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Tuesday, 02 February 2016 10:10
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The impact of China’s “energy diplomacy” policy on Southeast Asia

(LLCT) - China is currently the world’s second largest energy consumer, only behind the United States, and was the world’s largest crude oil importer in April 2015(1). In order to ensure its stable energy supplies at reasonable prices, the Chinese government has developed a national energy strategy and energy security policy with very specific guidelines.

1. China’s “energy diplomacy” policy

China is currently the world’s second largest energy consumer, only behind the United States, and was the world’s largest crude oil importer in April 2015(1). In order to ensure its stable energy supplies at reasonable prices, the Chinese government has developed a national energy strategy and energy security policy with very specific guidelines. Through concrete actions, it has been actively looking for new energy sources on global and regional scales.

After unilaterally seeking new energy sources in the 2001-2005 period, China began to participate in some multilateral cooperation mechanisms and established bilateral energy dialogues with large oil groups from the United States, Great Britain, Russia and Japan since 2006. One of China’s objectives for the future is to join the International Energy Agency. Between now and 2020, the country is implementing its strategy of Eastern coast development, which is subject to the State’s macro-management, and targets provinces, centrally-governed cities, and autonomous regions located along the coast on exploiting marine resources. With this strategy, institutional and organizational innovation is given a central role. This marks the initial period of the country’s national marine development strategy and also preparation for comprehensive implementation of the strategy. From 2020 until the mid-century, this strategy will be comprehensively implemented. By this time, marine resources and energy are expected to be exploited on a maximum scale, and China is likely to become a global superpower in terms of its marine economy.

China considers regional cooperation the foundation of its energy diplomacy policy. Its strategic objective is to establish a “Northeast Asian Energy Community”. At present, the region is one of the world’s largest energy markets besides the United States and Europe. China, Japan, and the Republic of Korea all depend on large quantities of imported oil to meet their respective demands for development. If the current economic growth in the region is maintained, energy security will become a pressing issue that the regional countries will face. In terms of energy, although these three countries have complementary strengths, they compete with each other fiercely and there exists a conflict of interest amongst them.

China will continue to apply its energy diplomacy policy to countries and regions so that it can proactively ensure its energy security. Some have called this policy an “oil spill” one because it does not simply aim to provide energy security for the country, but is also a way for it to achieve higher strategically important goals.

2. The impact of the policy on Southeast Asia

Southeast Asia has an important location on the sea route between the Indian and Pacific Oceans. The Strait of Malacca is considered the only gate through which to enter the bountiful market of the Asia - Pacific. In the early 21st century, China began to promote its “energy diplomacy” policy and energy cooperation with Southeast Asian countries. Although the region only has a modest amount of crude oil and natural gas reserves, China cannot afford to “ignore” this aspect of its energy diplomacy policy because of its important geopolitical position. China has jointly exploited oil and gas with almost all of the regional countries, including Indonesia, Vietnam, Malaysia, Thailand, Cambodia and Myanmar. China’s energy diplomacy policy has made a significant impact, with positive and negative aspects, on Southeast Asian economics, politics and security.

The policy aims to intensify the exploration and exploitation of oil and gas in the region and promote energy diplomacy between regional countries. According to China’s customs records, the country imported about 3.16 million tons of crude oil worth $730 million from Vietnam in 2000, 78.6% of its total import from Vietnam. The figure for 2001 was 3.36 million tons, which made Vietnam the largest Southeast Asian and the world’s sixth largest crude oil exporter to China(2).

In late 2007, China began construction of the pipeline connecting Sittwe port in Myanmar with Kunming, the capital of Yunnan province. The Chinese government’s pipeline is designed to be 2,380 kilometers long and to carry 170 million cubic meters of natural gas from Myanmar to the southwest of China and will be completed within the next 30 years. China Petroleum & Chemical Corporation (Sinopec), China National Petroleum Corporation (CNPC), and China National Offshore Oil Corporation (CNOOC) have intensified their exploratory operations in the seas off the Western coast of Myanmar. China has planned to invest approximately 160 million renminbi in development of ports in Myanmar, which is a good opportunity for Myanmar’s modernization and global integration(3).

Thus, in the first two decades of the 21st century, Southeast Asia has remained an important energy supplier and point of transit for China. If China and Southeast Asian countries manage to overcome security and sovereignty “obstacles” and find out appropriate cooperation mechanism, oil and gas will be an important contributing factor to the development of bilateral relations, security, and prosperity in the region.

China’s energy diplomacy strategy does not only deal with energy-related issues, but is also part of its plan to exert influence throughout Southeast Asia and the rest of the world and dominate the East Sea. Therefore, the strategy is complicated and has negative implications for the Southeast Asian region in terms of economy, energy, security and defence. Currently, energy cooperation between China and the ASEAN is faced with a number of obstacles, including the East Sea issue, which accentuates the regional countries’ strategic interests in oil and the important position of this sea. China’s policy of diversifying its supply of energy is the next step for domestic energy policies. As a result, China has been present in almost every region of the world in the name of economic, political and cultural cooperation.

As far as security cooperation is concerned, China has signed military agreements concerning the guarantee of absolute security of sea routes through the Strait of Malacca with Malaysia, Singapore and Indonesia. The importance of the Eastern Sea to China’s energy security is evidenced in the fact that 85% of its oil import must be transported through the strait(4).

China’s energy diplomacy, marine development strategies, and its energy situation in recent years are the main factors for its intensified dispute over sovereignty rights in the East Sea with Southeast Asian countries including Vietnam. 

To this effect, China has used the benefit of economic cooperation in order to neutralize the ASEAN member countries so that it can complete its construction of man-made islands and military bases on the East Sea. From the 12th to the 14th of November 2014, Chinese Premier Li Keqiang attended ASEAN+1, ASEAN+3 conferences and the East Asia Summit in Myanmar, where he introduced the initiative called “dual track thinking”, aimed at solving the East Sea issue. First, directly relevant countries should deal with disputes peacefully, by means of friendly negotiation. Second, peace and stability in the South China Sea should be jointly protected and maintained by China and the ASEAN countries(5).

Currently, there is competition between China and some Southeast Asian countries, including Vietnam, in the exploitation of oil and gas resources. China has expressed its determination of its own role in the East Sea, unilaterally declaring that China has the rights to 80% of the sea. On the 60th anniversary of the establishment of its People’s Liberation Army, China showed off its naval power on the East Sea, which triggered a series of reactions from neighboring countries in the region(6).

In order to account for such action, the role of the East Sea in China’s energy security strategy must be identified. Natural gas is China’s secondary source of energy behind oil. Because natural gas is relatively clean, it takes priority over oil in the country’s energy security policy. In the case of an oil crisis, natural gas, if stocked up, could partially supplement China’s supply of energy. Among the Southeast Asian countries, Indonesia and Malaysia have access to enormous natural gas reserves estimated at about 2,8 trillion cubic meters. Therefore, importing natural gas from Southeast Asia and investing in the exploration and exploitation of natural gas in this region is of great benefit to China’s energy security(7).

China is presently applying its “confidence boost” diplomacy strategy to the Southeast Asian region. This step-by-step strategy consists of two parts. The first part reaffirms China’s “nine-dash line” claims, taking practical actions to protect its sovereignty over the East sea. The second part continues to intensify China’s economic relations with surrounding Southeast Asian countries, drawing these countries into its sphere of influence.

China’s actions in the East Sea region are very unpredictable to the countries involved in the conflict and will cause issues that must be jointly solved by all parties.

The U.S. government has released a report on China’s “nine-dash line,” in which it dismissed the country’s territorial claims. However, recent history has shown that even when the International Court of Arbitration rules against China, Beijing will ignore such ruling(8). China is determined to achieve its goal of completely controlling the East Sea.

In order to solve the East Sea issue, the parties concerned must control themselves and make use of negotiations, multilateral and bilateral alike, as well as the United Nations Convention on the Law of the Sea of 1982. However, China’s actions in the sea have proved to be contrary to international law. Southeast Asian countries need to make joint efforts to solve the issue. They need to be flexible, but also determined to adhere to the common principle of “cooperation in joint exploitation for mutual benefit.” As a matter of fact, one-fifth of the ASEAN population is living in shortage of electricity, and energy demands in the region will increase by about 80% by 2035.

Thus, China’s energy diplomacy policy has caused both positive and negative impacts on the economics, politics, security, and peace of the Southeast Asian region, particularly ASEAN countries. This policy has taught the regional countries, including Vietnam, about the future of cooperation and competition with China. In the years to come, this policy will remain a point of tension, complicating international relations in the region.

 

Assoc. Prof., Dr. Thai Van Long

Institute of International Relations

Ho Chi Minh National Academy of Politics

Dr. Luong Cong Ly

University of Transport technology

 

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