China’s New Energy-Security
Debate
Andrew B. Kennedy
Over the past ten years, China’s soaring demand for energy has complicated its foreign relations on many fronts. China’s growing oil imports
have sparked criticism that this demand puts upward pressure on world
oil prices.1 Investments by China’s national oil companies have vexed
governments trying to isolate regimes such as Iran, Sudan and Myanmar.
China’s growing energy-related interests abroad have raised concerns that
Beijing will build a powerful navy that could challenge the United States
for control of the seas.2 And China, continuing to rely heavily on coal, has
become the world’s top emitter of greenhouse gases.3 As the December 2009
Copenhagen conference revealed, this last development may pose the most
difficult challenge of all.
While Chinese leaders seem increasingly self-assured on the world stage,
Beijing has watched the growth of China’s energy needs with considerable
concern. Indeed, the past decade has seen a surge of interest in the problem
of energy security in China, with a growing number of government officials,
military officers, think-tank experts and academics publicly pontificating
on the subject.4 Traditionally, Chinese commentators have been preoccupied with the country’s mounting oil imports and the external dependence
these imports imply. This focus reflects a wariness of international energy
markets and institutions, which are seen as heavily influenced by the
United States.5 But alternative perspectives have become more noticeable in
Andrew B. Kennedy is a Lecturer in the Crawford School of Economics and Government at the Australian
National University.
Survival | vol. 52 no. 3 | June–July 2010 | pp. 137–158
DOI 10.1080/00396338.2010.494881
138 | Andrew B. Kennedy
China’s domestic energy-security debate in the past five years. While external dependence remains a concern, some Chinese analysts now take a more
sanguine view of the challenge it presents, and have openly criticised many
of Beijing’s more mercantilist policies, urging a more positive approach
to international markets and institutions. At the same time, as the weaknesses of China’s domestic energy system have become more apparent,
an increasing number of analysts have argued that their country’s biggest
energy-security challenge lies not in growing imports, but in internal disarray. In this view, China should worry less about external dependence and
more about reforming its domestic energy sector, making it more reliable,
more efficient and less polluting.
The evolution of China’s thinking about energy security presents an
opportunity for the outside world, and in particular the United States and
its allies, as they respond to China’s rise. To appreciate the nature of this
oportunity, a more thorough understanding of China’s deliberations about
external dependence and domestic energy challenges is needed.
Rethinking external dependence
In the early years of the twenty-first century, most commentators on energy
security in China had a traditional view of what ‘energy security’ means.
Commentary tended to be state-centric, focused on energy supply more
than demand, infused with the belief that insecurity arises from external
dependence, and fixated on oil in particular.6 This preoccupation with oil
was no accident. While coal meets more than two-thirds of China’s total
energy consumption, the country has abundant reserves with which to
meet this demand. In contrast, China became a net oil importer in 1993, and
within a decade it was importing more than a third of its supply.7 At the
same time, renewed tension with the United States over Taiwan from the
mid-1990s highlighted the possibility of conflict with a state that seemed
well positioned to exploit China’s growing reliance on oil imports.
Worries about external dependence remain prevalent, as Beijing has
come to rely more and more on imported energy. China now imports more
than 50% of its oil, and if present trends continue, that figure that may reach
80% by 2030.8 Most of these imports are likely to come from Africa and the
China’s New Energy-Security Debate | 139
Middle East, crossing the Indian Ocean and passing through the narrow
Malacca Strait. China has also recently begun importing natural gas, and
imports are projected to comprise nearly 50% of the country’s gas supply by
2030.9 China is even becoming a net importer of coal, though the country’s
extensive domestic supplies will limit external dependence.10 This growing
reliance on imported energy has increased concern about vulnerability
to supply disruptions and price spikes, whether due to piracy, terrorism,
embargoes or the machinations of other powers. Oil remains the primary
worry, and there is particular concern that the United States, possibly in
concert with India or Japan, could exploit China’s heavy reliance on the
Malacca Strait to cut off oil supplies in a crisis.11
China’s efforts to address the challenge posed by its growing energy
imports have sparked a lively domestic debate that is playing out in several
distinct arenas. For example, the Chinese government has attracted considerable attention for supporting the overseas expansion of its national oil
companies. While the companies themselves are primarily
motivated by commercial considerations, Beijing’s support
for what is known as their ‘going out’ reflects a belief that
oil produced by Chinese companies abroad is a more secure
source than that purchased on international markets.12 This
view was never universally shared, however, and it has come
Oil remains
the primary
worry
under attack from a growing number of more market-friendly
Chinese analysts in recent years.13 In fact, some analysts have charged
that the national oil companies’ overseas investments actually undermine
China’s national interests in some cases. One caustic analysis predicted that
the relentless pursuit of equity stakes in foreign oil fields would inevitably
lead to ‘increasingly intense competition, increasingly scarce opportunities,
and increasingly great risks’.14 Others have charged that China’s foreign
policy has sometimes been hijacked by the national oil companies, whose
investments overseas have pulled the Chinese government closer to states
that are international pariahs.15 The National Development and Reform
Commission, which oversees China’s energy sector, showed sensitivity on
this point when it excluded Sudan from a list of countries in which Chinese
oil companies were encouraged to invest in 2007. Yet in a sign of just how
140 | Andrew B. Kennedy
much difficulty Beijing has controlling its own oil companies, the China
National Petroleum Corporation acquired new assets in Sudan anyway.16
Despite the controversy surrounding China’s overseas energy investments, Chinese leaders remain committed to intervening in commercial
energy deals abroad. In a series of ‘loans for oil’ deals concluded in 2009, for
example, China used its financial clout to facilitate long-term supply agreements and new investments in a number of oil-producing states outside
the Middle East. The deals with Russia and Kazakhstan are noteworthy
because they promise to reduce China’s reliance on seaborne oil imports
while deepening its cooperation with overland suppliers.17 China will rely
heavily on pipelines in both cases, and China has also concluded an agreement with Myanmar to build oil and gas pipelines from the Burmese coast
to China’s Yunnan province.18 While the China–Myanmar oil pipeline will
not transport locally produced oil, it will allow some of China’s imports
from the Middle East and Africa to bypass the Malacca Strait. If the pipelines from Russia, Kazakhstan and Myanmar are all completed and operate
at full capacity, they would carry 1.1 million barrels of oil per day, about
14% of China’s projected imports in 2015.19
Aside from increasing the diversity of suppliers and supply routes,
however, the extent to which these pipelines will enhance China’s energy
security is a matter of dispute. Some Chinese energy analysts doubt that
pipelines are a more secure means of transporting oil than tankers, and
some argue that pipelines are actually less secure since they are immobile
and comparatively easy to disrupt.20 It has also been noted that pipelines
imply a long-term supply relationship and that Russia’s reliability as an
energy supplier remains open to question.21 In fact, Chinese analysts expect
that Beijing and Moscow will continue to wrangle over the specifics of their
agreement, which was reached only after Russia came under pressure from
the global economic crisis.22 Finally, the pipelines currently under construction will meet only a relatively modest fraction of China’s import needs.23 It
is thus unclear how reassuring overland supplies will be for China as its oil
imports continue to grow.
China’s engagement with international energy institutions is also a subject
of debate. Beijing participates in a variety of forums that deal with energy
China’s New Energy-Security Debate | 141
issues at global and regional levels, though not always as a full member
or signatory. Most significantly, China has taken part in various activities
organised by the International Energy Agency (IEA) in recent years as a
‘major dialogue partner’. Although IEA membership has traditionally been
limited to OECD countries, in 2008 the United States expressed support for
China to join the organisation as a non-OECD member, and IEA Executive
Director Nobuo Tanaka has actively sought to bring China into the organisation more fully.24 To date, however, China has not sought to join. Energy
analysts at state-run think tanks in Beijing report continuing misgivings
about joining the organisation, since full membership would require China
to become more transparent in the energy sphere and to give up some
autonomy in the management of its strategic petroleum reserve.25 China has
recently completed filling the first phase of the reserve, which holds roughly
100m barrels of crude (about one month of net imports at current consumption rates), and the government eventually plans to build a national system
that can meet 90 days of net import demand.26 Despite these reservations,
however, some Chinese analysts argue that joining the IEA would amplify
Beijing’s voice on international energy issues, while also reassuring other
states about China’s impact on energy markets and institutions as it rises.27
It thus remains possible that China’s position will become more cooperative
in the future.
Finally, China is debating what kind of presence it needs on the high
seas to ensure access to energy supplies and to protect its other maritime
interests. It is well known that China is actively considering building several
aircraft carriers and associated ships by 2020, with much public support
for the move.28 Yet it remains unclear just how large a navy China will seek
to acquire, and more specifically, what kinds of carriers it might build and
what kinds of missions they would undertake.29 The acquisition of several
medium-sized, conventionally powered carriers would improve China’s
leverage in its territorial disputes in the East and South China seas, helping it
gain control over natural and energy resources in these areas. Some Chinese
naval and energy analysts, however, see the need for naval forces that can
range much more widely and that can compete with the United States for
sea control.30 In fact, officers of the People’s Liberation Army Navy (PLAN)
142 | Andrew B. Kennedy
now cite China’s rising energy imports to call for greater investments in
capabilities for ‘Far Sea Defense’ (yuanhai fangwei) and to assert their service’s centrality in defending the country. Yao Wenhuai, the PLAN deputy
political commissar, has argued that China’s growing dependence on seaborne energy imports means that the navy has a ‘special status and utility’
within China’s armed forces:
Maritime transport and strategic passageways for energy resources have
already become lifelines for the development of the national economy
and society. Particularly for oil and other key strategic supplies, our
dependence on sea transport is very great, and ensuring the security of
strategic seaways is extremely important. We must fully recognise the
actual requirements of protecting our country’s developmental interests
at sea, fully recognise the security threats our country faces at sea, and
fully recognise the special status and utility of our navy in preparing for
military conflict.31
In keeping with this view, Yao argues that it is time for China’s army to
receive a lower proportion of defence spending, and for the navy to ‘bear
the brunt’ of the burden of national defence.
Yet there is also opposition to such a far-reaching naval build-up. Not
surprisingly, there is considerable resistance to the idea of building aircraft
carriers among Chinese army and submarine commanders, who believe the
navy should focus on access denial rather than sea control.32 More broadly,
Chu Shulong of Qinghua University, one of China’s pre-eminent experts on
US–China relations, has criticised the notion that China can or should try to
match US military power, whether to protect the sea lines of communication through which energy shipments flow or for other reasons. In his view,
such a goal would be unrealistic, unnecessary and provocative.33 Taking a
less direct approach, Zhao Hongtu, deputy director of the Institute of World
Economics Studies at the China Institutes of Contemporary International
Relations, has argued at length that the threat of an oil blockade by the
United States is overblown.34 Zhao notes that such a blockade would only
be likely to occur in wartime, that the United States would not be able to
China’s New Energy-Security Debate | 143
insulate itself from the disruption of the world oil market (and the world
economy) that would result, and that it would be impossible to blockade the
Malacca Strait effectively without cutting off oil to Japan and South Korea as
well. Zhao thus sees an American-led blockade of China as unlikely.35
The idea of an ambitious naval build-up has also raised questions to
which China does not yet have answers. Beijing’s recent deployment
of warships to conduct anti-piracy operations in the Gulf of Aden, for
example, has stirred debate among Chinese military analysts over the
kind of overseas support infrastructure the PLAN would need to sustain
operations in the Indian Ocean, as well as how such infrastructure can
be reconciled with China’s long-standing opposition to foreign military
bases.36 Chinese security analysts have also suggested that a comprehensive effort to secure China’s foreign oil supplies would not merely entail
securing the sea lines of communication, but also developing the ability to
intervene in oil-producing states themselves, a capability that China is far
from possessing at present.37 Finally, there is no clear consensus as to how
China should approach Washington and its allies as it expands and modernises the PLAN, with some writers noting opportunities for collaboration
in patrol of sea lines of communication and others emphasising wariness
and competition.38
The challenge within
Even as China debates how to manage its increasing dependence on energy
imports, some officials and analysts are taking a less traditional view of the
energy-security challenge. In particular, they contend that worries about
external dependence have obscured a more important source of national
energy insecurity: China’s unreliable, inefficient and heavily polluting energy
system. In 2003, Chen Xinhua, a former programme manager for China at
the IEA, helped pioneer this point of view, pointing out that ‘energy security
does not only include oil supply’ and arguing that China’s energy-security
efforts ‘must attach importance to internal factors’.39 In recent years, this
critique has become more widespread. In 2007, for example, Zhao Hongtu
of the China Institutes of Contemporary International Relations emphasised
the challenge of cleaning up China’s energy sector:
144 | Andrew B. Kennedy
As for quickly developing countries, compared with the problem of
ensuring adequate supply, the environmental challenges that come from
energy consumption are much more difficult to solve, and the domestic
and international pressure they generate is much greater, and they deserve
greater attention.40
In 2008, Zha Daojiong, a prominent energy-security specialist at Beijing
University, extended this argument, publicly chastising his colleagues for
worrying too much about ‘wars, blockades, and embargoes’. Instead, Zha
argued, more attention should be paid to the many ‘domestic, non-war/
non-adversarial challenges’ that China faces in the energy sphere.41 That
same year, Zhu Chengzhang, who served in China’s
A boom in
heavy industry
caused energy
intensity to rise
Ministry of Energy until it was disbanded in 1993,
argued that ‘electric power security is the most important
energy security problem’ for China.42 Zhu proceeded to
call for a variety of administrative and market reforms
to make electricity generation more reliable and environmentally sustainable. To be sure, these writers are
not completely unworried by China’s growing reliance
on imported oil – there is some concern in this regard,
particularly since price spikes have the potential to undermine China’s economic growth.43 They are more concerned, however, with broadening the
focus beyond oil supplies and directing more attention to China’s internal
challenges.
The emergence of this domestically oriented view of Beijing’s energysecurity challenge is not hard to understand, given how apparent China’s
domestic problems have become over the past ten years. In the first half
of this decade, a boom in heavy industry caused the energy intensity (the
amount of energy consumed per unit of GDP) of the Chinese economy to
rise for the first time in the reform era.44 The booming demand for electricity that ensued led to crippling power shortages across China in 2004,
with shortfalls in 24 of the country’s 31 provinces.45 In early 2008 and 2010,
power shortages again plagued southern and central China. The immediate
cause of these latter failures was severe winter weather, which disrupted
China’s New Energy-Security Debate | 145
coal deliveries to power plants. But the shortfalls also reflected artificially
low, state-set electricity prices, which give power generators an incentive
to keep their on-site coal inventories small.46 Finally, the massive expansion
of China’s energy system in recent years, coupled with its heavy reliance
on coal, has exacerbated the toll that economic development is taking on
China’s environment and people. In 2007, for example, the World Bank
estimated that outdoor air pollution in China was causing between 350,000
and 400,000 premature deaths each year, more than Chinese historians estimate their country suffered in the Korean War. Sensitive to the outrage such
figures could produce, the Chinese government insisted that the World
Bank not publish the figures, citing threats to ‘social stability’.47
China’s booming energy demand has also helped make it the world’s
most prolific emitter of greenhouse gases in recent years. Generally speaking, this development, and the threat of climate change more generally,
has not been a driving force behind new thinking about energy security in
China. While Chinese government reports have made the case that climate
change is under way and that it is already damaging China’s economy, most
Chinese analysts see power supply and local pollution as more pressing
problems.48 But even before the Copenhagen conference a clear sense was
emerging that climate change is altering the international context in which
China operates. Many analysts worry that other countries will impose
‘carbon tariffs’ on Chinese exports if Beijing is seen as insufficiently cooperative on the climate-change issue, a concern that came to the fore after the
US House of Representatives passed legislation authorising such tariffs in
mid-2009.49 More broadly, many Chinese officials and analysts are focused
on the idea that countries are now competing to develop and produce lowcarbon technologies, and there is a determination to see China succeed in
this race.50 In short, while fighting climate change is not the top priority for
most Chinese analysts, the emergence of climate change as a high-profile
international issue is reinforcing the sense that China must modernise, and
even revolutionise, its domestic energy system if it is to prosper.
While China’s top leaders remain concerned about external dependence, it is also clear that their conception of energy security has broadened
considerably in recent years. At a central economic work conference in late
146 | Andrew B. Kennedy
2003, President Hu Jintao reportedly expressed concern about the security
of China’s oil imports, reflecting a traditional conception of China’s energysecurity challenge.51 By 2006, however, Hu was talking about energy security
in broader terms. Speaking at the G8 Summit in St Petersburg, Hu proposed
a ‘new energy security concept’.52 While Hu’s ‘new concept’ called for greater
international cooperation to increase oil and gas supplies, he also stressed
the need to control domestic demand and for ‘sustainable development of
human society’. Hu has continued to tout his new energy-security concept
at subsequent international meetings, and other Chinese leaders, including
Premier Wen Jiabao, have echoed his call for a ‘resource-conserving and
environmentally friendly society’.53
While this rhetoric may sound like self-serving propaganda, it is not
merely cheap talk. Hu and Wen have set demanding targets over the past
several years in an effort to control China’s energy demand and modernise
its system. In late 2005, the leadership set an ambitious goal of reducing
the energy intensity of China’s economy by 20% between 2006 and 2010,
which was then incorporated into the government’s 11th five-year plan.
After a slow start, China has made considerable progress toward this
target, thanks to new regulations and investments that have targeted the
most energy-intensive segments of the economy.54 In 2007, the leadership
set a further goal of generating 15% of China’s energy from renewable
sources by 2020, and it has pursued this target through mandates on power
companies, investments in the power grid and subsidies for consumers.
As a result, China is expected to exceed its renewable-energy goal, and
it has emerged as the world’s leading producer of solar panels and wind
turbines.55
China has also begun to set targets for its greenhouse-gas emissions. In the
run-up to the Copenhagen conference in 2009, the government announced
a voluntary goal of reducing the intensity of China’s carbon-dioxide emissions (that is, emissions per unit of GDP) by 40–45% between 2005 and
2020.56 Critics have charged that this pledge merely extends China’s current
efforts to reduce the energy intensity of its economy out to 2020.57 But while
China could probably accomplish more than it has promised, more important is the fact that its stated goal will require substantial new programmes
China’s New Energy-Security Debate | 147
to increase energy efficiency in enterprises, buildings and transportation,
all of which are likely to be incorporated into the next two five-year plans.58
In fact, Hu Jintao was subsequently compelled to reaffirm the target before
the politburo in an effort to stifle complaints that it was too demanding.59
Although China’s intensity goal will allow its absolute emissions to increase
as its economy does, albeit more slowly, models of climate-change mitigation typically do not assume reductions in China’s absolute emissions until
after 2020.60 In short, China’s pledge is significant, and for the time being
sufficient. Indeed, more worrying than China’s emissions pledge was its
clumsy and uncooperative diplomacy at Copenhagen, where it resisted
efforts to set emissions targets for 2050 and refused to support a call for a
binding global treaty in the coming year.61 China will probably be less maladroit in the future, but it will likely continue to resist external constraints on
its development.
Ultimately, China will have to rely on more than a series of national
targets to address its internal energy-security challenges. Indeed, despite
the progress that has been made in recent years, Beijing has been too slow
to take on some of the more fundamental challenges in energy reform. Most
importantly, the central government’s ability to govern the energy sector
remains too weak.62 While there was talk in 2008 of re-establishing a Ministry
of Energy, a move that would have begun to redress this problem, China’s
leaders have instead created two inadequate entities: the National Energy
Commission and the National Energy Administration. The former is tasked
with overall policy guidance and coordination, while the latter provides the
manpower and expertise for day-to-day work. In truth, neither possesses
the personnel to adequately monitor China’s energy sector and ensure that
central policies are implemented.63 China’s leaders have also been slow
to liberalise downstream prices for oil and gas, as well as electricity rates,
though it has developed a more flexible approach to setting oil prices.64
Notwithstanding these obstacles, however, it is clear that Beijing’s thinking
about energy security has widened considerably over the past decade, and
that external dependence is no longer the sole concern. Given the scale of
the domestic challenges that remain, it is unlikely that this change will be
reversed any time soon.
148 | Andrew B. Kennedy
Engaging China on energy security
China’s changing thinking about energy security represents an opportunity
for the outside world, and in particular, for the United States and its allies as
they respond to China’s rise. While the ability of foreign governments and
organisations to influence Beijing’s approach to energy issues has its limits,
the unsettled nature of China’s domestic debate means that there are real
opportunities to shape how it evolves in the future. Two broad objectives
ought to be kept in mind in this regard.
The first entails shaping China’s approach to external dependence. Beijing
remains uncomfortable with international energy markets and institutions,
and it would prefer not to rely so heavily on other countries to secure the sea lines of communication on which
it depends. These anxieties, in turn, serve to increase
support for policies and proposals that arouse ire in
foreign capitals. China’s support for energy investments
in pariah states, its wariness of deeper cooperation with
the IEA, and its interest in nationalistic naval development plans are all strengthened by Beijing’s distrust
of the international energy order. Washington and its
partners thus have a strong interest in reducing China’s
anxieties about external dependence and increasing its comfort with the
existing system.
Some progress has recently been made in this regard. China’s participation in anti-piracy operations in the Gulf of Aden, for example, has led to
unprecedented interaction and cooperation between the PLAN and other
navies, including that of the United States.65 Yet much work remains to be
Beijing remains
uncomfortable
with
international
energy markets
done, and not just in the military arena. One recent analysis has highlighted
the difficulties of bringing China more formally into the IEA, noting that
some existing members fear that their influence within the organisation
would be diluted as a result.66 In this view, it would be more profitable to
focus on the development of a new institution, which would be more open
to China and which would focus on particularly pressing problems, such
as the development of shared standards for overseas energy investments.
Nonetheless, downplaying the IEA in favour of a new institution would
China’s New Energy-Security Debate | 149
be premature. The biggest obstacle to deeper multilateral cooperation with
China on energy issues lies not in the fears of IEA members, but in Beijing’s
own hesitation. And China is likely to be wary of a new energy institution that aims to regulate how it invests abroad, not only because Beijing
will fear that it is designed to constrain China but also because Beijing’s
control over the national oil companies’ foreign operations is imperfect. In
contrast, it is clear that China’s views regarding deeper cooperation with
the IEA are in flux, and as international interlocutors continue to stress the
benefits of greater transparency and cooperative stockpile management, it
is possible that China will become more interested in joining the organisation in the future. Indeed, it is worth noting that current National Energy
Administration chief Zhang Guobao, who has been particularly wary of
increasing transparency in keeping with IEA norms, is now of retirement
age and will likely be replaced in the next few years. Washington should
thus continue to support Chinese membership in the IEA to make clear that
Beijing is welcome, and it should encourage its allies to voice such support
as well.
Secondly, even as the United States and other powers try to shape Beijing’s
approach to external dependence, they should also find ways to support
those calling for greater attention to China’s internal challenges. This will be
difficult to do. While China’s leaders are clearly concerned about the domestic energy challenges they face, there is no organisation within the Chinese
political system that can effectively champion reform. The National Energy
Commission/Administration combination is a poor substitute for an actual
Ministry of Energy, and the Ministry of Environmental Protection remains
a relatively weak player. Foreign governments should encourage Beijing to
develop the National Energy Administration into a full Ministry of Energy
with sufficient staff and the authority to liberalise downstream prices in the
energy sector.67 For its part, the Ministry of Environmental Protection needs
the authority and resources to enforce central environmental regulations
when local authorities fail to do so.68 Foreign encouragement to strengthen
these institutions must be given carefully, of course, to avoid provoking a
domestic backlash. For that reason, foreign governments should not present
these efforts as demands that are being made upon China, but rather as
150 | Andrew B. Kennedy
offers to help China’s leaders accomplish what they say they want to do:
make China a ‘resource-conserving and environmentally friendly society’.
The US Environmental Protection Agency, for example, recently concluded
a Memorandum of Cooperation with China’s National Development and
Reform Commission to boost the latter’s capability to monitor greenhousegas emissions. Similar agreements might be concluded between foreign
energy ministries and the National Energy Administration, raising its profile
and enhancing its ability to formulate and monitor the implementation of
central energy policies.
International efforts to promote energy and environmental reform in
China will have limited success, however, unless the rest of the world sets a
better example. The United States, in particular, must become a more credible advocate of demand management and pollution control. The Obama
administration’s decision to push health-care reform over energy legislation
in 2009, even as the Copenhagen conference approached, sent an unfortunate signal to Beijing about the president’s priorities. As of May 2010, new
energy legislation was being discussed in the US Senate, offering the administration another opportunity to burnish its green credentials. Yet even if
such legislation becomes law, the United States will still have much work
left to do. American fuel-economy standards are significantly weaker than
China’s and are likely to remain so for some time, notwithstanding recent
improvements.69 More broadly, the medium-term greenhouse-gas emissions target that Washington has proposed (a 17% cut between 2005 and
2020) is less ambitious than those of other industrialised countries. While
this is a concession to domestic political realities, Washington must begin
setting the stage for more ambitious actions after 2020 to take a leadership
role on this issue.
*
*
*
The outside world must strive to keep abreast of China’s changing thinking about energy security. China’s energy-security debate is now broader
and more sophisticated than ever before, and it will undoubtedly continue
to evolve in the future. Whether the specific issue is security of sea lines of
China’s New Energy-Security Debate | 151
communication, IEA membership or climate change, outsiders will better
understand Chinese behaviour if they are up to date on China’s evolving
thinking about what energy security is and how it can be achieved. And
while opportunities to shape China’s debate are not unlimited, keeping up
with its domestic deliberations is essential if other countries wish to influence Beijing’s approach to energy challenges.
Acknowledgements
The author gratefully acknowledges comments, criticism and assistance from Joshua Busby,
Thomas Christensen, Erica Downs, Andrew Erickson, Michael Glosny, Stuart Harris,
Iain Johnston, Donald Keyser, Alexander Liebman, Edward Steinfeld, Haibin Wang and
Andrew Winner. He also thanks the participants in the China and the World Workshop
and the Fairbank Center Director’s Seminar at Harvard University in April 2009.
Notes
1
2
3
4
5
6
7
On the relative contribution of the
United States and China to oil-demand
growth in recent years, see Kenneth
Lieberthal and Mikkal Herberg, ‘China’s
Search for Energy Security: Implications
for U.S. Policy’, NBR Analysis, vol. 17,
no. 1, April 2006, pp. 19–20.
Office of the Secretary of Defense,
Military Power of the People’s Republic
of China 2009, Annual Report to
Congress, pp. 17–18.
Elisabeth Rosenthal, ‘China Clearly
Overtakes U.S. as Leading Emitter of
Climate-Warming Gases’, International
Herald Tribune, 13 June 2008, http://
www.iht.com/articles/2008/06/13/
business/emit.php.
Renmin Ribao electronic database.
Lieberthal and Herberg, ‘China’s
Search for Energy Security’, pp. 13–16.
Erica Downs, ‘The Chinese Energy
Security Debate’, China Quarterly, no.
177, March 2004, p. 23.
BP Statistical Review of World Energy
2009, pp. 8, 11.
World Energy Outlook 2009, pp. 81, 84.
Ibid., pp. 366, 429.
10 Ibid., pp. 90–91.
11 For examples, see Dou Chao, ‘Pojie
Shiyou Kunju [Analyzing and
Explaining the Oil Predicament]’,
Jianzai Wuqi [Shipborne Weapons],
no. 12, 2008, pp. 10–13; Ni Jianmin,
Guojia Nengyuan Anquan Baogao
[Report on National Energy Security]
(Renmin Chubanshe, 2005), pp. 151–2.
Ni Jianmin was head of the Chinese
Communist Party’s Policy Research
Department when the report was
published. No affiliation was given
for Dou Chao. For a more extended
discussion of this concern, see
Andrew Erickson and Lyle Goldstein,
‘Gunboats for China’s New “Grand
Canals”? Probing the Intersection
of Beijing’s Naval and Oil Security
Policies’, Naval War College Review, vol.
62, no. 2, Spring 2009, pp. 55–7.
12 On the motivations behind the
national oil companies’ overseas
8
9
152 | Andrew B. Kennedy
13 14 15 16 17 expansion, and their complex relationship with the Chinese government, see
Trevor Houser, ‘The Roots of Chinese
Oil Investment Abroad’, Asia Policy,
no. 5, January 2008, pp. 141–66.
Author’s interviews with energy specialists at state-run think tanks and the
National Development and Reform
Commission, Beijing, March 2009. For
an example of the traditional view,
see Zhang E, ‘Shiyou Bianju [The
Oil Crisis]’, Zhongguo Shiyou Shihua
[China Petrochem], 15 October 2008,
p. 22. For an example of a more market-friendly view, see Zha Daojiong,
‘Nengyuan Yilai Jinkou Bukepa
[Energy Import Dependence is not
Scary]’, Shijie Zhishi [World Affairs],
no. 9, 2006, pp. 47–9. For an argument
that market-friendly analysts will ultimately prevail in this debate, see Alex
Liebman, ‘China’s Energy Security
in Historical Perspective: Natural
Resources and the Rise of the United
States, Japan, and China’, paper delivered at the ISA Annual Convention,
New York, February 2009, pp. 29–46.
Chen Weidong, ‘Maoyi Nengli:
Guoyou Gongsi de Biran Xuanze
[Trading Capability: State-Owned
Energy Companies’ Inevitable
Choice]’, Zhongguo Shiyou Shihua
[China Petrochem], 1 April 2006, p. 73.
Richard McGregor, ‘Chinese
Diplomacy “Hijacked” by Big
Companies’, Financial Times, 16 March
2008.
Erica Downs, ‘China’s “New” Energy
Administration’, China Business
Review, November–December 2008, p.
43.
On these deals, see Stuart Elliott and
Naubet Bisenov, ‘Chinese Expand
18 19 20 21 22 Presence in Kazakhstan’s Oil Sector’,
Platt’s Oilgram News, 26 November
2009; Nadezhda Roumiantseva,
‘Russia and China Finally Sign
Off on Oil-for-Loans Agreement’,
International Oil Daily, 22 April 2009.
Note that China did not apparently
fix a price for the Russian oil, but is
expected to pay the market price at
the time of delivery. See Wenran Jiang,
‘China Makes Strides in Energy “Go
Out” Strategy’, China Brief, vol. 9, no.
15, 23 July 2009, p. 8.
‘China, Myanmar Sign Pipe Deal’,
International Oil Daily, 30 March 2009.
Erica Downs, ‘China’s Energy Rise’,
unpublished manuscript, 17 June
2009, p. 17. For a recent overview of
China’s pipeline projects, see Andrew
Erickson, ‘Pipe Dream: Beijing Seeks
Land and Sea Energy Security’, Jane’s
Intelligence Review, August 2009, pp.
54–5. For a broader discussion of pipelines in Asia, see Bernard D. Cole, Sea
Lanes and Pipelines: Energy Security in
Asia (Westport, CT: Praeger Security
International, 2008), pp. 52–72.
Author’s interviews with energy
specialists at state-run think tanks,
Beijing, March 2009. For a public and
fairly pessimistic analysis of pipeline
security, see Zhao Hongtu, ‘Maliujia
Kunju yu Zhongguo Nengyuan
Anquan Zai Sikao [Rethinking the
Malacca Dilemma and China’s
Energy Security]’, Xiandai Guoji
Guanxi [Contemporary International
Relations], no. 6, 2007, pp. 40–41.
Ibid., p. 41.
See for example Ma Yujia, ‘China–
Russia Loan-for-Oil Negotiations
Stall on Price’, 19 February 2009,
http://www.china.org.cn/business/
China’s New Energy-Security Debate | 153
23 24 25 26 27 news/2009-02/19/content_17304691.
htm.
China currently has much greater
latitude to meet its demand for
natural-gas imports through pipeline
deliveries, given its lesser import
dependence in gas and the recent
opening of the Turkmenistan–China
pipeline. See Stephen Blank,
‘The Strategic Implications of the
Turkmenistan–China Pipeline Project’,
China Brief, vol. 10, no. 3, 4 February
2010, p. 11.
Phil Taylor, ‘Energy Policy: IEA Chief
Calls for Expanded Dialogue with
China, India’, E&E News, 13 February
2009; ‘IEA’s Tanaka Urges OPEC to
Keep Investing’, Platts Oilgram News,
28 April 2009.
Authors interviews with energy
specialists at state-run think tanks,
Beijing, March 2009.
Note that IEA requires its members
to have national and commercial
reserves sufficient to meet at least 90
days of net import demand. While
visiting Beijing in July of this year,
IEA head Tanaka stated that China’s
current petroleum reserves, including
commercial stocks, were sufficient to
meet 86 days of net imports. Chinese
officials promptly disputed this claim,
saying it was much too high, and
Tanaka later noted that the data were
‘unverifiable’. See ‘Chinese Official
Denies 86 Days Oil Reserve Claim by
IEA’, Asia Pulse, 6 July 2009; and ‘IEA
to Pursue China, India, and Russia
Ties’, Platts Oilgram News, 9 September
2009.
For enthusiastic endorsements of
China joining the IEA, see Zhao
Hongtu, ‘Guoji Nengyuan Zuzhi
28 29 30 31 32 yu Duobian Nengyuan Waijiao
[International Energy Organisations
and Multilateral Energy Diplomacy]’,
Guoji Shiyou Jingji [International
Petroleum Economics], no. 10, 2008,
pp. 12–17; Wang Lianhe, ‘Zhongguo
yu Guoji Nengyuan Jigou – Yi
Xiang Guifan Yanjiu [China and the
International Energy Agency – a
Normative Analysis]’, Guoji Guancha
[International Survey], no. 4, 2009, pp.
11–17.
On Chinese public support for acquiring aircraft carriers, see Robert Ross,
‘China’s Naval Nationalism: Sources,
Prospects, and the U.S. Response’,
International Security, vol. 34, no. 2,
Fall 2009, pp. 60–65.
For more discussion of the possibilities in this regard, see Nan Li and
Christopher Weuve, ‘China’s Aircraft
Carrier Ambitions: An Update’, Naval
War College Review, vol. 63, no. 1,
Winter 2010, pp. 13–32.
For more on these arguments, see
Gabriel B. Collins, Andrew S. Erickson
and Lyle J. Goldstein, ‘Chinese
Naval Analysts Consider the Energy
Question’, in Gabriel B. Collins,
Andrew W. Erickson, Lyle J. Goldstein
and William S. Murray (eds), China’s
Energy Strategy: The Impact of Beijing’s
Maritime Policies (Annapolis, MD:
Naval Institute Press, 2008), pp.
299–335.
Yao Wenhuai, ‘Jianshe Qiangda
Haijun Weihu Woguo Haiyang
Zhanlue Liyi’ [Build a Powerful Navy
to Protect Our Nation’s Strategic
Maritime Interests], Guofang [National
Defense], no. 7, 2007, p. 6.
Ross, ‘China’s Naval Nationalism’, p.
75.
154 | Andrew B. Kennedy
33 34 35 36 37 38 39 Chu Shulong and Lin Xinzhu,
‘Zhongguo Junli, Ganchao Meiguo
Bushi Mubiao [China’s Military
Strength, Overtaking the US Is Not the
Goal]’, Huanqiu Shibao [Global Times],
26 June 2008.
Zhao Hongtu, ‘Maliujia Kunju yu
Zhongguo Nengyuan Anquan Zai
Sikao [Rethinking the Malacca
Dilemma and China’s Energy
Security]’, Xiandai Guoji Guanxi
[Contemporary International
Relations], no. 6, 2007, pp. 36–8. The
China Institutes of Contemporary
International Relations produces
reports for China’s top leadership and
plays a role in the Chinese government similar to that played by the
CIA’s Directorate of Intelligence in the
United States.
Notably, a recent study by scholars
at the US Naval War College concurs with many of Zhao’s points.
See Gabriel B. Collins and William
S. Murray, ‘No Oil for the Lamps of
China?’ in Collins et al., China’s Energy
Strategy, 387–407.
Michael S. Chase and Andrew S.
Erickson, ‘Changes in Beijing’s
Approach to Overseas Basing?’, China
Brief, vol. 9, no. 19, 24 September 2009,
pp. 8–11.
Author’s interview with security specialist at state-run think tank, Beijing,
March 2009.
For an overview of the diversity of
views in this regard, see Erickson and
Goldstein, ‘Gunboats for China’s New
“Grand Canals”?’, pp. 64–6.
Chen Xinhua, ‘Nengyuan Anquan Yao
Zhongshi Neibu Yinsu, Qiangdiao
Zhengce Tizhi Baozhan [Energy
Security Must Attach Importance
40 41 42 43 44 to Internal Factors and Stress the
Safeguarding of the Policy System]’,
Zhongguo Nengyuan [China Energy],
no. 5, 2003, http://www.china5e.net/
dissertation/policy/20050718121240.
html. Chen is currently vice-president
of BP China and is affiliated with
a variety of foreign and domestic
institutions.
Zhao Hongtu, ‘Nengyuan Weiji:
Shenhua yu Xianshi [The Energy
Crisis: Myth and Reality]’, Xiandai Guoji
Guanxi [Contemporary International
Relations], no. 9, 2007, p. 48.
Zha Daojiong, ‘Tuozhan Zhongguo
Nengyuan Anquan Yanjiu de Keti
Jichu [Expanding the Underlying
Question in Research on China’s
Energy Security]’, Shijie Jingji yu
Zhengzhi [World Economics and
Politics], no. 7, 2008, p. 80. See also
Zha Daojiong, ‘China’s Energy
Security: Domestic and International
Issues’, Survival, vol. 48, no. 1, Spring
2006, pp. 185–7.
Zhu Chengzhang, ‘Dianli Anquan Shi
Zui Zhongyao de Nengyuan Anquan
Wenti [Electric Power Security is
the Most Important Energy-Security
Problem]’, Zhong Wai Nengyuan [SinoGlobal Energy], vol. 13, no. 5, 2008,
pp. 1–7. Emphasis added.
For example, see Zhou Dadi, ‘2020
Nian Zhongguo Nengyuan Zhanlue
Fenxi [Analysing China’s Energy
Strategy for 2020]’, Zhongguo Gaoxiao
Keji yu Chanyehua [Chinese University
Technology Transfer], no. 11, 2007, p.
53.
Dan Rosen and Trevor Houser, China
Energy: A Guide for the Perplexed
(Washington DC: Peterson Institute for
International Economics, 2007), p. 6.
China’s New Energy-Security Debate | 155
45 Paolo Hooke, ‘China’s Power Sector:
Can Supply Meet Demand?’, Asia
Times, 7 October 2005, http://www.
atimes.com/atimes/China_Business/
GJ07Cb01.html.
46 See ‘Analysis: Unreasonable Pricing
Mechanism Triggers Seasonal “Coal
Shortage” in China’, Xinhua Economic
News Service, 20 January 2010; and
David Victor, ‘Asia’s Achilles Heel’,
Newsweek, 28 February 2008, http://
www.newsweek.com/id/117004.
47 Joseph Kahn and Jim Yardley, ‘As
China Roars, Pollution Reaches Deadly
Extremes’, New York Times, 26 August
2007, p. A1. For a Chinese estimate of
their country’s casualties in Korea, see
Xu Yan, Diyici Jiaoliang [The First Trial
of Strength] (Beijing: China Broadcast
Television Press, 1990), p. 322. Note
that American estimates of China’s
casualties in Korea are much higher.
48 This is not to suggest that there is
no concern about climate change
in China, merely that other energyrelated problems are usually seen as
more immediate priorities. There are,
to be sure, some Chinese analysts who
argue that mitigating climate change
should be a high priority for Beijing.
See, for example, Hu Angang and
Guan Qingyou, ‘Zhongguo Yingdui
Quanqiu Qihou Bianhua de Si Da
Kexingxing [Four Big and Feasible
Things China Should Do to Combat
Global Climate Change]’, Qinghua
Daxue Xuebao [Qinghua University
Academic Journal], no. 6, 2008, pp.
120–32. For Chinese government
assessments of the impact of climate
change on China, see Information
Office of the State Council of the
People’s Republic of China, ‘White
Paper: China’s Policies and Actions
on Climate Change’, October 2008,
Section II, http://www.gov.cn/english/2008-10/29/content_1134544.
htm; and PRC National Development
and Reform Commission, ‘China’s
National Climate Change Program’,
June 2007, pp. 16–19, http://www.
ccchina.gov.cn/WebSite/CCChina/
UpFile/File188.pdf.
49 For examples, see Zhang Liping,
‘Meiguo Weihe Yao Zhengshou Tan
Guanshui [Why the US Wants to
Levy Carbon Tariffs]’, Shishi Baogao
[Report on Current Affairs], no. 9,
2009, pp. 59–60; Liu Dongguo, ‘Ri Ou
Mei Xin Nengyuan Zhanlue Ji Qi Dui
Zhongguo de Tiaozhan [New Energy
Strategies from Japan, Europe, and the
US and their Challenges for China]’,
Xiandai Guoji Guanxi [Contemporary
International Relations], no. 10, 2009,
p. 38.
50 Author’s interviews with energy
specialists at state-run think
tanks, Beijing, March 2009; Xie
Zhenhua, ‘Speech at Beijing
University’s Guanghua School of
Management’, 9 January 2010, available in Chinese and English at http://
www.chinafaqs.org/blog-posts/
what-does-china-think-about-climatechange-and-copenhagen.
51 Shi Hongtao, ‘Nengyuan Anquan
Zaoyu “Maliuya Kunju” ZhongRiHan
Nengfou Xieshou [Energy Security
Runs Up against the “Malacca
Dilemma”: Will China, Japan and
Korea Cooperate?]’, Zhongguo
Qingnian Bao [China Youth Daily],
15 June 2004, http://business.sohu.
com/2004/06/15/49/article220534904.
shtml.
156 | Andrew B. Kennedy
52 53 54 55 56 57 See ‘Hu Jintao’s Address at the G8
Outreach Session’, 17 July 2006,
Constantine Palace, St Petersburg,
http://www.fmprc.gov.cn/eng/wjdt/
zyjh/t26461.htm.
See for example ‘Text of Chinese
President’s Speech at APEC Summit
22 Nov’, BBC Worldwide Monitoring,
24 November 2008; and ‘Wen
Jiabao Zhuchi Zhaokai Guowuyuan
Changwu Huiyi [Wen Jiabao Presides
Over State Council Executive
Meeting]’, Renmin Ribao [People’s
Daily], 19 December 2008.
Wen Jiabao reported in March that
China reduced the energy intensity
of its economy by 14.38% in the first
four years of the 11th five-year plan.
See Wen Jiabao, Report on the Work
of the Government, delivered at the
Third Session of the Eleventh National
People’s Congress, 5 March 2010,
http://online.wsj.com/documents/
WorkReportEnglish.pdf.
Keith Bradsher, ‘China Leading Global
Race to Make Clean Energy’, New York
Times, 31 January 2010, http://www.
nytimes.com/2010/01/31/business/
energy-environment/31renew.html.
China also reiterated its 15% renewable energy target, as well as
previously announced targets for
increasing forest cover and forest
volume. The text of the announcement is available on the website of
China’s State Council at http://www.
gov.cn/ldhd/2009-11/26/content_
1474016.htm.
See for example Michael Levi,
‘Assessing China’s Carbon-Cutting
Proposal’, Expert Brief, Council on
Foreign Relations, 30 November 2009,
http://www.cfr.org/publication/20862/
58 59 60 61 62 assessing_chinas_carboncutting_
proposal.html.
‘Statement of the China Energy
Group, Lawrence Berkeley National
Laboratory on China’s RecentlyAnnounced Carbon Intensity
Target’, Environmental Energy
Technologies Division, Lawrence
Berkeley National Laboratory, 15
December 2009, http://china.lbl.gov/
news/statement-china-energy-grouplawrence-berkeley-national-laboratory-china%E2%80%99s-recentlyannounced-c.
‘Hu Jintao Qiangdiao Jinyibu Zuohao
Yingdui Qihou Bianhua Ge Xiangmu
Gongzuo [Hu Jintao Emphasises the
Need to Successfully Complete Every
Project in Climate Change Work]’,
Xinhua News Service, 23 February
2010, http://news.xinhuanet.com/politics/2010-02/23/content_13034269.htm;
Stephen Chen, ‘Politburo Set on Carbon
Emissions Target; Party Leaders Rule
out Further Debate on Goal Promised
at Copenhagen Meeting’, South China
Morning Post, 26 February 2010.
See for example Ross Garnaut,
The Garnaut Climate Change Review
(Cambridge: Cambridge University
Press, 2008), pp. 207, 209.
On China’s diplomatic manoeuvring at Copenhagen, see Kenneth
Lieberthal, ‘Climate Change and
China’s Global Responsibilities’,
John L. Thornton China Center, The
Brookings Institution, 23 December
2009, http://www.brookings.edu/
opinions/2009/1222_china_climate_lieberthal.aspx.
On the pronounced weakness of
China’s energy-governance system,
see Erica Downs, The Brookings Foreign
China’s New Energy-Security Debate | 157
Policy Studies Energy Security Series:
China (Washington DC: The Brookings
Institution, December 2006), pp. 16–24;
and Edward A. Cunningham, ‘China’s
Energy Governance: Perception and
Reality’, MIT Center for International
Studies, Audit of the Conventional
Wisdom Paper Series, March 2007.
63 On the inadequacy of the National
Energy Administration, see
Downs, ‘China’s “New” Energy
Administration’, pp. 42–5. On the
National Energy Commission, see
Julian Wong, ‘The National Energy
Commission: Myth-busting the “New
Energy Super Ministry”’, 9 February
2010, http://greenleapforward.
com/2010/02/04/the-national-energycommission-myth-busting-the-newenergy-super-ministry/#more-260.
64 On downstream oil prices, see ‘China
Explains Details of New Oil Pricing
Mechanism’, and ‘Analysis: China’s
Product Oil Pricing Mechanism Needs
to be More Sensitive to Markets’,
Xinhua Economic News Service, 10 May
2009 and 12 March 2010, respectively.
Note that China was expected to
unveil price reforms for natural gas
earlier this year, but as of this writing
had not done so. See ‘China Delays
Gas Price Reform on Dispute over
Pricing Measures’, Xinhua Economic
News Service, 18 March 2010.
65 On China’s activities in the Gulf of
Aden, see Gaye Christoffersen, ‘China
and Maritime Cooperation: Piracy
in the Gulf of Aden’, lecture delivered at the International Conference
on Comprehensive Security in the
Asia-Pacific Region, 30 November–1
December 2009, Tokyo, Japan, http://
66 67 68 69 www.isn.ethz.ch/isn/Digital-Library/
Publications/Detail/?id=111041.
David G. Victor and Linda Yueh,
‘The New Energy Order: Managing
Insecurities in the Twenty-first
Century’, Foreign Affairs, vol. 89, no. 1,
January–February 2010, pp. 61–73.
Note that the World Bank called for
these and other measures in a 2007
report that was published in cooperation with China’s State Council. See
Noureddine Berrah, Fei Feng, Roland
Priddle and Leiping Wang, Sustainable
Energy in China: The Closing Window of
Opportunity (Washington DC: World
Bank, 2007), esp. pp. 163–5.
On this point, see Alex Wang,
‘Environmental Enforcement Ideas
from Sunny California. Episode #1 –
Give MEP Stronger Authority over
Local Environmental Performance’,
Greenlaw, 23 February 2009, http://
www.greenlaw.org.cn/enblog/?p=655.
On China’s fuel-economy standards,
see Hongyan H. Oliver, Kelly Sims
Gallagher, Donglian Tian and Jinhua
Zhang, ‘China’s Fuel Economy
Standards for Passenger Vehicles:
Rationale, Policy Process, and
Impacts’, Discussion Paper 2009-03
(Cambridge, MA: Belfer Center for
Science and International Affairs,
March 2009). On recent improvements in the United States, see
‘Obama Speeds Up Fuel Economy
Standards, Sets First Carbon Limit’,
Bloomberg.com, 19 May 2009. For
an international comparison of fueleconomy standards, see the website
of the International Council on Clean
Transportation at http://www.theicct.
org/reports_live.cfm.
158 | Andrew B. Kennedy