An Anatomy of China's Energy Insecurity and Its Strategies Page: 3 of 68
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Summary
Recent power shortages, environmental degradation, vulnerability to various oil supply
and price shocks, and the lack of an energy policy making capacity constitute four
dimensions of China's energy insecurity. Structurally and fundamentally, however,
China's energy insecurity largely originates from the constrained availability,
questionable reliability, and uncertain affordability of its oil supplies. The country's rapid
industrialization and urbanization, together with demand for infrastructure and the
increasing popularity of automobiles, requires a lot of energy. Yet, China consumes
energy both intensively and inefficiently, placing pressure on its domestic and the
international energy markets, and threatening the environmental well-being of China and
its neighbors.
China's risk aversion and poor energy policy making system further magnify its
perceptions of the low availability, reliability and affordability of oil imports, which
further compound its sense of energy insecurity. Distrustful of the market, and suspicious
of other major energy players in the international market, the Chinese leadership relies on
the state-centered approach, or economic nationalism, rather than a market approach to
enhance its energy security. Moreover, the country lacks not only an energy policy
making system that can make and implement sound energy policies but also an energy
market that relies on market prices to allocate energy resources efficiently. As a result of
this domestic failure, China has pushed its national flagship companies to undertake a
global scavenger hunt for energy while muddling along a messy road of energy reform at
home. Setbacks in acquiring new sources of oil have supported the Chinese leadership's
belief that international oil is not subject to free market forces and that China's access to
international oil is not guaranteed through the market. China's problems in the
international energy market are also perceived as evidence of attempts by other major
players in the international system to prevent China from exerting international influence.
As a result, China's leadership is convinced that China should focus on areas where
western capital is not heavily concentrated or where western influences are weak. With
the recent revaluation of Chinese currency and its growing economy, China has both the
wherewithal and appetite to acquire more oil assets abroad.
Both China and the United States stand at a critical juncture of history where China's rise
depends on reliable energy supplies which it increasingly imports from abroad and where
the growing wealth of the United States is increasingly dependent upon China's success.
If China does not have energy security its 1.3 billion fuel-starved people may prevent the
rest of the world from achieving energy security.iii
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Kong, Bo. An Anatomy of China's Energy Insecurity and Its Strategies, report, December 6, 2005; Richland, Washington. (https://digital.library.unt.edu/ark:/67531/metadc873983/m1/3/: accessed April 26, 2024), University of North Texas Libraries, UNT Digital Library, https://digital.library.unt.edu; crediting UNT Libraries Government Documents Department.