technology, investing in their industries and energy infrastructure and looking the other way with respect to their human rights records.

Currently, China derives 13.6 per cent of its oil imports from Iran. In March 2004, China signed a US$ 100 million deal with Iran to import 10 million tons of Liquefied Natural Gas over a 25-year period in exchange for Chinese investment in Iran’s oil and gas exploration, petrochemical and pipeline infrastructure.

Growing Sino-Iranian relations are undermining US sanctions against Iran. The Bush administration has sanctioned Chinese companies 62 times for violating US or international controls on the transfer of weapon technologies to Iran and other states.

The US Central Intelligence Agency has submitted a report to the US Congress stating that Chinese companies have “helped Iran move towards its goal of becoming self- sufficient in the production of ballistic missiles”.

In the ongoing controversy over Iran’s uranium enrichment programme, China has also opposed bringing the issue before the UN Security Council and has even threatened to veto any resolution that is brought against Iran. As Saudi-US relations have soured in the post-9/11 world, the Saudi-US strategic partnership may be supplanted by a Sino-Saudi partnership. Saudi oil shipments to the US have been declining in 2004 while increasing to China.

Sinopec has won the right to explore or natural gas in Saudi Arabia’s al-Khali Basin and Saudi Arabia has agreed to build a refinery for natural gas in Fujian in exchange for Chinese investment in Saudi Arabia’s bauxite and phosphate industries. Cooperation in the economic and energy spheres complement an already burgeoning relationship in the military sphere as seen with China selling Saudi Arabia Silkworm missiles during the Iran-Iraq War in the 1980s, and both states having strong relations with Pakistan.

Russia’s Revival of the Strategic Triangle:

Russia is China’s fifth largest crude oil supplier with Lukoil now replacing Yukos as China’s main supplier of Russian oil. China is expected to import atleast 10 million tons of oil from Russia in 2005 and 15 million in 2006 while Russian rail shipment capacity is expected to increase from 20 million tons in 2004 to 60 million tons by 2006. The controversy over the sale of Yugansk, which produces 60 per cent of Yukos’ oil output and pumps 11 per cent of Russia’s oil, has also highlighted the increasing presence of Chinese energy companies in Russia.

While the mysterious buyer, Baikal Finance Group, ended up selling its stake in Yugansk to Rosneft in December, which may be acquired by Russian state-owned Gazprom, this does not preclude the possibility of Yukos’ assets being acquired by China. China’s CNPC has allegedly been offered a 20 per cent stake in Yukos and provided a US$6 billion loan to Rosneft to purchase Yugansk.

China’s support for Russia’s accession into the World-Trade Organisation and growing Sino-Russian trade and cooperation in the fight against terrorism is further cementing Sino-Russian relations. Sino-Russian energy relations appear to be mirroring political and military relations. Just as China increasingly relies on Russian energy resources so it also constitutes Russia’s biggest buyer of Russian military hardware.

Russia and China are also to engage in their largest joint military exercises later this year. Infact, growing Sino-Russian energy cooperation resurrects former Russian Prime Minister Yevgeny Primakov’s idea for a strategic triangle between Russia, India and China.

These states are bound together by their shared interests in the fight against terrorism, the push for a multipolar world, and respect for the principles of state sovereignty and non-intervention with regards to their respective ‘separatist’ movements in Chechnya, Kashmir and Taiwan.

Now, the energy sector can be added to this list of shared interests. India and China are already collaborating in the energy sphere with India holding a 20 per cent stake and China a 50 per cent stake in the development of the Yahavaran oil field in Iran. China Gas Holdings has also established an alliance with India’s largest energy conglomerate, Gail. With India and China vying for assets in Yukos, Sino-Indian-Russian collaboration in the energy sphere could be further cemented.

Africa and the Americas- Entering the US Sphere of Influence:

As China has made limited progress in accessing energy resources on its doorsteps due to poor relations with neighbouring states, it has shown growing interest in accessing energy resources further afield. For example, a consortium 40 per cent owned by China’s CNPC pumps over 300’000 barrels per day in Sudan.

China is also a major supplier of arms to the Sudanese government, which has just concluded a peace agreement with the main rebel group in the south, the Sudan People’s Liberation Movement (SPLM), ending 20 years of conflict sparked over the allocation of oil revenues.

The Sudanese government is still engaged in a conflict in the Darfur region of western Sudan using proxy militias. China is also vying for energy resources in Angola and other energy-rich African states by offering arms and aid for oil. China is also acquiring energy resources in the Americas.

While attending the annual Asia-Pacific Economic Cooperation (APEC) summit in Chile in November 2004, Chinese President Hu Jintao announced an energy deal with Brazil worth US$10 billion supplementing a US$1.3 billion deal between Sinopec and Petrobras for a 2’000-km natural gas pipeline.

China is also acquiring oil assets in Ecuador as well as investing in offshore petroleum projects in Argentina. During Venezuelan President Hugo Chavez’s visit to Beijing in December and Chinese Vice President Zeng Qinghong’s visit to Venezuela in January 2005, China also committed to develop Venezuela’s energy infrastructure by investing US$350 million in 15 oil fields and US$60 million in a gas project in Venezuela.

On 20 January, during, Canadian Prime Minister Paul Martin’s visit to Beijing, China and Canada also signed a joint statement on energy cooperation, which included accessing Canada’s oil sands and uranium resources.

China’s growing energy interests in the Americas have been accompanied by a growing involvement in the region’s security. In October, China sent a UN peacekeeping contingent to Haiti in its first military deployment to Latin America. Ironically, Haiti is one of only 25 states that recognise Taiwan rather than China.

The US is looking on with caution as China encroaches upon a region that has traditionally been under its sphere of influence and a major supplier of energy resources. Venezuela and Canada together provide the US with a quarter of its energy imports.

Energy as the Catalyst for Conflict:

Friction between China and the West has so far focused on the question of China’s undervalued exchange rate, its human rights record and relations with ‘rogue’ states. However, the competition over energy resources is now becoming an additional area of contention. China’s growing presence on the international energy stage could ultimately bring it into confrontation with the world’s largest energy consumer, the US.

While China and the US have launched the US-China Energy Policy Dialogue, both states are also engaged in a competition for energy resources in Russia, the Caspian, the Middle East, the Americas and Africa. This competition could potentially combine with other areas of friction.

For example, in the event of China engaging in a conflict with Taiwan, Japan or India or internal repression such as a repeat of the Tiananmen Square massacre of 1989, the US could censure China’s actions by an oil embargo or by blocking vital sea lanes in the Straits of Malacca, thus sparking a wider conflict.

It is not by coincidence that China has made progress in resolving its border disputes with India and Russia, while failing to make progress on territorial disputes with Japan in the East China Sea and in the South China Sea given that the latter involve access to potential oil and gas resources.

In this context, China’s claim to pursuing a ‘peaceful ascendancy’ policy and putting aside areas of disagreement in favour of creating a stable environment for economic development is limited to areas where China’s vital strategic interests are not threatened.

China-America Energy Competition in Africa:

With oil prices hitting record levels of US$70 per barrel in recent weeks, major energy-consuming countries are engaging in an increasingly heated competition for energy resources on the world stage. Nowhere is this more evident than between the United States and China, the world’s first and second-largest energy consuming countries respectively.

In the contest for energy resources, numerous ‘stages’ of competition are emerging, including the Middle East, Central Asia; Latin America, and tie East and South China Seas. However, Africa is fast emerging as one of the most volatile stages of Sino-US energy competition, given its vast reserves of energy resources and concentration of internal security crises.

Africa owns about eight per cent of the world’s known oil reserves with Nigeria, Libya and Equatorial Guinea as the region’s leading oil producers. Seventy per cent of Africa’s oil production is concentrated in West Africa’s Gulf of Guinea, which stretches from the Ivory Coast to Angola. The low sulphur content of West Africa crude makes it of further strategic importance.

However, the region is also vulnerable to instabilities ranging from piracy to terrorism, interstate and tribal conflict, AIDS and politic uncertainties. Given the weak governments and significant Muslim populations of the region, the African continent may also emerge as a hub for al-Qaeda-linked terrorist groups.

Finally, oil-rich countries in Africa have been unable to escape the ‘curse of oil,’ which has fuelled corruption, conflict, and environmental degradation across the region. For instance, while Nigeria has earned US$ 300 billion in oil revenues over the last 25 years, per capita income remains below US$1 per day.

Nigeria is also subject to ethnic violence, oil strikes and sporadic attacks on oil infrastructure by the Niger Delta People’s Volunteer Force. Adding Sino-US energy competition to this volatile mix could further destabilise the region.

US-Africa Energy Relations:

The US currently derives 15 per cent of its oil supplies from Africa as compared to 22 percent from the Persian Gulf.

Within the next ten years, the US could be depending on Africa for a quarter of its oil supplies, according to the US National Intelligence Council, Nigeria alone is the fifth-biggest source of US imports with the United States accounting for half of Nigeria’s oil exports. Washington has also re-established diplomatic and energy relations with Libya following the removal of economic sanctions in September 2003 after Libya abandoned its nuclear weapons programme.

In addition to securing energy supplies in the region, the US has a burgeoning economic relationship with the region and has been increasingly concerned with Africa’s security situation, political freedoms and human rights record. US- Africa trade stood at US$44.5 billion in 2004 with oil-rich Nigeria being the second-largest source of US investment after South Africa.

Since the September 11 attacks, the US has also stepped up security cooperation with African states. The US Coast Guard has increased patrols of the region as well as engaged in training, intelligence-sharing and public relation exercises with numerous states including Sao Tome and Principe, Cape Verde, Ghana, Benin, and Equatorial Guinea.

Meanwhile, the US State Department’s Trans-Sahara Counter Terrorist Initiative has trained troops in Niger, Mauritania, Mali and Chad. The US also maintains a military base in Djibouti from where it coordinates anti-terrorism operations on the continent.

Nevertheless, with military assets tied up in Afghanistan, Iraq and the Persian Gulf, the US has not been able to devote the necessary attention to Africa, which in turn has allowed other countries such as China to make further inroads.

Sino-African Energy Relations:

China currently derives a quarter of its oil imports from Africa, with oil interests in Algeria, Angola, Chad and Sudan are increasing stakes in Equatorial Guinea, Gabon, and Nigeria, China’s energy interests in Chad are of particular interest given that Chad still maintains diplomatic relations with Taiwan.

China’s growing energy partnership with Sudan represents one of a number of areas where Sino-US energy interests diverge in Africa. China National Petroleum Corporation established oil exploration rights in Sudan in 1995. Two years later when Washington cut ties with Sudan, China filled the vacuum, making Sudan China’s largest overseas production base.

More than half of Sudan’s oil exports go to China, accounting for five per cent of China’s total oil imports. C.N.P.C. owns a 40 per cent stake in the Greater Nile Petroleum Operating Company and pumps more than 300,000 barrels per day in Sudan. Another Chinese firm, Sinopec, is constructing a 1500 kilometre (932 miles) pipeline to Port Sudan on the Red Sea, where China’s Petroleum Engineering Construction Group is building a tanker terminal.

As in the case of US relations with Africa, China’s relations with Africa are multidimensional. However, in recent years, China’s political, economic and military relations with Africa have been subordinated to its quest to secure energy resources in the Africa continent as energy resources are being secured in exchange for aid, arms or infrastructure investment.

China’s goodwill with African states can be traced back to its support for anti-colonial struggles in the 1960s. However, China’s relations with Africa have shifted from holding a strong ideological bias in support of communist regimes and Marxist insurgencies to being led by market and resource considerations.

Today, the only ideological component to Sino-African relation is the One China principle, although there are even exceptions to this as seen in the case of growing Chinese energy interests in Chad, which still has diplomatic relations with Taiwan. At present, only seven African states hold diplomatic relations with Taiwan.

African states are also drawn to China by its non- ideological, non-interventionist approach, which contrasts with the Western approach that places an emphasis on democracy, governance, human rights and humanitarian intervention.

China has also appealed to Africa through numerous goodwill gestures. For example, the Chinese foreign minister has maintained a policy of making his first official overseas trip to the African continent every year.

For decades, China has also supported numerous infrastructure projects across Africa, as well as sending doctors and nurses to the region, establishing scholarships for African students to study in Chinese universities, providing training to African businessmen and trade officials, and supplying funds to encourage Chinese businesses to invest in Africa.

China also maintains dialogue with Africa through several bilateral and multilateral forums such as the Asia-Africa Summit and the China-Africa Business Council, which was jointly established with the United Nations Development Programme in November 2004 to support China’s private sector investment in Cameroon, Ghana, Mozambique, Nigeria, South Africa and Tanzania.

In 2000, China also initiated the China-Africa Cooperation Forum comprising 46 of the 53 African countries. Among its accomplishments is cancelling US$1.2 billion in debt for 31 African countries. China is also engaged in negotiations to create a free trade area with the Southern African Customs Union, as well as coordinating with African states in international organisations such as the World Trade Organisation and United Nations.

On the economic front, Sino-Africa trade increased by 50 per cent between 2002 and 2003 to US$18.5 billion, which is expected to grow to US$30 billion by 2006. At present, 700 Chinese companies operate in 49 African countries and eight African countries have been granted the status of ‘officially approved travel destinations’ by China.

China has also expanded its military presence in the region as seen by its deployment of peacekeepers to Liberia in December 2003, which occurred two months after Liberia switched its diplomatic recognition from Taiwan to China. China has also sent a peacekeeping contingent to the Democratic Republic of Congo, as well as provided uniform to Mozambique’s army, helicopters to Mali and Angola, and weapons to Namibia and Sierra Leone.

Many of China’s diplomatic initiatives in Africa are in direct conflict with US policy towards the region. For example, Beijing supplied US$1 billion in arms to both Ethiopia and Eritrea during their war from 1998 to 2000. Zimbabwe’s President Robert Mugabe, whose regime has been isolated from the West due to its forced eviction of slum dwellers and white farmers, has also turned to China for aid.

Chinese investment in Zimbabwe amounted to US$600 million in 2004. China has upgraded Zimbabwe’s transport infrastructure, provided roofing material for Mugabe’s US$9 million palace, and provided the regime with Chinese-made Karakoroum military trainer jets, MA60 passenger planes and radio-jamming equipment for a military base outside Harare, which has been used to block transmissions by opposition parties.

China is also one of Sudan’s leading arms suppliers. Sudan is the largest recipient of Chinese overseas investment and up to 10,000 Chinese nationals work in the country. The Sudanese government, which has recently concluded a peace agreement with the Sudan People’s Liberation Movement/Army (S.P.L.M. /A.) in the south, is still engaged in a conflict in the Darfur region of western Sudan using proxy militias such as the Janjaweed.

In 2004, the UN Security Council was forced to water down a resolution condemning atrocities in the Darfur region to avoid a Chinese veto. China abstained in the vote over the final weaker resolution. With Sudan and Iran together supplying China with 20 per cent of its oil imports, US attempts to contain these regimes brought into direct confrontation with China’s energy security policies.

The United States and China are not the only states vying for energy resources in Africa. Recently, Korea National Oil Corporation obtained 65 per cent oil and gas production rights in two Nigerian offshore blocks, while India’s Oil and Natural Gas Corporation Videsh obtained a 25 per cent stake.

South Korea and India are the world’s fourth and sixth-largest energy consumers- respectively. India and China both hold stakes in the Greater Nile Oil Project in Sudan with India having invested US$700 million in Sudan’s oil sector. China and India have also been engaged in direct competition for African energy resources, as seen in October 2004 when China outbid India to buy an interest in an offshore block in Angola.

Conclusion:

Sino-US relations are going through a cold spell as a result of disputes over US quotas on Chinese-made textiles and China’s military expenditures, exchange rate policy, intellectual property rights infringements, human rights record, and relations with dictatorial ‘rogue’ or anti-US regimes including Iran, Myanmar, Nepal, Uzbekistan and Venezuela.

The recent postponement of the much-anticipated meeting between Chinese President Hu Jintao and US President George W. Bush in Washington as a result of the relief efforts for Hurricane Katrina is likely to add insult to injury among some in Beijing.

While there have been gestures of rapprochement in Sino- US relations such as the recently initiated Sino-US Strategic Dialogue and both states along with India, Australia, Japan and South Korea establishing an energy partnership known as the Asia Pacific Partnership on Clean Development, the competition to secure energy resources on the world stage could fuel their already shaky relationship.

The recent failed bid by Chinese energy company, China National Offshore Oil Corporation, to acquire US Energy Company Unocal is an evidence of this. Facing a plethora of internal crises ranging from poverty to poor governance and civil war, Africa is likely to emerge as a volatile stage of Sino- US energy competition.

African states have been drawn to China by its non-interventionist, non-ideological approach in conducting relations, although China’s attempts to secure energy resources in conflict-ridden states by offering aid or arms-for-oil could heighten instability in the region.