China-US oil codependency it is unavoidable

David Fickling

By the way that China and USA are working hand in hand to free crude from their strategic reserves of Petroleum and to reduce the tension in the oil market a bit, one might think that the two largest energy consumers in the world found an area in which they can cooperate.

In hindsight, “taking action to address global energy supplies” – clearly a reference to the reserve releases that occurred – was one of the few solid points of agreement at last week’s virtual summit between Presidents Joe Biden and Xi. Jinping.

However, it is still an uncomfortable relationship. Let’s talk about Khalifa, a port on the oil-rich shores of the Persian Gulf where China’s state-owned Cosco Shipping Co. has been building a $ 738 million container terminal with the Abu Dhabi government. US intelligence agencies discovered that China was secretly setting up a military installation at the port and pressured the United Arab Emirates to halt construction, the Wall Street Journal reported last week, citing people it did not name. That would represent an extraordinary foray into a region where the US is the only major external military power (its allies, the UK and France, also have small bases in Bahrain and the United Arab Emirates).

It is not difficult to understand why Beijing would want a more secure foothold in the gulf. The US has been one of the three largest oil producers in the world since the 19th century and could, if necessary, become self-sufficient. China, on the other hand, imports almost three-quarters of its oil, about 60% of the total by sea.

The Beijing regime is existentially dependent on the long supply lines that transport crude from the Gulf to its eastern ports – and the US Navy provides the security detail for that trade. If the two nations were to clash (in a conflict over Taiwan, for example), it would be relatively easy for Washington to block China’s energy supply in the Strait of Hormuz, Malacca and Singapore. That could paralyze the entire country and, more importantly, the power source for its war machine.

Energy and transportation have long fueled the great power conflict. Britain’s naval blockade in World War I turned the war in its favor by isolating Germany from imported nitrate fertilizers, leading to a widespread calorie deficit and starvation. The Japanese colonization of Manchuria and then Southeast Asia two decades later was aimed at replacing their previous dependence on American oil. Hitler invaded Russia in part to capture the oil fields of the Caucasus and fix the Wehrmacht’s outdated reliance on horsepower instead of motorized transportation.

That is the best explanation for Washington’s continued obsessive involvement in the Middle East, a region in which it has few strategic interests commensurate with the large sums invested over decades.

“America’s primacy in the gulf is a key element of its status as the predominant global power,” said David Brewster, a senior fellow at the Australian National University School of Homeland Security that focuses on the Indian Ocean. “If the US wasn’t there, then China would be there, and that would destabilize the entire region.”

It is understandable that Beijing doesn’t like to feel hanged in this way by the US, but it is stuck, unless new zero-carbon technologies can replace crude in both civilian and military uses.

The key elements of China’s foreign and defense policies over the past decade make the most sense when viewed as an attempt to correct the power imbalance. The Belt and Road Initiative, with its ports in Tanzania, Pakistan, Sri Lanka and Myanmar, gives Beijing a position in the Indian Ocean that could one day serve to offset its severe shortage of military supply and supply facilities. China’s only military base abroad, in Djibouti, at the gates of the Red Sea, could serve a similar purpose.

Pipelines through Myanmar, a railroad through Malaysia, and incentives for rail transport through Central Asia reduce dependency on the bottleneck around the Singapore Strait. The recent surge in China’s anti-piracy activity in the Indian Ocean and the construction of aircraft carriers suggest ambitions to become an offshore naval power, capable of operating far from its own shores and securing distant maritime communication lines essential to its own survival.

It is a dangerous game. China is unlikely to ever be a competitive fleet in the Indian Ocean, Brewster said: “In the event of a major conflict, it would be immediately isolated from ports and left very vulnerable.” Even so, attempts by great powers to protect themselves from rivals’ control of the seas have historically precipitated conflict as much as they prevented it, as did the Anglo-German arms race before World War I and the attack. Japan’s preventive against Pearl Harbor.

In this case it also applies. Any gradual shift from the US to China in control of Asia’s crude supply lines would alarm Washington’s other oil-dependent allies (Japan, South Korea, and Taiwan) as much as it would comfort Beijing. India, the world’s third-largest importer of crude oil and the natural hegemon in the Indian Ocean, may also find that it cannot sit idly by.

As much as this disturbing status quo may upset US foreign policy experts who want the nation to move away from the Middle East and alarm their peers in China who fear their national security will be under the control of the Pentagon, at the moment it is the best we have. Cooperation among the great powers on the liberation of their strategic oil reserves may not transform the oil market. However, the alternative to cooperation is much worse.