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Engagement for Oil: China the Multilateralist

March 31, 2011

Nearly a month ago this blog assessed China’s addiction to oil through the lens of unrest in Libya and the strategic implications for China’s energy security.  In the article ‘China’s Vulnerability to Oil Shocks Implies Need for Foreign Policy Re-think’, we surmised that energy security concerns may lead to a more responsible foreign policy which contemplates support of legitimate governments.

Since then, China abstained from voting at the UN Security Council on Resolution 1973, withholding a veto despite having ‘serious reservations’ about aspects of the agreement.  Adoption of the resolution was thereby enabled.

Ten days ago in an op-ed, Trevor Houser, of the influential Washington think-tank the Peterson Institute, reached the conclusion that a more engaging, multilateral foreign policy approach for China may be implied where energy is concerned, specifically with a view to minimising domestic upheaval in energy producing nations.

What is interesting about Houser’s specific perspective of forced collaboration is that, mercifully, this pathway diverges from the doomsday scenario foreshadowed and forewarned by the World Bank in late 2009 of a shift to competing national trade interests, protectionism, strife and violence in a post-GFC world.

As Ian Bremmer of Eurasia Group notes in an article ‘The Fourth Wave’ in Foreign Policy magazine, emerging markets have too much to lose to let this happen.

With oil prices nudging north and no sign of softening, barring some Roubini-esque financial collapse, there is growing realisation of energy security risk in both near- and long-terms. 

Today, POTUS Obama announces an objective to significantly reduce foreign oil imports through enhanced alternative energy programs (even a stopped clock tells the right time twice a day in US energy policy), while yesterday the Financial Times cites the UK Office for Budget Responsibility as fingering oil prices as being the main threat to the UK economy – possibly inducing stagflation. 

For China to continue a rate of economic growth that keeps pace with objectives of social cohesion at home, all measures to enhance energy security will have to be pursued:  energy diversification by source and technology; demand-side response and resilience; and energy efficiency.

Energy security and diversification (more on the latter in a future post) are very much centre-stage in major economies.  It gives the opportunity for collaboration and multilateralism, not just competition, with implications for other policy arenas:  alternative energy and energy efficiency technology collaboration (climate change);  supply security (engagement on governance, human rights, stability); and nuclear safety and non-proliferation. 

Pessimism has been prevalent in commentary on China’s international engagement in these areas.  China’s own national energy security interests will be the stimulus to keep China on a collaborative pathway.

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One Comment leave one →
  1. March 31, 2011 10:03 pm

    I don’t think that China’s reliance on oil is something they appreciate anymore than the rest of the world does.

    The country is investing large amounts of money and effort in green energy and clean energy – but realistically the population is crying out for further economic development, the idea that will go away to satisfy the demands of developed nations is a bit bizarre.

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