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China’s Pursuit of Happiness

Dharak V. Bhavsar - 8/1/2007

The phenomenon of globalization has substantially changed the dealings of the nations with each other and created a complex system of interdependence among the nations. The emergence of economic globalization has greatly diminished the prospects of regional or world wars, hence creating more opportunities for development and growth. Economic globalization lies at the core of China’s rise to a superpower in a peaceful manner. An open door policy has been Deng Xiaoping's most dramatic contribution to China's economic reform movement. Since starting to open up and reform its economy in 1978, China has averaged 9.4 percent annual GDP growth, one of the highest growth rates in the world. As China ascends to a peaceful rise through its outstandingly impressive economic rise and development, its dependence on and hunger for natural resources has greatly intensified. As such, it needs to focus on acquiring natural resources to keep its economic engine running. The primary goal for Chinese diplomacy is to retain the country's strategic opportunities and maintain economic development to the year 2020 . The rise of India and Brazil as well as the massive usage of natural resources by U.S., Japan and other economic powerhouses has sent China on a wild and persistent search to find sources that will satisfy its hunger.

China today faces an immediate challenge: energy dependence. China was the eight largest importer of oil in 2000, fourth largest in 2003 after the United States, Japan and Germany and will most probably occupy second place before the end of this decade. Beijing recognizes the need for a cheap and consistent supply of energy for its continued economic growth. Hence, economic strategies are based on fulfillment of these energy needs with any other strategic advantage being treated as a by-product. China’s diplomacy revolves around the acquiring of energy assurances from resource rich countries regardless of the political, economical or security situation of the country. For this purpose, China has heavily invested its resources in Latin America, Central Asia and Africa. In Latin America, China has entered into mutually beneficial relations with Venezuela, Ecuador, Bolivia, Colombia and Mexico. The bilateral trade between Latin America has increased from $12.6 billion in 2001 to $30 billion in 2004. Chinese oil companies often oversee the implementation of government policy. The China National Petroleum Corporation (CNPC) has been given the rights to operate fifteen fields in eastern Venezuela, to participate in the development of the 200 billion barrel Orinoco belt, negotiating the development of a new refinery in eastern China to refine Venezuelan oil . In August 2003, in Ecuador, the CNPC was awarded prospecting rights by Ecuador’s president Lucio Gutierez in return for investment in the energy infrastructure. In 2004, the CNPC bought a subsidiary of Plus-Petrol in Peru. In 2004, in Bolivia, Chinese companies began construction of a chemical complex. In Colombia, China offered to finance the construction of an oil pipeline. From the few above mentioned examples of China’s involvement in Latin America, it can be inferred that the mode of operation of the Chinese diplomats is to negotiate and extract consistent energy supply in exchange for investment in the infrastructure of the country.

China’s policy of investing in raw natural resources extends beyond Latin America into Africa. In November, China hosted a two day summit for 48 African leaders which highlighted the growing importance of the region. The modus operandi of energy supply for infrastructural investment continues in Africa. China’s quest for natural resources and energy turns a blind eye to the humanitarian situation of a nation. Sudan, where the bloodshed has left hundreds of thousands of people dead, receives continued support from Chinese government. China has pumped $4billion into Sudan’s oil industry, and has blocked several U.N. resolutions condemning Sudan. Beijing has extended a $2 billion “ultra-low” interest loan to Angola to gain exploration and development rights; Nigeria granted four oil exploration licenses in return for $4 billion in “infrastructural investments. Unlike Western countries whose assistance for the African continent is based on good and fair governing practices, China advocates no-strings attached, strictly business policy. Due to the economic boost and the non-interference guarantee that the countries receive because of this investment and aid, African countries are particularly friendly toward China. In return for the support, China has canceled nearly $1.4 billion in debt held by 31 African countries since 2000; Trade between China and Africa is soaring 30 percent a year. It hit $40.5 billion in the first nine months of 2006 .

As involved as it may be in Latin America and Africa, it remains most involved in its own backyard – Asia. This involvement is best evident in the economic sphere. Not only is China increasing trade with its neighbors, it is also increasingly investing in the region. In 2003, China’s direct investment in other Asian countries reached $1.5 billion out of a total of $2.85 billion invested by Chinese companies globally. In Central Asia, the Shanghai Cooperation Organization (SCO) that was established for political and security reasons has now been expanded to include economic cooperation. China’s motive in this economic expansion was to tap into the natural resources of Kazakhstan, Kyrgyzstan, Russia, Tajikistan and Uzbekistan. At the 2003 meeting of the SCO, then Chinese premier Wen Jiabao proposed setting up a free trade-zone among member states and reducing non-tariff barriers in a variety of areas. China has increasingly stepped up trade with the economic powerhouses of Asia – South Korea, Japan and India. There are existent animosities between these countries; China’s diplomatic efforts helped achieved this economic boost. Another example of China’s relentless pursuit of energy despite negative situations in a country is China’s support of the oppressive Junta regime in Myanmar. Reports a New York Times article “With so much energy and other resources at stake, and given its preference to shun outside interference in internal politics, China’s leaders are seemingly unbothered by what is happening inside Myanmar” . In the Middle East, China is in the formative stages of negotiating strong alliances with Saudi Arabia, Kuwait and other resources rich nations. Saudi Arabia provides about 17 percent of China’s oil imports—China National Petrochemical Corporation (SINOPEC), in cooperation with Saudi Arabia’s largest oil com¬pany, Arabian American Oil Company (ARAMCO), has invested $300 million to explore the Ghawar natural gas field in the Rub al-Khali desert in Saudi Arabia. It has already established a strong link with Iran. The rewards it reaped were plentiful. It gained access to cheap Iranian oil in times of elevating energy prices. While the rest of the world frets about Tehran’s nuclear ambitions Beijing recently signed a massive deal to develop Iran’s Yadvaran field.

If the twenty-first century is marked by international competition over energy supplies, China certainly intends to come out in the front. In going global in search for its energy resources, Beijing is signaling that it intends to compete, for markets, for resources, for influence, not simply in East Asia, but around the world. China’s unremitting pursuit of energy sources, along with the parallel rise of India, takes a heavy toll on the world energy sources. China’s economic prowess will undoubtedly turn into heavy political influence and a superior military in the coming decades making it a truly international player like the United States and the European Union.