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MIDEAST: Energy Security Guides China’s Approach

Antoaneta Bezlova

BEIJING, Jan 12 2009 (IPS) - China’s pro-active stance in finding a settlement to the latest crisis in the Middle East – a trouble spot which does not normally figure on Beijing’s list of top foreign policy priorities – suggests heightened attention to energy security for the country’s power-hungry economy.

Joining the calls for an immediate ceasefire in the Gaza Strip, China announced it will be sending its Middle East special envoy to Egypt, Israel and Palestine to promote conflict resolution.

Beijing has also pledged one million US dollars of emergency humanitarian aid to the Palestinian National Authority and promised it will send more in the future.

“We grieve over the deteriorating humanitarian crisis in the Gaza Strip,” Foreign Ministry spokesman Qin Gan said at a regular press briefing last week. “We appeal to relevant parties to immediately stop military actions.”

Chinese leaders have expressed concern about the worsening armed conflict in the region.

Chinese President Hu Jintao held a telephone conversation with U.S. President George W. Bush after the conflict broke out and foreign minister Yang Jiechi has also spoken, via telephone, with U.S. Secretary of State Condoleezza Rice.


The conflict overshadowed China’s celebrations of the 30th anniversary of establishing diplomatic relations with the United States. Because of the Israeli-Hamas violence, Rice cancelled her trip to Beijing to attend the celebrations last week, bringing to the fore the importance Washington attaches to the situation in the Middle East.

“China is an emerging economic power and has to push for increasing its influence in the Middle East,” says independent energy analyst Liu Tao. “Participating along with other world powers in the resolution of the current conflict in the region can help China better ensure its energy security.”

Although a relatively new player in the Middle East, in recent years China has invested diplomatic efforts into cultivating relations with countries in the region. While seeking to carve out a space for itself in a region traditionally dominated by U.S. and British influence, Beijing has concentrated on upgrading economic ties.

Arab countries are currently China’s eight largest trading partner. In the Middle East, and in the Persian Gulf in particular, China is no longer viewed just as a source of low-priced consumer goods but mainly as a major market for oil.

Securing access to oil is what has underpinned Beijing’s charm offensive in the region since the country became a net oil importer in 1993. Today, more than 50 percent of China’s oil imports come from the Middle East.

The country’s energy officials have adopted a strategy of energy diversification, working to secure concessions and investments in oil and gas fields in other resource-rich countries like Venezuela and Nigeria.

Yet the bulk of China’s oil imports remain dependent on the Middle East which holds two-thirds of the wrold’s proven oil reserves.

The International Energy Agency predicts that Chinese oil imports from the Middle East will rise to at least 70 percent by 2015, underscoring that the prospects of maintaining high growth for Chinese economy are inextricably tied to the fortunes of the Middle East.

While the current crisis does not involve major oil-producing countries in the region, Chinese energy analysts have pointed at its impact on oil prices. Worries that the armed conflict could engulf the oil-rich Middle East, had helped push oil prices to 48 US dollars per barrel last week.

“The conflict is a godsend for those hoping that oil prices will bounce back to some more acceptable level,” says Dong Xiucheng, expert at China University of Petroleum in Beijing.

For China though, the conflict may bring disruption to recently announced plans to stockpile oil. Amid low international oil prices Beijing has been seeking to fill up its strategic oil reserves, quickening the pace of its imports.

While China does not disclose its oil inventories on a regular basis, it has been upgrading its existing storage facilities and building new ones.

The country’s plans to create strategic oil reserves came to a halt after oil prices hit 70 dollars a barrel in August 2007. Analysts believe Beijing resumed filling up the reserves in the last few months, taking advantage of falling global demand for energy.

In early January, Zhang Guobao, head of the National Energy Administration, was quoted by the People’s Daily newspaper as saying that China will “encourage companies to utilise idle storage capacity to increase oil inventories”.

That followed news that the U.S. was seeking to buy as much as 20 million barrels of oil for its emergency stockpile while the low prices held.

Some Chinese newspapers have speculated that the conflict and its “price-inflating” effects were timed as a “parting gift” by the “Bush dynasty” to the U.S. oil majors. “The traditional mode of crisis the region has slipped into cannot disguise the war over petrol that is going on,” said a commentary in the China Times.

 
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