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.