How China’s energy policy affects US-Sino relations

15 May

 

There are many negative issues concerning US-Sino relations that are constantly in the headlines from the undervaluation of the Yuan, to accusations of the people’s liberation army cyber-spying on the US government and businesses. China’s energy policies and involvement in energy markets has also had a huge impact on relations. Because China’s energy policy and its consequences is such a broad area I will look mainly at China’s involvement in the Middle East, and then look at how development of clean energy may be improving relations.

 

Although “A recent study has discovered that at current the situation is fluid and could either go toward a path of conflict or cooperation” (Jones, 2012). Daojiong (2005) and Yi-Chong (2006) point out that the US is concerned with the Chinese national oil company’s (NOC’s) dealings with countries that have poor human rights, foreign policies that are counter to those of the US and often have UN sanctions against them. The NOC’s lack of a political agenda or ideology enables them to invest in countries US companies would not be able or willing to invest in. The NOC’s also pursue a policy of “offend no one” and “non-interference” which means they tend to come “with significantly less political baggage than dealing with the United States or European Union” (Jones, 2012), making them far more attractive deals.

 

This issue is worsened by China’s lack of transparency in these deals, which can lead to speculation that “China has a well-coordinated project of countering U.S. influence” (Daojiong, 2005, p51).  Yi-Chong (2006, p278) goes as far as to say that “China [is] taking advantage of a power vacuum”. The way China plays towards countries in the Middle East can also lead to increased tensions. For example after the killing of Osama bin laden “China’s position was the opposite of the U.S. response, which included heavy criticism of Islamabad and the threat of reducing or eliminating U.S. aid to Pakistan” (Jones, 2012). Instead Beijing exploited this opportunity to portray itself as “a more reasonable alternative to Washington” (Jones, 2012). By praising Islamabad and providing 50 fighter jets to the Pakistan air force.

 

There are many shared energy interests between the US and China especially in the Middle East which makes relations more important and also more fluid, as the countries relies on each other. Jones (2012) note that China benefits from the U.S. in that it currently relies on the U.S. to safeguard shipping lanes that come out of the Persian Gulf, thus ensuring the security of energy supplies that China needs urgently to sustain its impressive economic rise. Daojiong (2005) also states how Chinese policy is often supportive or at least not conflicting to US policy. Such as China’s somewhat support of US military presence in the Middle East as it helps provide stability in a volatile region. It appears that “as long as this symbiotic relation of mutual dependency continues, cooperation and coexistence would persist. However, should China’s tendency to sign long-term contracts diminish US access to the energy sources of the region, the possibility of conflict cannot be ruled out” (Jones, 2012). Therefore it seems vital these countries focus upon their shared interests such as low and stable oil prices, secure sea lanes and a stable middle east rather than focusing on their differences.

 

To ensure good relations over China’s increasing role in the Middle East, it is clear the US should take measures to ensure security and reduce the amount of issues that could harm relations and cause a potential conflict. Firstly “the US should induce China to rely more on international markets and less on exclusive supply deals to meet its energy needs” (Khamis, 2011). This could be helped by ensuring China that in the event of a conflict the US, they would not close sea lanes to China. Secondly (Khamis, 2011) notes that encouraging joint US-Chinese ventures would improve relations and give a sense of partnership between each other’s energy security. It would also be essential for the US to push for China’s membership in the International Energy Agency (IEA) as this would prevent China disrupting the western powers coordinated efforts in an energy crisis.

 

There are also ways in which China improves the world’s energy security. Firstly Chinese NOC’s “explore and develop oil and gas reserves in regions that no western energy companies could or would invest in” (Leung, 2011, p1336). Essentially the more money China invests in exploration of Middle Eastern oil and gas, the more it expands availability of oil in the global energy markets, thus preventing sharp price hikes that are detrimental to the economic interests of major consumer nations such as US and China.

 

In 2009, “President Barack Obama and President Hu Jintao announced a far-reaching package of measures to strengthen cooperation between the United States and China on clean energy” (The Whitehouse, 2009). This was seen as somewhat of a rarity in US-Sino energy relations as it is normally an area of distrust and conflict.  “China’s Minister of Science and Technology Wan Gang said…I’m sure that this is one of the best points of convergence and cooperation between our two countries, and will be one of the bright spots in our future cooperation” (Gardener et al. 2011). The Wilson centre (2012) (A US independent research body) states that many tensions exist over clean energy however. Firstly China tends to produce more solar goods where as other nation are deploying and using the technology (i.e. US and Germany). This is an area that since 2011 has causes many issues with the US, because it was at this point the US generated a solar trade deficit with China. Partly leading to the US pursuing investigations in China’s solar and wind sectors claiming they were breaking international trade rules, which increased tensions furthermore. It seems likely these sorts of disputes will increase as these industries become more and more competitive. This is problematic as these disputes affect other more positive aspects of bilateral clean energy relations. “Realistically, there is no path to a sustainable future without sustained and clear-eyed cooperation between the United States and China.” (Cooke 2012)

 

To conclude it seems that better relations are taking place since the bush administration. This Is because the Obama administration seems to understand the need for cooperation between the superpowers especially in a volatile region such as Middle East, and when involving an issue as important as energy security and the environment. Jones (2012) highlight that their “study of China’s strategy for energy acquisition in the Middle East reveals… that a great power realignment in the Middle East is already underway that has the potential for cooperation as well as conflict”. And it’s up to both countries whether it’s the former or latter outcome. It seems that in the near future because of the reliance and interconnected nature of the issue, conflict is unlikely. China and the US are the leading countries in global clean energy investment therefore cooperation is extremely important to ensure the sharing of technologies which will allow for greater efficiency and productivity in an emerging sector. It seems this cooperation will continue in the near future, however there will be difficulties as we have seen. But the fact the stakes are so high suggests it would be irresponsible to not cooperate as much possible.

 

Word count 1200

 

Bibliography

 

Journal articles

Daojiong, Z. 2005. China’s energy security and it’s international relations. The China and Eurasia forum Quarterly. 3 (3). 39-54

Leung, G.C.K. 2011. China’s energy security: Perception and reality. Energy Policy. 39 (1). 1330-1337

Yi-chong 2006. China’s energy security. Australian journal of international affairs. 60 (2). 265-286

 

News articles

Timothy Gardener and Ayesha Rascoe, 2011. Clean energy seen as “bright spot” for U.S. – China relations. Reuters [Online] 19 Jan 2011. Available at: http://www.reuters.com/article/2011/01/19/us-usa-china-energy-idUSTRE70H5WB20110119 [Accessed 14 May 2013]

Dick Jones, 2012.Energy: The tipping point for U.S. – China relations, study shows. Newswise [online] 18th April 2012. Available at: http://www.newswise.com/articles/energy-the-tipping-point-for-u-s-china-relations-study-finds [Accessed 14 May 2013]

Husien Khamis, 2011. Common ground in US-China energy relations. East Asia forum [Online] 13 July 2011. Available at http://www.eastasiaforum.org/2011/07/13/common-ground-in-us-china-energy-relations/ [Accessed 14 May 2013]

 

Websites

Office of the Press Secretary, The white house, 2009. U.S.-China Clean Energy Announcements [Online] Available at: http://www.whitehouse.gov/the-press-office/us-china-clean-energy-announcements [Accessed 14 May 2013]

The Wilson Center, 2012. Cooperation or conflict? Contradictions in US-China energy relations, [Online] Available at: http://www.wilsoncenter.org/event/cooperation-or-conflict-contradictions-us-china-clean-energy-relations [Accessed 14 May 2013]

 

Publications available from websites

Merritt T. Cooke, 2012. Sustaining U.S. – China clean energy cooperation. The wilson center. Available at: http://www.wilsoncenter.org/sites/default/files/US_China%20Cooperatin%20in%20Clean%20Energy.pdf [Accessed 14 May 2013]

 

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