Thu, Jan 20, 2005 - Page 8 News List

China's move toward oil diplomacy

By Paul Lin 林保華

The continued rapid development of China's economy over the past few years has led to an astonishing consumption of raw materials and energy sources.

In a report detailing the raw-materials production market in 2003 and forecast for last year, China's Ministry of Commerce pointed out that the country relied on imports for 35 percent of its crude oil, 36.2 percent of its iron ore, 47.55 percent of its aluminum oxide and 68.24 percent of its natural rubber. At the annual National People's Congress and Chinese People's Political Consultative Conference last March, an economist pointed out that energy consumption needed in China to create US$1 was 4.3 times that of the US, 7.7 times that of Germany and 11.5 times that of Japan. China has now become the world's biggest consumer of crude oil after the US, importing more than 100 million tonnes last year. One of the reasons oil prices soared last year was China's great increase in oil imports.

China's urgent desire to import oil is indeed startling. Apart from the needs resulting from economic development, there is also a feeling of crisis, as if someone were trying to cut their oil supplies. After Hu Jintao (胡錦濤) took over as president, China's diplomacy has been transformed from a great-nation diplomacy to an "oil-nation diplomacy," and China's oil grab is now reaching across the globe.

At the end of January last year, Hu visited four nations, three of which, Egypt, Gabon and Algeria, are all oil exporters. The purpose of his visit was to sign energy agreements. Last November, he signed a US$19.7 billion investment agreement with Argentina, US$5 billion of which is to be used for oil exploration.

Last month, Venezuela's President Hugo Chavez visited Beijing, where he signed an agreement allowing China to drill for oil, set up oil refineries and produce natural gas. To be able to import oil from Sudan, China sold a vast amount of arms to the Sudan government to support it in the country's 20-year civil war. China also opposed submitting the issue of Iran's nuclear program to the UN Security Council for discussion in order to be allowed to drill for oil in Iran.

A conflict has, however, arisen between China and Vietnam over drilling in the oil fields in the South China Sea. In the Americas, because Canada is the biggest provider of oil to the US, China's oil company sent representatives in December 2003 to Calgary, the energy capital of Canada, to discuss a joint investment plan aimed at undermining the US' oil position. China's oil company is even going to buy the Asian assets of the Californian oil company Unocal Corp.

The most important target of China's oil-nation diplomacy is of course Russia. China recognizes Russia's occupation of Chinese territory and has bought large amounts of Russian arms, and the two nations also share the goal of counterbalancing the US. The two nations enjoy a very good relationship, and in 1994 an agreement was reached to build an oil pipeline between Angarsk in Siberia and Daqing in China. Hu visited Russia in May 2003 to sign an agreement, but the following September Russia changed its attitude. Leaders from the two countries then exchanged several visits without being able to sign an agreement, and Russia instead turned to cooperation with Japan to build a pipeline between Taishet and Nakhodka, and finalized an agreement to do so on Dec. 31 last year.

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