Page 3 of 4 China plays its own energy
game By M K Bhadrakumar
communications in their energy policies
and exchange views on the current world energy
situation."
While receiving the energy
ministers of the US, Japan, South Korea and India,
Chinese Premier Wen Jiabao stressed China's
readiness to cooperate in "maintaining the
stability and security of the international energy
supply".
But there are contradictions in
the China-US energy equation. China has been
hyperactive in securing access to energy sources
all
over the world. This runs counter to the United
States' plea that energy-consuming countries
should depend on the market rather than try to
"lock in" the world's finite energy reserves.
China plans to build more pipelines (from Russia,
Kazakhstan, Uzbekistan and Turkmenistan) and the
proposed one to Turkmenistan almost reaches up to
the northern borders of Iran. China has just
entered a cooperation agreement with Iran in the
Caspian region and has a massive
multibillion-dollar energy deal with Tehran.
Besides, China and the US are competing
for access to energy sources in the Caspian and
Russia. Without doubt, the US is focusing on
diverting Caspian energy westward through
non-Russian pipelines. It has taken scarcely any
interest in facilitating Caspian energy reserves
to flow to Asian energy-consuming nations.
Its best advice to Asian consumers is to
trust and believe in the market and to effect
greater efficiency in energy consumption, apart
from developing alternative or renewable sources
of energy by using available Western technology.
Again, China is keen to invest in Russia's oil
industry, and is open to giving Russian companies
access to China's lucrative retail market. The US
strongly discourages such directions of energy
cooperation with Russia, unless and until Russia
throws open its mineral sector to exploitation by
Western companies.
On the other hand,
China stands to gain by cooperating with the US as
Beijing seeks technology and investment for energy
efficiency and conservation and environmental
protection. The commercial spinoff is enormous. On
the sidelines of Saturday's five-nation energy
summit in Beijing, China and the US signed a
memorandum paving the way for an $8 billion deal
for Westinghouse Electric Co to build four
civilian nuclear reactors in China, each with a
capacity of 1.1 gigawatts. China plans to
construct another 30 reactors by 2020, bringing
its installed nuclear capacity to 40GW.
By
cooperating with the US, China hopes to remove
itself from the firing line for being responsible
for the current high oil prices. Energy
cooperation with the US is also in consonance with
China's overall projection of being a conservative
power with a growing stake in the stability and
predictability of international trading and
security mechanisms.
The fact that China
has not opted for an exclusive Asian
energy-cooperation grouping (as some in India, for
instance, have been occasionally canvassing) but
instead invited the US, though not an Asian power,
to come in is extremely significant. In political
terms, China signals that it welcomes more
sustained US diplomatic and economic inputs into
the delicate and volatile Asian region.
In
a limited sense, though, what this strategic
hedging between China and the US portends for the
SCO will pose a fascinating spectacle. Chinese
diplomacy is endowed with the talent for
undertaking delicate balancing acts. (Even as the
China-US economic dialogue was getting under way,
Wen was attending the annual SCO
heads-of-government meeting in Dushanbe, the
capital of Tajikistan.) Hardly two years ago,
Beijing ignored a US request for observer status
with the SCO. In June 2005, the SCO sought a
timeline for the withdrawal of US military bases
in the Central Asian region. So, what will the
other SCO member countries make of the joyful
happenings in Beijing last week?
They
would have taken note of what the People's Daily
called the "global impact" of China-US strategic
economic dialogue. As the Chinese newspaper said,
"At a time when economic globalization is
undergoing in-depth development, the economies of
China and the US are having an increasingly
greater impact on the global economy." Certainly,
no world capital would have paid closer attention
than Moscow to the latest China-US cogitations.
For Russia, the triangular equations involving it,
China and the US have always been and will
continue to be a high-stakes affair.
Russia will ponder whether Saturday's meet
is the tip of an iceberg, forewarning a US drive
to assemble a larger conclave of the energy
consuming countries of Asia and Europe under the
leadership of China and the US. If Russia's
geopolitical strategy through this year had
certain distinctive features, it was by way of
favoring China in the energy sector. Putin is on
record as saying that by 2020, Russia could export
as much as a third of its oil and substantial
quantities of natural and liquefied gas to Asia.
Russia has commenced work on its
4,000-kilometer East Siberia-Pacific Ocean (ESPO)
oil pipeline with an annual capacity of 80 million
tons, of which 30 million tons will go to China
and 50 million to the Pacific coast. More
important, Moscow has favored China by its
decision to take up the Chinese leg as ESPO's
first phase.
During Putin's visit to China
in March, Russian gas supply to China was
discussed - Russia will supply up to 40 billion
cubic meters (bcm) of gas to China after 2010,
which will be stepped up possibly to 60-80bcm -
and it was agreed that the 3,000km Altai
