ABSTRACT

The purpose of this paper is threefold: to provide the most up-to-date analysis of China's energy situation; to argue that China's global quest for energy is primarily driven by its rapid economic growth in recent years, out of insecurity rather than a master plan to dominate the world; and thirdly, that China's energy security issues have multiple implications beyond simple economic concerns. The paper seeks to recommend a forward-looking engagement policy to be adopted by other countries, especially OPEC states, Canada, and the United States, in dealing with China's growing energy demands.

INTRODUCTION

When China began to experience energy shortages early in this decade, many Chinese military strategists were concerned about the security of the country's energy supply. A recent book entitled Liberating Taiwan, published by the Chinese Military Publishing House, portrayed a hypothetical conflict scenario set around 2010. The arena is the vast West Pacific region. To break the U.S.- Japan-Taiwan military containment of China, the combined air, naval, and armed forces of the People's Liberation Army (PLA), equipped with newly established carrier battle groups, have destroyed all U.S. military bases in the region, taken control of all strategic sea routes from the Strait of Malacca to the Persian Gulf, and imposed an oil embargo to choke the United States, Japan, Taiwan, and their allies.

The attention paid to strategic oil routes only highlights the fact that energy security is closely linked to China's national security and the nation's future. This paper analyses the relationship between China's economic growth and its energy security concerns, the latest developments in China's energy demands, major policy shifts, and the implications for the rest of the world. In view of the global recession since the second half of 2008, it will also examine the latest Chinese policies in responding to changes in oil prices, and how the latest round of Chinese energy and resources acquisitions, for instance in Africa, are a part of China's overall strategy to strengthen its global financial position while securing further energy supplies.