Development Demands Fueling China

Development Demands Fueling China's Search for New Energy Sources
Africa News 2/9/2006
China may have failed in its bid to acquire U.S.-based Unocal last summer, but just north of the border it has found a new partner in energy-rich Canada.

To meet its soaring demand for energy, China is scouring the globe for oil, natural gas and other sources, and that drive has major implications for North America, said Wenran Jiang, a China expert at the University of Alberta.

Jiang addressed the Seattle Economists Club on Wednesday and will speak from 8 to 10 a.m. today at the University of Washington's University Club.

"China is power hungry, not so much for political power but in the economic sense," he said. "China without energy cannot deliver" on its development plans.

Those plans include quadrupling its economy in the next 15 years.

From the early 1980s to the mid-'90s, China quadrupled its economy largely using domestic energy sources, Jiang said. But now it has become a net oil importer, and it will need to double its supply to reach its goals.

To understand the potential impact on energy consumption, China, with 22 percent of the world's population, now consumes 6.4 million barrels of oil per day. The United States, with 5 percent of the world's population, consumes 25 million barrels.

If China had the same per-capita consumption as the United States, it would need 85 million barrels per day, as much as the entire world consumes today, Jiang said.

For a country in search of oil, Canada looks like the Holy Grail. Its oil reserves in Alberta rank second only to those in Saudi Arabia, and some predict Canada will become the biggest global supplier by 2010.

When Chinese President Hu Jintao visited Canada in September to celebrate 30 years of diplomatic relations between the two countries, he announced both had moved from a "cooperative" to a "strategic" partnership, said Jiang, an academic member of Foreign Affairs Canada's Strategic Working Group on China.

The next month, China's largest oil company, China National Petroleum, spent $4.2 billion to acquire control of PetroKazakhstan, a Canadian company with assets in Central Asia. That was followed by a deal in which China National Petroleum and an Indian company jointly acquired Petro-Canada's stake in Syrian oil fields.

China relies on coal for about 70 percent of its energy, which results in severe pollution in many cities. In addition to searching for oil and natural gas, it is spending $40 billion to produce 32 nuclear reactors by 2020, Jiang said.

The country is also working to develop alternative energy such as wind farms.

Jiang described the country's energy grab as "driven by desperation." Already there are blackouts in major cities. If development hits a speed bump, the Communist Party in power may lose its grip if it can't deliver jobs and economic growth.

As a result, energy has become a central theme in China's foreign policy. Chinese companies are courting deals from Sudan to Iran to Peru.

Although China's rise is often viewed negatively in the U.S., evidenced by political interference in the Unocal deal, perceptions of China are more positive elsewhere, Jiang said.

Allowing China to participate in energy markets will encourage more moderate foreign policies and less desperate measures, Jiang contends. Either way, China's influence isn't going away.

"China not only has joined the world but is already changing it," he said.

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