Energy security might not be the priority motivation of China's ambitious plan to develop multimodal transportation routes between itself and Europe.
But it's among the top three, writes Hugo Brennan, Verisk Maplecroft politics analyst, Asia, in a June 26 report.
Brennan thinks China's main hope is to strengthen economic links with countries along the several corridors of its One Belt, One Rode initiative (OBOR).
Also called Belt and Road and New Silk Road, the program envisions land transportation connecting China with Europe through Central Asia and the Middle East as well as sea links with coastal countries in the South China Sea, Indian Ocean, and Mediterranean.
A third motivation, according to Brennan, is to spread Chinese "soft power" and geopolitical influence in Asia.
Launched in 2013 by President Xi Jingping, the initiative encompasses currently planned projects worth perhaps $1 trillion, many financed by Chinese entities.
When assessing projects related to security of energy and trade, Brennan writes, China in some cases will give geostrategic considerations precedence over commerciality.
The aim is to diversify routes for Chinese imports of commodities so as to lower reliance on shipping through strategic chokepoints.
Brennan points out that China receives 80% of its imported oil aboard tankers transiting the Strait of Malacca.
"Policymakers in Beijing fear that, in the event of war or heightened tensions, a targeted naval blockade would disrupt China's energy imports and bring the economy to its knees," the analyst writes.
Because China leads the world in energy consumption and will need to increase oil imports over the next 20 years, its push for improved energy security strongly affects global patterns of energy trade.
Beijing was trying to diversify its energy transport options before OBOR. But it will intensify the effort under auspices of the program, "despite the potential for individual setbacks at the project level," Brennan writes.
"International energy companies would do well to appreciate this policy driver when seeking to align corporate strategies with China's grand vision."
(From the subscription area of www.ogj.com, posted June 30, 2017; author's e-mail: [email protected])
