Archive for the ‘Blogroll’ Category

Enter the dragon

Friday, December 22nd, 2006
Chicago Tribune: "China had enough oil to sustain itself just 15 years ago. Now it is one of the world's thirstiest oil addicts, importing 40 percent of what it needs. Only the U.S. consumes more. [...] "You have two powers competing over the same sandbox," said Gal Luft, a China expert with the Institute for the Analysis of Global Security in Washington. "As a country of China's size grows, there will be a moment when the moment of reckoning comes." "

China isn’t waiting for us to move

Friday, November 24th, 2006
Some very exciting news that should also serve as a dire warning to US policymakers: China sees the writing on the wall and is rapidly moving to reduce its need for oil in the transportation sector, which accounts for the bulk of the growth in Chinese oil consumption, by diversifying its transportation fuel supply.  China is not waiting for the US to move on fuel choice, it is taking action to harness its own domestic resources to produce transportation fuel and most assuredly is making a shift toward true flexible fuel vehicles that can use gasoline, ethanol, AND methanol. This is exactly the sort of tranformation that the Fuel Choices for American Security Act based on the Set America Free blueprint would achieve, and Congress had better recognize that fuel choice is China's Sputnik, and if we do not act now, its rumbling engines will leave us in the dust. Here is the latest news:
Beijing has settled on a national standard for methanol as an automotive fuel, a decision which will legitimise and bolster a market that has been growing rapidly without central government approval. The standard, which has yet to be officially announced, was reported in a trade magazine and confirmed yesterday by an official attached to the National Development and Reform Commission (NDRC), the economic planning body responsible for the standards. Local companies have under construction, or are awaiting approval to build, plants to produce methanol equivalent to about 20 per cent of China's present oil consumption, according to Jim Brock, a Beijing-based energy consultant. By the time the plants, which convert coal to liquids, start producing in 2011 to 2013, China's oil demand will have doubled, allowing methanol to supply about 10 per cent of the market. "It will be a major alternative fuel which does not exist in any other country in the world," said Mr Brock. Methanol, a chemical usually derived from coal, can be added to petrol to create a cleaner-burning fuel. When oil prices are high, it is also cheaper. China has abundant coal but declining reserves of oil and is expected to become ever more reliant on imports. Imports now account for about 40 per cent of Chinese oil consumption. Several of China's coal-rich provinces, impatient with the NDRC's long deliberations over thestandard, have issued interim standards for methanol over the last year. Shaanxi, in north-central China, which produces about 600m tonnes a year of coal - just over a quarter of national production - has issued stickers allowing cars using pure methanol free passage on the province's toll roads. "Shaanxi is doing the best job in China in promoting the use of methanol as fuel," said Peng Zhigui, head of the provincial methanol office, in Taiyuan. "Our aim is to solve the problem of China's oil shortage. We are creating a new kind of energy." Shaanxi officials had complained that the NDRC had been holding back the development of methanol in favour of ethanol, which is mainly made using corn in China. The complaint largely reflects provincial rivalries. Ethanol is produced using corn grown in the country's north-east - China's poor rustbelt - an area that has been given priority by the central government. The two methanol standards issued by Shaanxi use fuel with 15 per cent and 85 per cent of methanol respectively. Mr Peng said the province already had 100 buses using the "M85" fuel and is in discussions with Chery, a local car company, to build a fleet of taxis designed to run on the fuel. Production of ethanol is also soaring in China, partly driven by the high prices available for exporters on the world market. Critics of ethanol say it is inappropriate to use corn to make fuel at a time when China is struggling to keep precious agricultural land in production to ensure "food security" for the country.
Methanol and ethanol are different alcohol fuels that can both be used in flexible fuel vehicles, cars that look and perform just like gasoline only cars but can be powered with a variety of fuels and cost less than $150 extra to manufacture.  Ethanol in the US is primarily made from corn.  In Brazil it is much more efficiently made from sugarcane, and that are many countries with a suitable climate for growing sugarcane that could also produce ethanol and export to the US should we decide to remove the protectionist 54 cent a gallon tariff on ethanol imports.  Methanol can be made from biomass, natural gas, and coal. Additional information: The Methanol Economy

China: Oil at any cost

Monday, October 30th, 2006
China's Sinopec sees crude imports rising 21% this year
According to Zhang Yuqing, deputy head of the Chinese National Reform and Development Commission (NRDC)'s energy department China imported 38.34 million tons of crude oil from Africa in 2005, accounting for 30 percent of its oil imports.
In 2005, Saudi Arabia was China's largest source of crude oil, followed by Angola. Four African countries, namely, Angola, Sudan, Congo and Equatorial Guinea, were among the top 10 oil exporters to China in 2005. By the end of 2005, China had invested in 27 major oil and natural gas projects in 14 African countries, including Sudan, Algeria, Angola and Nigeria. Zhang said the government will encourage Chinese firms to expand their cooperation with African countries in the energy sector. (China Daily)
"China's fast-growing economy has created a deep thirst for oil that has pushed it to do business with some of the most corrupt and dangerous regimes on Earth, several of them in Africa. [...]
"Beijing's guiding philosophy of noninterference with the affairs of other nations, and its growing financial involvement in the developing world, are having an overwhelmingly negative effect on stability and human rights. Setting aside China's stonewalling on efforts to crack down on nuclear threats posed by Iran and North Korea, its reluctance to impose tough sanctions on Sudan (where it has significant oil interests) is contributing to the ongoing murder, rape and displacement of hundreds of thousands of people in the Darfur region.[...] "Chinese banks haven't signed on to the Equator Principles, a voluntary set of environmental and human rights guidelines adopted by 80% of the world's commercial lenders. This makes it easier for Chinese banks to do business with corrupt government officials. "

Meanwhile, in the Persian Gulf:

"the importance of energy cannot be underestimated when examining Sino-Arab relations. China is the world's second-biggest energy consumer and third-biggest importer. Its oil consumption surpassed Japan's in 2003 and now stands at 6.5 million barrels per day, compared to 20 million barrels per day for the US. [...] "Today, 58 percent of China's oil imports come from the Middle East, mostly from the Gulf. China has adopted a strategy of geographical diversification by investing in foreign oil and gas fields in more than 20 countries including Venezuela, Nigeria and Australia. But diversification away from the Middle East has its limits. Two-thirds of proven oil reserves are located in the region, mostly in the Persian Gulf. Similarly, many of the oil reserves in non-Middle Eastern countries are rapidly being depleted. The I.E.A. predicts that Chinese oil imports from the Middle East will rise to at least 70 percent by 2015, underpinning that the future of the Chinese economy is inextricably tied to the Middle East. [...] "China has the closest relations with Saudi Arabia, the world's largest oil producer. China is now Saudi Arabia's fourth-largest importer and fifth-largest exporter. Saudi Arabia is China's biggest oil supplier, accounting for almost 17 percent of China's oil imports. Trade between the two has grown an average of 41 percent a year since 1999, according to the Chinese Ministry of Commerce. "Saudi Arabia's oil exports to China increased to some 500,000 barrels per day in 2005, up from 440,000 barrels in 2004. This is set to increase further after Saudi oil giant Aramco agreed to provide the China Petroleum and Chemical Corporation (Sinopec) with 1 million bpd by 2010. Abdallah Jum'ah, president of Aramco, described China and Saudi Arabia "as among the most important energy relationships on the planet." "In April of this year King Abdullah became the first Saudi king to visit China. This was Abdullah's first trip outside the Middle East since ascending to the throne in 2005, potentially signaling a new strategic alignment. During the three day visit, King Abdullah told Chinese legislative chief Wu Bangguo that Saudi Arabia considered China a "truly friendly country" and hoped that their relations would become "better and better."
"The summit saw the signing of five agreements, including a landmark pact for expanding cooperation in oil, natural gas and minerals. Saudi Arabia also granted China a loan to improve infrastructure in China's oil-rich Xinjiang region and offered Chinese companies investment opportunities in Saudi’s enormous infrastructure sector. "

We've been beating on this drum for a while. Further reading:

The Sino-Saudi Connection

U.S., China Are on Collision Course Over Oil

Fueling the dragon: China's race into the oil market

China's oil rush in Africa

Chinese Quest for Crude Increases Focus on Africa

As Set America Free's Anne Korin said to UPI:

"'We don't want to see it escalate to a resource conflict' [...] The Set America Free Coalition says the best solution is to help China help itself [..] allowing Beijing to be steered away from its oil dependence.

"'In the same way (developing countries) skipped wires by going right to wireless, they could leapfrog oil and go right to alternative energy sources'"

And the U.S. should lead by example.

Why various and sundry dictators prefer doing business with China

Thursday, October 26th, 2006
"We don't want the development models, ideologies and values of other countries foisted on our country," [China's Assistant Foreign Minister Zhai Jun] said. "Likewise we don't impose our development mode, ideology and values on other countries -- not least on African countries. So, it has been the consistent position of the Chinese government when conducting aid with African countries that we do not attach conditions."
In plain English: Dear dictator: we'll give you money, you give us oil, end of story (oh, and if you'd like, we'll throw in some development money).  China is not going to bother you about your human rights abuses, not going to ask why you don't let women vote, not going to demand you increase religious freedom.    In case you are wondering whether China's oil interests in Sudan is what has ensured a Chinese veto in the UN Security Council of any attempt to saction the Islamist Arab government of Sudan for carrying out genocide first against Christian and animist Africans and now against Sufi Muslim Africans, Mr. Zhai assures that nothing of the sort is going on: "I believe the Darfur issue and China's economic and energy cooperation and trade are two separate issues. It is not the case that because of the good relationship and cooperation with the Sudanese government that we're turning a blind eye to the situation in Darfur." Righto. Well, at least he admits they are turning a blind eye. For more on the impact of China's quest for energy in Africa on that continent's dismal human rights situation, read China's Oil Rush in Africa by LCDR Cindy Hurst.

Buying the support of a third of humanity

Thursday, October 12th, 2006
Saudi Arabia Woos China and India:
"In January 2006, Saudi king Abdullah bin Abdul-Aziz al-Saud visited China and India, a trip some commentators labeled "a strategic shift" in Saudi foreign policy and reflective of "a new era" for the kingdom. It was King Abdullah's first trip outside the Middle East since taking the throne in August 2005, and it was also the first trip by a Saudi ruler to China since the two countries established diplomatic relations in 1990. "Abdullah's travel was significant. His reception suggested both Chinese and Indian recognition of the House of Saud's role in regulating global oil prices and the impact that Saudi oil policy has not only on Western economies but on the Chinese and Indian economies as well. Riyadh's relations with Beijing and Delhi are not shaped by energy alone, however. There is a major political component to Saudi strategic thinking. The royal family wishes to engage China and India in order to create a political alternative to its relationship with the United States. Saudi thinkers may believe that an Asian alternative will make the kingdom less susceptible to Western pressure on such issues as democratization and terror financing. [...] "Many Saudi officials, annoyed with U.S. pressure to cease funding Islamist and terrorist groups, find Beijing's no-questions-asked policies attractive."  Read the whole thing.
Also read: The Sino-Saudi Connection Fueling the dragon: China's race into the oil market

A history lesson

Friday, October 6th, 2006
A recipe for conflict:
Almost all of China's energy imports are obtained through sea and it is worried the United States could hold its oil supply hostage.  [...] "A focus of Chinese concern has been on the security -- or, more properly, the insecurity -- of the sea lines of communication upon which almost all of China's energy imports travel," said Daniel Blumenthal, a former senior Pentagon official eyeing China's growing military might. China's strategists, he said, were aware Beijing did not exercise naval superiority through the seas linking its ports to the major oil producers in the Middle East. They also know that China was dependent upon the United States and other major powers on ensuring the safe flow of its energy imports, he said. "If China truly does not trust the US and its allies to provide for the security of the SLOCs (sea lines of communication) and is too suspicious to join in common efforts over the long term, it must develop the military capabilities to challenge them," Blumenthal said.
Remember 1941? Paranoia on the side of Chinese military strategists, coupled with China's growing oil dependence does not bode well. All the more reason to work with China on something all the globe's large energy consumers can agree on: reducing dependence on foreign oil. * * * * * * Further reading on China's posture: Army War College paper by Commander Jim Cooney: Chinese Oil Dependence: Opportunities and Challenges Further reading on maritime security as it relates to energy transport:  Foreign Affairs article by Gal Luft and Anne Korin:  Terrorism Goes to Sea

Guess who’s going to Shanghai?

Tuesday, June 13th, 2006
This is a clear illustration of Sec. Rice's comments about how energy has warped foreign policy:
Iran's president, Mahmoud Ahmadinejad, will not be just toasting the leaders of the [Shanghai Cooperative Organization's] six members - China, Russia and four Central Asian nations - Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan - as an observer to the summit to be held in Shanghai. The Iranian leader, whose country defies the free world by developing nuclear weapons and tops the list of nations supporting terrorism, will also be pushing for full membership in the SCO. It's "passing strange" for the SCO - which highlights the "fight on terrorism" as one of its three prime objectives (the other two being separatism and extremism) - to have invited Mr. Ahmadinejad and considered membership for Iran, Defense Secretary Rumsfeld said recently at the Shangri-La Dialogue, an annual Asian-Pacific conference which took place in Singapore in early June and was organized by the London-based International Institute for Strategic Studies. Not at all, according to the SCO's secretary-general, Zhang Deguang. "We would not have invited them if we believed they sponsored terror," he responded to an inquiry about Iran's participation. Mr. Zhang hoped that other nations, once improving their ties with Iran, would have better opinions of that country. As for the pressing issue of nuclear non-proliferation, all he could say was, "We do not yet have legal documents on the issue." How reassuring to those who view the SCO increasingly as an attempt by China and Russia to undermine America's influence in their backyard and beyond. "By letting Iran enter the SCO, Russia and China would clearly demonstrate that they side with Iran and its nuclear program and would embark on a collision course with the West," a Moscow-based think tanker said, according to Radio Free Europe. Iran is China's third largest oil supplier, amounting to 13% of China's total crude imports. For Washington to expect that Beijing, which relies on rapid economic development to maintain its rule, would exert pressure on Tehran to halt its nuclear ambitions is more than wishful thinking. I hope Secretary of State Rice proves me wrong in her decision to negotiate with the mullahs. But I'm afraid that the country the Bush administration has so desperately tried to turn into a "responsible stakeholder" would once again prove disappointing. As Ms. Rice's deputy, Robert Zoellick, admitted to a House International Relations Committee hearing last month, when he confronted the Chinese about their dealings with Iran, he was told, "Look, we got our own interests there, we got energy security concerns." "An extended SCO would control a large part of the world's oil and gas reserves and nuclear arsenal. It would essentially be an OPEC with bombs," a professor at the University of Cambridge's East Asia Institute, David Hall, told the Washington Times, referring to the Organization of Petroleum Exporting Countries.
(emphasis added) Read the whole thing. UPDATE: This article by Dr. Ariel Cohen of the Heritage Foundation on the subject is excellent: Bear and Dragon summit.