The Waking Dragon

The conventional wisdom-put forward by China itself-is that China never entangles itself in international disputes that do not directly threaten China's national interest.

The conventional wisdom-put forward by China itself-is that China never entangles itself in international disputes that do not directly threaten China's national interest. The Chinese have never sought the kind of global influence that the British, Russians, Japanese, French or Americans have. But it would be shortsighted to assume that the new China will be bound by its history, particularly now that China's national interest demands that it scour the globe in search of new energy suppliers.

The numbers tell the story. China has 21 percent of the world's population but only 1.8 percent of the world's oil supply. Thirty percent of China's domestic oil reserves are located in Xinjiang, a province in which Muslims outnumber Han Chinese and where Beijing's long-term grip on local politics is least sure. A net importer of oil since 1993, China now buys half its daily consumption abroad. China imports twice the amount of oil it did just five years ago, and its demand for oil surged nearly 40 percent in the first half of 2004 alone. For all of 2004, China accounted for about one-third of the increase in world oil consumption. If its oil demand continues to grow at an average rate of 7 percent a year (as it has the last 15 years), China will need 21 million barrels a day by 2022-the same amount consumed today in the United States.

Chinese leaders decided years ago that future domestic political stability would be sustained by Beijing's ability to give its citizens something the Soviet Union and the Warsaw Pact nations never provided their own people: prosperity. Prosperity depends on sustained long-term economic growth, and growth depends on energy. In a world where energy supply is tightening, demand for energy access propels China into areas of the world they have never considered even minimally important to their national interests-areas where Beijing crosses paths and purposes with the United States.

Consider Iran. In November 2004, China signed a "memorandum of understanding" with Tehran, a precursor agreement for the largest energy deal in Iran's history. China agreed to buy 250 million tons of liquefied natural gas over thirty years. Iran will also export 150,000 barrels of crude oil per day to China, once Sinopec, a Chinese state-owned energy company, has developed Iran's Yadavaran field. The deal is valued at $70 billion.

Shortly after, Beijing made public its opposition to any attempt by the United States to use the un Security Council to impose sanctions on Iranian energy in response to Iran's failure to satisfy the UN's nuclear watchdog, the IAEA, that it remains in compliance with the Nuclear Nonproliferation Treaty. Iran has now negotiated a watered-down deal on its nuclear program with three European states, a deal Washington calls inadequate. The White House may yet push the issue to the Security Council-if only to demonstrate the UN's continuing uselessness as a forum for resolving conflict. But China's lucrative new energy deal ensures Beijing won't allow the Security Council to punish Iranian non-compliance. Because it needs the oil and gas, China has now replaced Russia as the major obstacle to effective multilateral pressure on Iran to renounce its nuclear-weapons ambitions and to stop funding terrorist groups in Israel and Lebanon.

China's search for energy has also complicated Washington's efforts to stop what the White House and the United Nations have called a state-sponsored genocide in the Darfur region of Sudan. Darfur sits atop a lot of oil, and the Chinese National Petroleum Corporation holds the largest oil concession there. China whittled down U.S.-sponsored warnings to Sudan to stop the violence in Darfur, changing Security Council threats to "take further action" against Khartoum to the promise to "consider taking additional measures." The change made, China abstained on even this weakened resolution. China has also effectively separated un resolutions on the dispatch of peacekeepers to Darfur from those intended to impose sanctions that would cut off Chinese access to Sudanese energy.

China and the United States already compete for oil in Russia. The United States wants to reduce its energy dependence on volatile countries and regions-the Persian Gulf, Venezuela, Nigeria-by building U.S.-Russian cooperative pipeline projects to move oil across Siberia to the Pacific port of Murmansk, where it can be put on tankers bound for the U.S. west coast. But China wants that oil too and is bidding on it.

China is also competing for Russian energy with Japan, a key U.S. ally and potential counterbalance to Chinese influence in East Asia. Japan imports 80 percent of its oil and has lobbied the Russian government for a 2,500-mile pipeline from Siberia to the Pacific port of Nakhodka. China, in turn, wants a 1,400-mile pipeline from Angarsk to Daqing in China's northeast Heilongjiang province. For the moment, Japan has won the argument. But China is not giving up. It has counter-proposed a branch from the Japanese pipeline to bring Russian oil to China by 2020. The direct competition for Russian oil heightens other already-tense political disputes between Beijing and Tokyo.

China's massive demand growth in key commodities focused on, but not limited to, oil and gas has also sharpened traditional political rivalries elsewhere in Asia. The recent conflicts with Japan in the East China Sea and with Vietnam in the South China Sea have further raised the security temperature. The southern part of the South China Sea contains considerable reserves of oil and gas. There may also be energy deposits in the disputed Spratly Islands. Conflicts among China, Japan, South Korea and Taiwan over sovereignty in these areas are not new. But they are intensifying as China's military assertiveness grows almost as quickly as its demand for oil and gas.

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