Op-Ed Contributors

Sating resource appetite

By Hongyi Lai (China Daily)
Updated: 2010-06-14 07:21

China has agreed to a new list of sanctions imposed by the United States on Iran for its nuclear program although the US was forced to dilute some of the toughest sanctions in response to Chinese demands.

As long as it remains reliant on Iranian oil, China, along with Russia, will always come under intense international pressure to cooperate on Iran. It is not within China's interest to look toward Iran as a solution to satisfying its greater oil needs. China cannot afford to cut ties, but nor can it expect to increase supply.

Russia and central Asian countries like Kazakhstan will be major sources of oil to accommodate the increase in Chinese demand. China and Russia are relatively close. They are in agreement over strategic issues such as sanctions on Iran; they share reservations over US foreign policy; China has supported Russia's bid to be a WTO member.

Their dual reliance on strong energy ties in the region will ensure their continued cooperation as they bid, through organizations like the Shanghai Cooperation Organization, to prevent the US from expanding its influence in the Central Asian peripheries.

Increasingly important are the burgeoning ties between China and Latin America, long viewed as the US' backyard. Sinopec has announced it will be increasing its oil imports from Brazil under a multi-billion-dollar loans-for-oil deal, which would take its Brazilian imports to 200,000 barrels a day.

The challenge for China not only lies in identifying stable sources of oil. It is also intent on establishing new ways to ship its oil imports into the country.

Currently, 70 percent of China's oil imports pass through the Strait of Malacca, the main shipping channel between the Indian Ocean and the Pacific Ocean and the shortest route for China's Middle Eastern and African imports.

It is a reliance that China would like to reduce. The Strait of Malacca is plagued by piracy but the real issue is the danger of foreign intervention. If there is a major conflict in the area, a potential blockade could be imposed, stopping Chinese cargo ships from passing through.

China is considering the construction of new pipelines through Myanmar and Pakistan to diversify its import routes. Both require delicate handling. Pakistan's domestic situation is notoriously unstable and China has come under pressure for its strong ties with Myanmar from both Western countries and Asian neighbors.

Alternative routes lie in the South China Sea. Less preoccupied with Taiwan as cross-Straits ties warm, China has looked to increase its naval presence in the South China Sea but it will need to tread carefully. If China is too bold, there will be ramifications for its foreign relations in Asia.

It must also develop alternative energy sources, but these also carry pitfalls. China announced in 2006 that it would aim for 40 Gw of nuclear power capacity by 2020. Yet the China Nuclear Industry Association said China has only managed to develop a third of the uranium required to meet this target.

The race for oil could also become a scramble for uranium reserves in countries such as Kazakhstan, Uzbekistan, Australia and Namibia, and China may need to employ its diplomatic charm offensive on a second front. China's active quest for oil necessitates a wide range of new international initiatives. China will need to manage the external consequences very carefully.

The writer is associate professor with the School of Contemporary Chinese Studies at the University of Nottingham, and author of The Domestic Sources of China's Foreign Policy.

China Forum

(China Daily 06/14/2010 page4)