China's energy thirst a regional concern

China's energy thirst a regional concern

By Rizal Sukma

JAKARTA (JP): China's rapid economic growth in the last 15
years has brought about a number of serious problems for the
country. One of those problems is that China has to deal with
energy problems as a result of its heavy concentration on
industrialization in its effort to modernize the country. A
strategy that relied on coal as the main energy source during the
1980s is no longer suitable for coping with China's increasing
need for energy. This is a logical consequence of China's
modernization program which has made the country an energy-
intensive economy. As a result, to meet its energy needs China
will soon turn to oil and gas.

China's increasing need of oil and gas not only poses critical
problems for China, but also could have serious implications that
should be considered by its neighbors. This is due to the fact
that the shortage of energy has become one significant aspect of
post-cold war international and regional security. This article
examines the question of the energy crisis in China and its
possible implications for regional security in the Asia-Pacific
region.

As China's industrial growth increases every year, its future
energy needs will also experience a sharp increase. That China
will face serious energy problems can be seen from the blue print
of Ten-Year-Plan of National Economic Development and its Eight
Five-Year Plan adopted by the National People's Congress in 1991.
It was stated that China would quadruple its Gross National
Product by the end of this century, and to support those goals it
was estimated that the economy should grow at 6 percent until
2000. It was also planned that China would double its energy
consumption to support such a level of growth.

However, China later on revised its target for economic growth
from 6 percent to 8-9 percent in October 1992 on the order of
Deng Xiaoping. In effect, this revised plan would also increase
China's energy need even further. Therefore, an estimation by
Hisahiro Kanayama (Institute for International Policy Studies,
Tokyo, June 1994) suggests that China's energy demand would
exceed its production in 1995. In coal, for example, China would
only able to produce 1.20 billion tons in 1995 while its
consumption would be 1.23 billions tons. In 2000, China would
produce 1.30 billions tons of coal, while it needs would reach
1.42 billion tons (this estimation is based on the assumption
that China's economy would enjoy an 8.5 percent growth). The
above figures clearly indicate that China will suffer shortages
of energy production if it continues to rely on coal.

The same features can be seen in oil production. Kanayama
estimated that China in 1995 would only produce 0.145 tons of
crude oil, while it would use 0.146 billion tons. However, in
2000 China's production would only reach 0.165 billion tons while
it will need 0.188 billion tons. It means the country's crude oil
consumption between 1991 and 2000 will increase about 45-70
million tons. This estimation proved to be accurate when China,
for the first time, had to import oil from abroad in 1993.

Unfortunately, China's oil reserves will not solve its energy
problem. From the Talimu Basin in the northwestern part of China,
for example, the government plans to exploit 15 million tons of
oil by 2000. This number, however, is not enough to cover China's
need for crude oil which will be around 45-70 million by that
year. Increasing coal production is also not a viable option for
meeting increasing energy needs, since China is still facing
financial, transportation, and technological problems. Moreover,
it would also pose environmental problems. The most important
question for us, then, is where will China look for its new
resources?

Such a question is closely related to the future of regional
security in Southeast Asia. Two possible implications are soon
discernible in this regard. First, the South China Sea has long
been recognized as an area which has potential resources. China
will therefore look for at this part of the region as a possible
source of energy, and China will definitely capitalized its
technology to exploit the region. Although there has been no
precise estimation of oil reserves in the area, it is widely
believed that the South China Sea contains large amounts of oil.
This will automatically strengthen China's territorial claim to
the area.

Second, the strengthening of China's claim to the South China
Sea would make the solution of the present territorial dispute
among China, Taiwan, Vietnam, the Philippines, Malaysia, Brunei
over the jurisdiction of the area even more difficult to achieve.
Besides the question of sovereignty which is itself sensitive
enough, the problem would be more complicated by the increasing
importance of an energy factor in the dispute. Because, for the
conflicting parties, the need for energy and natural resources
has become a key aspect in promoting economic development.

Viewed from this perspective, the need for a solution to the
South China Sea dispute is indeed pressing. In this regard, the
ASEAN Regional Forum designed by the 1993 ASEAN Ministerial
Meeting as a new framework for dialog can be used as an
alternative venue to address this question.

Moreover, it is time now to bring the Informal Workshop in the
South China Sea initiated by Indonesia to a more formal level. Of
course, it needs a more flexible approach by the parties
involved. China's position and view in this regard will be of
great concern to other claimants. As a major power, and also as
the most feared country in the region, it is time for China to
act as a pioneer in taking a position acceptable to other parties
in the dispute. This means that China should indicate its
willingness to cooperate with the other parties in finding an
acceptable formula. It is and still will be facing an energy
problem and the countries in Southeast Asia therefore should be
aware of the significance of China's way of handling its energy
problems.

The writer is a researcher at the Center for Strategic and
International Studies, Jakarta, and a PhD. candidate at the
London School of Economics and Political Science, United Kingdom.