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China’s Mercantilist Oil Strategy and its Implications for U.S.—China Relations

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Asian Energy Security

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Abstract

Oil security is widely recognized as one of the policy priorities of national development. Furthermore, the oil industry is the least stable among all energy sectors.1 Because oil is limited and unevenly distributed across the world, oil supply and demand has become a function of political ideology, technology, and market forces, all of which influence the type and rate of oil consumption.2 Differences in political ideology, economic influence, and access to technology and markets often lead to confrontation among countries over the management of oil. Today “oil politics” has been exacerbated by geopolitical and market factors such as oil price hikes, geopolitical instability, surging demand among the developing countries, oil supply competition, OPEC production cuts, and natural disasters.3

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Notes

  1. Originally published in a slightly different form as “China’s Oil Strategy and its Implications for U.S.—China Relations,” Issues & Studies 42, no. 3 (September 2006): 165–201, © Institute of International Relations, National Chengchi University, Taipei, Taiwan (ROC). Reprinted by permission. This chapter is an updated version of the aforementioned article.

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  44. In this sense, “rational” means appropriate to the specific incentives and institutional constraints and opportunities that existed at the time. See ibid.

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  63. In 2003, China’s leading crude import sources included Saudi Arabia (16.8 percent of total imports), Iran (13.8 percent), Angola (11.2 percent), Oman (10.3 percent), Yemen (7.7 percent), and Sudan (4.7 percent). See Katharine A. Fredriksen, “China’s Role in the World: Is China a Responsible Stakeholder?” (Statement before the U.S.-China Economic and Security Review Commission, August 4, 2006), 7.

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  89. Evidence of national security concerns can be found in the restrictions China imposes on foreign involvement in the energy sector. As for institutional inefficiencies, Chinese institutions have actively sought to acquire advanced technologies from abroad in many sectors but lacked the appropriate legal, financial, and accounting systems and expertise to carry out the contracts. Meanwhile, Chinese institutions are reluctant to pay for foreign personnel and experts, and SOOEs often refuse to yield management control over assets and personnel, while foreign enterprises cannot hold majority stakes. See Todd M. Johnson, “Foreign Involvement in China’s Energy Sector,” in China Joins the World: Progress and Prospects, eds. Elizabeth Economy and Michel Oksenberg (New York: Council on Foreign Relations, 1999), 19.

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  127. Jane Morse, “U.S., China Explore Joint Efforts for Tackling Global Concerns,” The Washington File, August 18, 2006, http://usinfo.state.gov/xarchives/display.html?p=washfile-english&y=2006&m=August&x=20060818171848esromaj2.586001e-02.

  128. The related dialogues of energy include Joint Commission on Science and Technology (between the U.S. director of the Office of Science and Technology Policy and the Chinese Ministry of Science and Technology), the Economic Development and Reform Dialogue (between the U.S. Department of State and China’s National Development and Reform Commission), the Global Issues Forum (between the U.S. Department of State and China’s Ministry of Foreign Affairs), and the Asia-Pacific Partnership on Clean Development and Climate (it brings together China, the United States, Australia, India, Japan, and Korea), and so on. Please see “Fact Sheet Creation of the U.S.-China Strategic Economic Dialogue,” the U.S. Department of Treasury, September 20, 2006, http://www.ustreas.gov/press/releases/hp107.htm.

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  130. Ibid.

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  133. USCC, USCC 2005 Annual Report, 176.

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  136. “China, U.S. Agree to Enhance Cooperation on Global Issues,” People’s Daily Online, August 10, 2006, http://english.people.com.cn/200608/10/eng20060810_291873.html.

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Authors
  1. Yuanming Alvin Yao
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  1. University of Nottingham, United Kingdom

    Hongyi Lai

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Yao, Y.A. (2009). China’s Mercantilist Oil Strategy and its Implications for U.S.—China Relations. In: Lai, H. (eds) Asian Energy Security. Palgrave Macmillan, New York. https://doi.org/10.1057/9780230619609_4

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