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Abstract
This article explores the ways in which China's energy security strategy has evolved over the past fifteen years. Energy security had become an urgent policy priority for Beijing by the mid-2000s due to China's rapidly increasing oil import dependency set against the backdrop of oil scarcity and rising oil prices. Rather than rely on purely market-based means to secure oil supply, China pursued a state-led or neomercantilist approach. Initially, the most notable and distinctive element of its oil neomercantilism was the overseas acquisition of oil assets by China's national oil companies (NOCs) under broad strategic direction from Beijing. However, increasingly over the past decade China's energy security strategy, while remaining neomercantilist in orientation, exhibits greater reliance on the market. Reasons for this shifting emphasis include the changing geopolitics and geoeconomics of the global oil industry, which moved to oversupply following the US shale oil revolution, along with transformations within the Chinese state under the leadership of President Xi Jinping.
Aknowledgements
This article is based on a presentation I was invited to deliver at the Confucius Institute at the University of Helsinki in August 2021. I would like to thank Professor Julie Chen (University of Helsinki), the editor of Asian Affairs and the Journal’s anonymous reviewer for their feedback.
Disclosure statement
No potential conflict of interest was reported by the author.
Notes
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5 J. S. Nye, ‘The Wrong Way of Thinking about Oil’. Korea Herald, February 27, 2006.
6 Mu, ‘Have the Chinese National Oil Companies Paid Too Much in Overseas Asset Acquisition?’, op. cit.
7 D. Zweig and J. Bi, ‘China’s Global Hunt for Energy’. Foreign Affairs Vol. 84. Issue 5 (2005): 25–38.
8 M. Taylor, The Chinese State, Oil and Energy Security. Basingstoke: Palgrave Macmillan, 2014, p. 71.
9 IEA (International Energy Agency), ‘IEA Atlas of Energy’. 2020, http://energyatlas.iea.org/#!/tellmap/-1920537974 (accessed 5 November 2021).
10 M. Lelyveld, ‘China’s Energy Risk Rises Despite Oil Output Growth’. Radio Free Asia, January 15, 2021, https://www.rfa.org/english/commentaries/energy_watch/oil-01152021104340.html (accessed 5 November 2021).
11 ‘Outline of the 14th Five-Year Plan for National Economic and Social Development and Vision 2035 of the People’s Republic of China’, 9 August, https://www.fujian.gov.cn/english/news/202108/t20210809_5665713.htm
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13 EIA (Energy Information Administration), ‘China’s crude imports surpassed 10 million barrels per day in 2019’. U.S. Energy Information Administration, March 23, 2020, https://www.eia.gov/todayinenergy/detail.php?id=43216 (accessed 5 November 2021).
14 For the figures from 2010 see J. Jiang and J. Sinton, Overseas Investments by Chinese National Oil Companies: Assessing the Drivers and Impacts. Paris: OECD/IEA, 2011, p. 12.
15 E. Gupte and E. Kettley, ‘China seen importing record volumes of North Sea crude in March’. S&P Global Platts, March 22, 2021, https://www.spglobal.com/platts/en/market-insights/latest-news/oil/032221-china-seen-importing-record-volumes-of-north-sea-crude-in-march (accessed 5 November 2021).
16 D. Eberhart, ‘Why China is Suddenly Buying Record Amounts of American Crude Oil’. Forbes, September 20, 2020, https://www.forbes.com/sites/daneberhart/2020/09/20/china-increases-imports-of-us-oil-ahead-of-november-election/?sh=4bcd981148cc (accessed 5 November 2021).
17 A. Schipani, ‘South Sudan’s ‘wasted decade’: ‘We have been at war for too long’. Financial Times, August 26, 2021, https://www.ft.com/content/5c8041a4-10af-4950-8502-87ff75a5438b (accessed 5 November 2021); ‘Angolan Oil is in Decline’. The Economist, October 5, 2019, https://www.economist.com/middle-east-and-africa/2019/10/03/angolan-oil-production-is-in-decline (accessed 5 November 2021).
18 BP, BP Statistical Review of World Energy 2021.
19 Ibid.
20 J. Lind, and D. G. Press, ‘Markets or Mercantilism? How China Secures its Energy Supplies’. International Security Vol. 42. Issue 4 (2018): 196.
21 Ibid, p. 171.
22 E. Downs, ‘High Anxiety: The Trade War and China’s Oil and Gas Supply Security’. Columbia SIPA Center on Global Energy Policy, 2019, https://www.energypolicy.columbia.edu/sites/default/files/file-uploads/ChinaTradeWar_CGEP_Commentary_111519.pdf (accessed 5 November 2021).
23 T. Whipple, ‘Trump signs China trade deal, putting economic conflict on pause’. The New York Times, January 16, 2020, https://www.nytimes.com/2020/01/15/business/economy/china-trade-deal.html?action=click&module=Top%20Stories&pgtype=Homepage (accessed 5 November 2021).
24 Downs, ‘High Anxiety: The Trade War and China’s Oil and Gas Supply Security’, op. cit.
25 M. Meidan, The Structure of China’s Oil Industry: Past Trends and Future Prospects. Oxford Institute for Energy Studies, 2016, p. 54.
26 Nye, ‘The Wrong Way of Thinking about Oil’, op. cit.; Lind and Press, ‘Markets or Mercantilism?’, op. cit., p. 170.
27 Mu, ‘Have the Chinese National Oil Companies Paid Too Much in Overseas Asset Acquisition?’, op. cit.
28 Clark, ‘Willing to go where western companies fear to tread’, op. cit.
29 A. C. Alves, ‘Chinese Economic Statecraft: A Comparative Study of China’s Oil-backed Loans in Angola and Brazil’. Journal of Current Chinese Affairs Vol. 42. Issue 1 (2013): 101.
30 R. Kennedy, ‘Debt sustainability and the Belt and Road Initiative in Africa’. Center for Strategic and International Studies, September 9, 2019, http://www.cogitasia.com/debt-sustainability-the-belt-and-road-initiative-in-africa/ (accessed 5 November 2021).
31 Chen Ziwhu quoted in J. Schneyer and N. M. Perez, ‘How China took control of an OPEC country’s oil’. Reuters, November 26, 2013, https://www.reuters.com/article/china-ecuador-oil-idUSL3N0IR50K20131126 (accessed 5 November 2021).
32 See I. Taylor, ‘China’s Oil Diplomacy in Africa’. International Affairs Vol. 82. Issue 5 (2006): 937–959; A. M. Jaffe and S. W. Lewis, ‘Beijing’s Oil Diplomacy’. Survival Vol. 44. Issue 2 (2002): 115–134.
33 Meidan, The Structure of China’s Oil Industry, op. cit., p. 55.
34 R. Jaybhay, ‘China’s Pipeline Dream in Pakistan, The Interpreter, Lowy Institute, June 30, 2020, https://www.lowyinstitute.org/the-interpreter/china-s-pipeline-dream-pakistan (accessed 5 November 2021).
35 L. Cook and E. Ailworth, ‘First Tanker of U.S. Crude Oil for Export Sails from Texas’. Wall Street Journal, December 31, 2015, https://www.wsj.com/articles/first-tanker-of-u-s-crude-oil-for-export-launches-from-texas-1451601536 (accessed 5 November 2021).
36 A. Harder and L. Cook, ‘Congressional Leaders Agree to Lift 40-year Ban on Oil Exports’. Wall Street Journal, December 16, 2015, https://www.wsj.com/articles/congressional-leaders-agree-to-lift-40-year-ban-on-oil-exports-1450242995 (accessed 5 November 2021).
37 P. Takahashi, ‘Over 100 oil and gas companies went bankrupt in 2020’. Houston Chronicle, January 20, 2021, https://www.houstonchronicle.com/business/energy/article/More-than-100-oil-and-gas-companies-filed-for-15884538.php (accessed 5 November 2021).
38 N. Hume, ‘Chinaoil on buying spree as oil price drops’. Financial Times, October 29, 2014, https://www.ft.com/content/2a19d0e4-5f7b-11e4-a882-00144feabdc0 (accessed 5 November 2021).
39 F. Li, Z. Liu and Q. Wang, ‘Xi calls for accelerating new energy vehicle tech’. ChinaDaily, July 3, 2019, http://www.chinadaily.com.cn/a/201907/03/WS5d1baf60a3105895c2e7b42c.html (accessed 5 November 2021).
40 N. Browning, ‘Oil prices extend gains to multi-year highs on tight supply’. Reuters, October 25, 2021, https://www.reuters.com/article/global-oil-idCNL1N2RL02E (accessed 5 November 2021).
41 L. Jones and S. Hameiri, Fractured China: How State Transformation is Shaping China’s Rise. Cambridge University Press, 2021.
42 See, for instance, Jaffe and Lewis, ‘Beijing’s Oil Diplomacy’, op. cit.; P. K. Lee, ‘China’s Quest for Oil Security: Oil (Wars) in the Pipeline?’ Pacific Review Vol. 18. Issue 2: 265–301.
43 The genesis of this perspective can be traced to K. Lieberthal and M. Oksenberg, Policy Making in China: Leaders, Structures, and Processes. Princeton University Press, 1998.
44 K. Lieberthal, ‘Introduction: The ‘Fragmented Authoritarianism’ Model and its Limitations’. In Kenneth Lieberthal and David Lampton (Eds.), Bureaucracy, Politics, and Decision Making in Post-Mao China, Berkeley: University of California Press, 1992.
45 See, for instance, T. Houser, ‘The Roots of Chinese Oil Investment Abroad’. Asia Policy, No. 5 (2008): 141–166; B. Kong, China’s International Petroleum Policy. Santa Barbara, Calif.: Praeger Security International, 2010; R. Lester and E. L. Steinfeld, ‘China’s Real Energy Crisis’. Harvard Asia Pacific Review, Vol. 9. Issue 1 (2007): 35–38.
46 Taylor, The Chinese State, Oil and Energy Security, op. cit., p. 155; M. Taylor, ‘China’s Oil Industry: Corporate Governance with Chinese Characteristics’. In Xu Yi-chong (Ed.), The Political Economy of State-Owned Enterprises in China and India. Basingstoke: Palgrave Macmillan, 2012.
47 Taylor, The Chinese State, Oil and Energy Security, op. cit.
48 C. Zhu, D. Lague and B. K. Lim, ‘Special Report: Inside the Purge of China’s Oil Mandarins’. Reuters, July 24, 2014, http://graphics.thomsonreuters.com/14/07/CHINA-PURGE:CNPC.pdf (accessed 5 November 2021).
49 Ibid.
50 Ibid.
51 D. Ren, ‘Overseas deal fixer may shed light on fall from grace of Chinese oil boss’. South China Morning Post, October 14, 2015, https://www.scmp.com/news/china/policies-politics/article/1867597/overseas-deal-fixer-may-shed-light-fall-grace-chinese (accessed 5 November 2021).
52 Meidan, The Structure of China’s Oil Industry, op. cit., p. 52.
53 Ibid. p. 50.
54 Ibid., pp. 48–51.
55 C. Denina, J. Zhu, and R. Bousso, ‘China’s Sinopec Looking to Sell Nigeria Business’. Reuters, December 6, 2017, https://www.reuters.com/article/us-china-sinopec-divestiture-exclusive-idUSKBN1E01LN (accessed 5 November 2021).
56 Ibid.
57 A. Ravel, and D. Sheppard, ‘Oil futures plan fuels up China’s ambition’. Financial Times, September 16, 2015, https://www.ft.com/content/818fc158-5c73-11e5-a28b-50226830d644 (accessed 5 November 2021).
58 L. Hornby, ‘Chinese oil giant Sinopec finds ‘unusual’ data at subsidiary Unipec’. Financial Times, January 4, 2019, https://www.ft.com/content/5af4e96e-1017-11e9-acdc-4d9976f1533b (accessed 5 November 2021).
59 M. Meidan, China’s Energy Policies in the Wake of Covid-19: Implications for the Next Five-Year Plan. Oxford Institute for Energy Studies, November, 2020, p. 10.
60 Schneyer and Perez, ‘How China took control of an OPEC country’s oil’, op. cit.
61 K. Yang, ‘Angola to maintain oil shipments to Unipec in Q3 to repay loans’. Global Times, June 8, 2020, https://www.globaltimes.cn/content/1190957.shtml (accessed 5 November 2021).
62 Meidan, The Structure of China’s Oil Industry, op. cit., p. 53.
63 Ibid., p. 53.
64 A. Chen, and S. Zhang, ‘China ‘teapot’ refiners crank up run rates as oil price war boosts margins’. Reuters, March 11, 2020, https://www.reuters.com/article/global-oil-china-demand-idUSL4N2B32R8 (accessed 5 November 2021).
65 ‘China’s New Oil Giants Flourish in Xi’s Clean Energy Wave’. Bloomberg, 10 August, 2021, https://www.bloomberg.com/news/articles/2021-08-09/china-s-new-oil-giants-flourish-in-xi-s-clean-energy-wave (accessed 5 November 2021).
66 E. Kanason, ‘Trouble in the teapot oil refining industry’. NrgEdge – The Energy Professional Network, August 25, 2021, https://www.nrgedge.net/article/1629895898-trouble-in-the-teapot-oil-refining-industry (accessed 5 November 2021).
67 Ibid.
68 A. Chen, ‘China approves $20 billion mega petchem complex in Shandong oil hub’. Reuters, June 2, 2020, https://www.reuters.com/article/us-china-oil-refinery-shandong-exclusive-idUSKBN2390OU (accessed 5 November 2021).
69 EIA (Energy Information Administration), ‘Country Analysis Executive Summary: China’. U.S. Energy Information Administration, September 30, 2020, https://www.eia.gov/international/analysis/country/CHN
70 BP (British Petroleum), BP Statistical Review of World Energy 2021. London: British Petroleum.
71 EIA, ‘Country Analysis Executive Summary: China’, op. cit.
Additional information
Notes on contributors
Monique Taylor
Dr Monique Taylor is a Senior Lecturer in World Politics in the Faculty of Social Sciences at the University of Helsinki. She is the author of The Chinese State, Oil and Energy Security (Palgrave Macmillan, 2014). Email: [email protected]