Energy First: China and the Middle East
By Jin Liangxiang
Middle East Quarterly
Spring 2005
China’s Middle East policy is undergoing a major shift. Traditionally,
Beijing considered the region too distant for significant investment and
instead limited its efforts to convincing Arab capitals to sever their
ties to Taiwan and establish diplomatic relations with the People’s
Republic.[1] Beijing’s first diplomatic victory in the Arab world was
the formal establishment of relations with Egypt in 1956. The Chinese
Foreign Ministry completed its mission of establishing ties to each Arab
country when China and Saudi Arabia exchanged ambassadors in 1990. With
China’s economic boom, though, Beijing’s Middle East policy has taken on
new importance. While Washington’s Middle East policy has traditionally
been activist, Beijing’s policy was more restrained. But Chinese
passivity in the region may end in coming years, as the Chinese
government’s need to achieve energy security forces a more active policy.
China’s Quest for Energy
For decades after the 1949 establishment of the People’s Republic,
energy concerns were only a minor factor in Beijing’s national security
assessment. After all, the Daqing oil field, 600 miles northeast of
Beijing, discovered in 1959, had since 1962 produced enough oil to keep
the nation self-sufficient. This changed, however, as China’s economy
developed. Since the 1978 initiation of economic reforms, China has
enjoyed an almost 9 percent annual growth rate.In 1993, China became a
net importer of oil and, in 2003, with a daily demand of 5.5 million
barrels per day, Chinasurpassed Japan to become the second largest
international oil consumer after the United States.[2]
While China has boosted its own domestic production, demand is outpacing
domestic supply. By 2020, China might produce 3.65 million barrels per
day but will likely require more than twice that to meet its needs.
While Chinese scholars suggest that oil imports will account for 60
percent of Chinese energy needs, [3] the International Energy Agency
believes that the figure could behigher.[4] While analysts may quibble
over the actual figure, there is consensus that the Chinese thirst for
oil will only increase.
As China’s thirst for oil has grown, energy security has become a major
consideration of its Middle East policy. While the Middle East accounted
for less than 40 percent of China’s oil imports before 1994, since 1996,
the proportion has risen to over half. In a June 2004 lecture, Han
Wenke, deputy director of the Energy Research Institute of China’s
National Development and Reform Commission, argued that China should
“make full use of international influence and comprehensive national
strength to strengthen international cooperation with major oil
production countries and exporting countries in fields of politics,
economy and trade and diplomacy.”[5] In many ways, Han’s statement is
more a description of current Chinese policy rather than proscriptive
advice.As Table 1 (below) indicates, Iran and Saudi exports together now
represent almost two-thirds of China’s Middle East oil imports.
While China’s imports from smaller producer countries rise and fall, the
Chinese partnerships with major producers such as Saudi Arabia and Iran
have increased exponentially. Whereas in 1994, Iran accounted for just
one percent of China’s total imports, less than a decade later, Beijing
purchased $2 billion (US) of oil from Tehran, representing more than 15
percent of its total 2002 oil imports. Today, the figure is probably
larger still. In October 2004, the head of China’s National Reform and
Development Commission and Iranian oil minister Bijan Namdar Zanganeh
signed a memorandum of understanding regarding bilateral energy
cooperation. According to the agreement, the Chinese government will buy
10 million tons of Iranian oil each year for the next twenty-five years.
In return, China Petroleum and Chemical Corporation (Sinopec), the
nation’s second largest oil producer, may develop the Yadavaran oil
field in Iran’s western Kurdistan province, giving China a 50 percent in
terest in the field’s estimated 17 billion barrel reserve. Yadavaran
could be China’s biggest oil investment in the Middle East.[6]
Nevertheless, China-Iran trade should be kept in perspective. While the
China trade may be significant for Iran, the opposite is not true.
Bilateral Sino-Iranian trade accounts for only 0.6 percent of the
Chinese total.[7]
The recent growth in Chinese oil imports from Saudi Arabia has less to
do with politics than with technicalities. Saudi oil tended to have too
high a sulfur content for Chinese refining capability. The Chinese
government has turned the impediment into advantage, though, as it gives
Beijing an opportunity to engage the Saudis not only politically but
also economically. Both Beijing and Riyadh are working jointly to
establish capable oil refineries. The Chinese government has already
approved a joint Sino-Saudi petroleum and chemical project in China’s
eastern Fujian province, and the Chinese government included the joint
Qingdao refinery in China’s eastern Shandong province in its tenth
five-year plan (2001-05).[8]
Beijing’s strategy has not been limited to importing oil and increasing
China’s own refining capacity but has also included increasing bilateral
cooperation in Middle Eastern production. The China National Petroleum
Corporation, China’s largest energy company, began operating in Sudan in
1995. After a decade of continuous investment, the corporation was able
to boost Sudanese oil production to 250,000 barrels per day.[9] More
recently, on March 7, 2004, Sinopec, in partnership with Saudi ARAMCO,
signed a natural gas exploration and development agreement in Ar-Rub~Q
al-Khali, the so-called “Empty Quarter.” Sinopec maintains a four-fifths
share.[10]
Beijing views the Middle East not only in terms of its value as a source
of oil but also in the context of its huge potential as an oil services
market. Early in 1979, Chinese labor services companies entered the Gulf
Cooperation Council markets. By 2001, China had signed almost 3,000
contracts in all six Gulf Cooperation Council states for labor services
worth $2.7 billion. The overseas construction arm of China National
Petroleum Corporation moved into the Kuwaiti market in 1983, and a major
business expansion took place in 1995 when the group won an oil storage
reconstruction project in Kuwait. Since then China has expanded into oil
services in Egypt, Qatar, Oman and other parts of the Arab world.[11]
China’s growing economic ties with the affluent Persian Gulf emirates
have not been unilateral. In July 2004, the six Gulf Cooperation Council
finance ministers visited China where they signed a “Framework Agreement
on Economic, Trade, Investment, and Technological Cooperation” with
China and agreed to negotiate a China-Gulf Cooperation Council free
trade zone.[12]
Iraq Policy: Symbol of New Activism
Beijing’s policy to pursue good relations with every Middle East
government has extended to Iraq. China and Iraq established diplomatic
relations on August 25, 1958, shortly after the July revolution ousted
the Iraqi monarchy and installed a republic. Over subsequent decades,
despite frequent and sometimes violent changes in the Iraqi government,
bilateral relations remained stable. Chinese companies were once very
active in the Iraqi labor services market. From 1979 to 1990, Chinese
companies signed 662 labor services contracts with Iraq amounting to
almost $2 billion. After the 1990 Iraqi invasion of Kuwait, Beijing
suspended its economic relations with Baghdad in accordance with the
relevant U.N. resolutions. While Beijing had donated humanitarian
assistance to Iraq through channels such as the International Red Cross,
Chinese firms suspended their investments in Iraq until the 1996
inauguration of the United Nation’s oil-for-food program.[13] Even after
the formal resumption of Iraqi oil exports under U.N. supervision,
Beijing’s purchases from Saddam Hussein’s Iraq never accounted for more
than 10 percent of China’s total Middle East oil imports and never
exceeded 5 percent of China’s total oil imports. Chinese economic
interests in Iraq have not dominated Beijing’s stance on political and
diplomatic questions regarding the troubled country.Consistent with the
Chinese foreign ministry’s stance on proliferation and the Iranian
nuclear issue, Beijing sought to resolve the Iraq issue within the
framework of the United Nations, a reflection of Beijing’s traditional
opposition to military intervention.[14] While Beijing opposed the
eventual war, its position was much more moderate than that of France
and Russia, both of whom threatened to wield their Security Council veto.
In recent months, and consistent with Beijing’s evolving Middle East
policy, Beijing has become more assertive on the Iraq issue. In May
2004, China’s United Nations mission raised a proposal to enhance the
Iraqi interim government’s real power by setting a date for a U.S.
military withdrawal. Russia, France, and Germany supported China’s
proposal, which was reflected in the final text of U.N. Security Council
Resolution 1546.[15] While an American audience might simply see
Security Council members seeking to undercut U.S. power, veteran China
watchers found Beijing’s actions far more significant because China
seldom raises its own proposals on the Middle East.
Respecting American Concerns
In the aftermath of the 9-11 terrorist attacks and especially after the
Bush administration showed its willingness to use military power against
Afghanistan and Iraq, many Arab governments expected that the Chinese
government would become a more assertive player in the Middle East as a
counterbalance to American dominance. In an interview with Renmin Ribao
(People’s Daily), China’s leading newspaper, Syrian president Bashar
al-Assad said, “China is now a superpower and is very important after
the absence of the Soviet Union. China’s role has expanded across the
world and has become more important especially for small countries
including Syria.”[16]
Assad sought the Chinese government’s support against increasing U.S.
pressure. On an emotional level, it is a plea that has resonance among
Chinese policymakers. Because the Chinese government feels that their
country was victimized by Western powers prior to the 1949 communist
revolution, Chinese diplomacy has long maintained the principle of
equality among nations big or small in international affairs.
Nevertheless, consideration of the U.S. position still matters. China
abstained on the vote for U.N. Security Council Resolution 1559, which
demands a Syrian withdrawal from Lebanon.[17]
Within the corridors of Washington, Beijing’s outreach to the Arab world
may be cause for concern. In prepared testimony for a 2003 hearing
before theCongressionalU.S.-China Economic and Security Review
Commissionon China’s energy needs and strategies, Roger W. Robinson,
chairman of the commission, and C. Richard D’Amato, vice chairman,
argued that China’s approach toward oil-rich countries “may also
encourage China to offer incentives to energy supplier nations, as it
has in the past, including missile and WMD [weapons of mass destruction]
components and technologies, for secure long-term access to energy
supplies.”[18] Other experts worry that China might transfer arms,
missile components, or conventional or unconventional technology to
countries sponsoring terrorism in order to safeguard its own energy
security.
Such concerns are misplaced. Yitzhak Shichor, a professor of East Asian
studies at the University of Haifa and perhaps Israel’s foremost China
expert, argues that China has been a marginal, almost insignificant
player in the Middle East arms market, with the possible exception of
tactical missiles.[19] For more than a decade, China has made tremendous
improvements in its non-proliferation commitments. China is now a
signatory to the Nonproliferation Treaty, both the Chemical and
Biological Weapons conventions, as well as the Comprehensive Test Ban
Treaty and the Missile Technology Control Regime. In addition, the
Chinese legislature,the National People’s Congress of China, has passed
laws to administer export of both arms and military technologies. The
Chinese government has worked to demonstrate commitment to counter
proliferation efforts by training nineteen chemical weapons inspectors
for the U.N.’ s Monitoring, Verification, and Inspection Commission
(UNMOVIC) in September 2002. China also seconded two of its own arms
experts to UNMOVIC when Iraq inspections resumed in November 2002.[20]
The Chinese involvement in UNMOVIC signals an aspect of broader Chinese
policy that remains applicable to the Middle East. Beijing’s policies
emphasize reliance on mediation through international bodies. This holds
true with regard to the Iranian nuclear issue.[21] The Chinese
government has encouraged the Iranian government to cooperate with the
International Atomic Energy Agency and ratify the additional protocol
that would avoid serious punishment.
While the economic motivations for China’s new activism in the Middle
East may be significant, the importance of security cannot be
underestimated. China shares a 20-mile border with Afghanistan.
Following the 9-11 terrorist attacks, China gave strong support to the
U.S.-led war against the Taliban and has subsequently, both politically
and financially, supported the new government of Afghan president Hamid
Karzai.[22] Beijing’s support for U.S. actions in Afghanistan was in
part a reflection of its own security concerns. The Taliban cooperated
with Al-Qaeda, which in turn supported the East Turkistan terrorist
forces that threatened the stability of China’s northwestern Xinjiang
Uighur autonomous region. Between 1990 and 2001, East Turkistan
terrorist forces, based in western Xinjiang, staged more than 200
attacks in Xinjiang, killing 162 people of all ethnic groups, including
grassroots community le aders and religious personnel. Several hundred
more were wounded.[23]
Supporting an Arab-Israeli Resolution
While some Washington officials may be concerned about China’s new
outreach to the Middle East, both Chinese and U.S. concerns remain
remarkably consistent. The United States seeks energy security. So, too,
does China. The United States opposes terrorism. So, too, does China.
The United States supports Arab-Israeli peace. So, too, does China.
Israel was the first and, until 1956, the only country from the Middle
East to recognize the People’s Republic of China, even though the two
countries did not exchange ambassadors until 1992. Unlike many Arab
countries, Israel never recognized the government in Taipei although
Israel and Taiwan did pursue military ties.[24]
China’s new activism in the Middle East is also reflected by its recent
involvement in Arab-Israeli diplomacy. At a September 17,2002 press
conference, a Chinese Foreign Ministry spokesman declared that Beijing
had decided, at the request of several Arab states, to appoint a special
envoy to the Middle East. The Foreign Ministry dispatched veteran
diplomat Wang Shijie, who had previously served as ambassador in
Bahrain, Jordan, and Iran, to the region.[25] When Wang returned to the
region in his new capacity two months later, he reiterated Beijing’s
positions: China both supported the concept of “land for peace” as the
basis of Arab-Israeli peace and recognized the need for an independent
Palestinian state. However, Wang emphasized that Israel’s security
should be guaranteed, a position the Chinese government first enunciated
in 1991.[26]
Wang has subsequently visited Israel and all of its neighbors and has
also consulted with the special envoys of the Quartet: the United
States, Russia, European Union, and United Nations. Beijing’s new
involvement reflects very practical concerns: peace can bring the
stability needed to ensure a stead flow of oil. As a possible future
mediator, China further needs to maintain its traditional relations with
Arab states and engage Israel as well. Israeli politicians seem to
recognize this. When meeting his Chinese counterpart, Tang Jiaxuan,
during his trip to Beijing in March 2002, Israeli foreign minister
Shimon Peres said that Israel appreciated Chinese diplomatic efforts and
suggested that China play a larger future role.[27] Peres reiterated the
message six months later when the two foreign ministers again met while
attending the U.N. General Assembly in New York.[28]
The willingness of Beijing and Jerusalem to cooperate diplomatically in
pursuit of Arab-Israeli peace does not mean that the Sino-Israeli
relationship is without its bumps. Israel’s 1994 decision to receive the
Dalai Lama, the exiled Tibetan leader, briefly strained relations,[29]
as have occasional Chinese condemnations of Israeli operations in
Palestinian areas. Another case in point was Israel’s July 2000
decision~Wunder heavy U.S. pressure~Wto cancel the sale of the Phalcon
airborne early-warning radar system.[30]
The most recent contretemps in Sino-Israeli relations is also connected
to bilateral military cooperation. According to a report in Ha’aretz,
the United States demanded that Israel not return to China some of the
drones the Chinese military sent to Israel for upgrading, even though
these drones are Chinese property.[31] Regardless of the eventual
outcome of the dispute, in some ways the damage has been done. If Israel
does not meet its commitments to upgrade the drones, contractual terms
would lead Beijing to likely launch sanctions on Israeli enterprises not
only on the Chinese mainland but also in Hong Kong.[32]
High-level visits can repair some of the strain in relations. Every
Israeli president since Chaim Herzog, as well as prime ministers Yitzhak
Rabin and Benjamin Netanyahu, has visited China. In June 2004, Israel’s
deputy prime minister Ehud Olmert visited Beijing. Several Chinese
officials have reciprocated the visits, most prominent among them
President Jiang Zemin and Vice Premier and Foreign Minister Qian Qichen
in April 2000. The latest high-level bilateral exchange was the visit on
December 28, 2004, by Chinese state councilor Tang Jiaxuan, former
Chinese foreign minister, to Israel following his visit to the
Palestinian Authority.
Conclusions
Although the changes are “slow and subtle,”[33] China’s foreign policy
is undergoing transformation. When interviewed by the Zhongguo Qingnian
Bao(China Youth Daily), one of China’s leading newspapers, Wu Jianmin,
former Chinese ambassador to France and currently president of the China
Foreign Affairs University, said that China’s diplomacy is transforming
from “responsive diplomacy” (fanying shi wwaijiao) to “proactive
diplomacy” (zhudong shi waijiao).”[34] American scholars have made
similar observations.[35]
The age of Chinese passivity in the Middle East is over. Beijing will
play an increasingly active role in the region with the goal of securing
its own energy security. This does not mean that Chinese and American
policies will necessarily be at odds. Beijing understands and, indeed,
shares U.S. concerns regarding proliferation and terrorism. Just as
Washington seeks to maintain good relations with both the Arab world and
Israel, so too will Beijing.
There will be differences of opinion, however. While Beijing supports
Arab domestic reform, consistent with its opposition to unilateral
action, the Chinese government will strongly oppose any outside attempts
to impose reform. China’s stance is closely linked to its sentiment of
national sovereignty and its up-to-now successful experience of reform.
Only through candid dialogue can better policy coordination be achieved.
But Washington would be mistaken if it expects that Beijing will
placidly revert to its past passivity. China’s new activism is a
reflection of Chinese interests~Wespecially in the energy sector. Beijing
and Washington can work together. But if U.S. strategic calculations in
the Middle East do not take Chinese interests into account, then they
will not reflect reality.
Jin Liangxiang is a research fellowat Shanghai Institute for
International Studies
NOTES
[1] Deng-ker Lee, “Peking’s Middle East Policy in the Post-Cold War
Era,” Issues and Studies, Aug. 1994, pp. 69-94.
[2] International Energy Agency (IEA), Oil Market Report, Mar. 11, 2004,
p. 12.
[3] Wu Lei, Zhongguo Shiyou Anquan(Beijing: China Social Science Press,
2003), pp. 121-6.
[4] IEA, China’s Worldwide Quest for Energy Security (Washington, D.C.:
IEA, 2000), p. 19.
[5] Han Wenke, “Energy Supply and Security Guaranteed by Strong Reliance
on Domestic Resource and Economic Introduction of International
Resource,” speech at the Seminar on International Energy Security and
Cooperat ion, Shanghai, June 24-25, 2004.
[6] Wang Yichao and Zhang Fan, “Zhongyi Dadan Yi Shichang Huan Shiyou,”
Caijing, Nov. 15, 2004.
[7] “2003 nian 1-12 yue Jinchukou Shangpin Guojia Zongzhi Biao,”Ministry
of Commerceof the People’s Republic of China, Feb. 11, 2004.
[8] “Zhongsha Jingmao Hezuo Xianzhuang,”Economic and Commercial
Counsellor’s Office of the Embassy of the People’s Republic of China in
Saudi Arabia, accessed Jan. 31, 2005.
[9] “Zhongguo Sudan Jingmao Hezuo Gaikuang,”Ministry of Commerce of the
People’s Republic of China, May 2003.
[10] “Natural Gas Exploration and Development Agreement upon Section B
in Ar-Rub’ al-Khali signed among Sinopec, Saudi Arabia ARAMCO Petroleum
Co. and the Ministry of Petroleum of the Kingdom of Saudi
Arabia,”Sinopec Corporation, accessed Jan. 31, 2005.
[11] Anwar Yusuf Abdullar, director, Department of Energy, Gulf
Cooperation Council General Secretariat, “Sino-Arab Energy Cooperation:
Problems, Approach and Outlook,” speech at the Seminar on International
Energy Security and Cooperation, Shanghai, June 24-25, 2004.
[12] “The Joint Press Communiqué between the People’s Republic of China
and The Cooperation Council for the Arab States of the Gulf (GCC),”
Ministry of Foreign Affairs of the People’s Re public of China, July 7,
2004.
[13] “Shuangbian Guanxi,” Ministry of Foreign Affairs of the People’s
Republic of China, updated on July 28, 2004.
[14] Ministry of Foreign Affairs of the People’s Republic of China, news
conference, Mar. 18, 2003; idem, “Foreign Ministry Spokesperson Liu
Jianchao’s Comment on the Establishment of the Iraqi Interim
Government,” June 2, 2004.
[15] “The Situation between Iraq and Kuwait,” Security Council
Resolution 1546, June 8, 2004.
[16] Syrian Arab News Agency (SANA), June 21, 2004.The report of the
interview was not carried in the Chinese media.
[17] “Security Council Declares Support for Free, Fair Presidential
Election in Lebanon,” U.N. news release, Feb. 9, 2004.
[18] Roger W. Robinson and C. Richard D’Amato, statement before the
U.S.-China Economic and Security Review Commission, U.S. Congress, Oct.
30, 2003, p. 3.
[19] Yitzhak Shichor, “Mountains out of Mole hills: Arms Transfers in
Sino-Middle Eastern Relations,” Middle East Review of International
Affairs (MERIA), Fall 2000, p. 73.
[20] He Hongze and Xu Xueliang, “Zhongguo Hecha Zhuanjia Zai Yilake,”
HuanQiu Shibao(Beijing), Dec. 2, 2002.
[21] “Statement by Ambassador Zhang Yan on Iranian Nuclear Issue,”
Ministry of Foreign Affairs of the People’s Republic of China, Sept. 30,
2004; “Spokesperson’s Remarks on Iran’s Strengthening of Its Cooperation
with IAEA,” idem, Oct. 22, 2003.
[22] Renmin Ribao (Bejing), Jan. 25, 2002.
[23] Ibid., Jan. 21, 2002.
[24] P. R. Kumaraswamy, Israel’s China Odyssey (New Delhi: Institute for
Defense and Studies and Analyses, 1994), pp. 67-70; idem, “China and
Israel: Normalization and After,” China Report, vol. 34, no. 3-4, pp.
265-86.
[25] Chinese Foreign Ministry news conference, Sept. 17, 2002.
[26] Wen Hui Bao (Shanghai), Mar. 22, 1991.
[27] Renmin Ribao, Mar. 26, 2002.
[28] Ibid., Sept. 17, 2002.
[29] The Jerusalem Post, Mar. 21, 1994.
[30] Jonathan Adelman, “The Phalcon Sale to China: The Lessons for
Israel,” The Jerusalem Letter, Mar. 1, 2002; Shichor, “Mountains out of
Molehills,” p. 73.
[31] Ha’aretz, Dec. 22, 2004.
[32] Guoji Xianqu Daobao (Beijing), Jan. 7, 2005.
[33] Evan S. Medeiros and M. Taylor Fravel, “China’s New Diplomacy,”
Foreign Affairs, Nov./Dec. 2003.
[34] Zhongguo Qingnian Bao (Beijing), Feb. 18, 2004.
[35] Medeiros and Fravel, “China’s New Diplomacy.”
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