Chinese Energy Policies and Foreign Policy Overview

Date: 16 April 2012

To: AEC 445G

From: Shinho Hayashi

Subject: Chinese Energy Policies and Foreign policy Overview

Today, China imports about half of its oil, and becomes the second-largest oil consumer in the world. Its entry into the club of oil importing nations has raised questions; what is the Chinese energy strategy to get more oil? How will the relationship between China and U.S change? What is the impact in the world when China increases its energy consumptions? In chapter 9 and 10 of the book The Quest, Daniel Yergin focuses on Chinese energy policies and the future relation between U.S. and China.

China‟s Energy Policy

In the Chapter 9 of The Quest, Yergin mentioned that in the energy field, a great economic expansion has changed China‟s oil position and the huge energy requirements of all the factories that make China the world‟s leading manufacturing country and supplier of goods to the global economy is increasing. At the same time, he also argues that China‟s rapid growth in oil demand generates great anxiety. In addition to the anxiety regarding the pressure on world oil supplies, he also describes the impact of China‟s Energy Policy, the so called "Go Out Policy". Seeking more oil from overseas markets is inevitable for China, since by 1993 the petroleum production could no longer keep up with the rising domestic oil demand. With its "Good Neighbor Policy" especially, China is building a relationship with Africa. In exchange for China‟s contributions on building infrastructures in Africa, China receives natural resources from them. Yergin calls this relationship "value-added."

Following Deng‟s policy of "peaceful rising," a kinder and gentler economic growth policy is one of the China‟s strategies. Also with China‟s "Good Neighbor Policy", China refocuses its energy on expanding economic trade and cooperation with all its neighbors and other countries. Not only trade, but also energy, plays an important role in its economic growth, so to secure stable energy sources is imperative for China.

Then, what kind of impacts does the "Go Out strategy" have in Africa? After examining Chinese behavior in Nigeria, I would like to say China had a "catastrophic impact" on Nigeria rather than "value- added" one. China and Nigeria started their trade in 1961; the trade volume was below $1million. By 1996, the volume of trade had risen to $178 million and by 2001 it reached $1.14billion. Obviously, Chinese trade and infrastructural aid were fundamentally reshaping Nigeria‟s economics. On the other hand, cheap Chinese imports have jeopardized textile and other manufacturing sectors, and the growing influx of Chinese immigrants brought catastrophic impacts.