Maureen Lorenzetti
The US should work harder to bolster energy ties with China, industry experts and academics told an Oct. 30 hearing of the US-China Economic and Security Review Commission. The US Congress created the commission in 2000 to review national security implications of trade and economic ties between the two nations.
China is expected to surpass Japan as the world's second-largest petroleum consumer for 2003, with demand forecast to increase rapidly over the next 2 decades, US Energy Information Administrator Guy Caruso testified. Much of China's imported oil will come from the Middle East; the country is also expected to be a large LNG importer by 2005.
Current agreement
A 2000 US-China bilateral energy agreement calls for an "information exchange" with joint research and development projects for power systems, clean fuels, oil and gas, energy and environmental technologies, and climate science. Officials from both governments meet this week to monitor progress on the exchange. Recent efforts include a carbon sequestration study and oil and gas technology training workshops.
But more outreach is needed, speakers suggested.
Robert Ebel, chairman of the energy program at the Center for Strategic and International Studies cautioned China has not yet faced the reality of protecting an economy increasingly dependent on adequate, timely, and secure oil supplies. Still, there is reason to believe that as a major global trading partner, the country will take a more active, responsible role in managing its energy vulnerability, he said.
Kang Wu, head of the East-West Center's China Energy Project said that China's energy security policy is still being formed. The country's leaders have pledged to diversify imports, increasing oil and gas imports from Russia and Central Asia; enhance overseas investments by state oil companies; and increase oil and gas infrastructure investments.
Strategic reserves
Chinese officials want to expand a strategic petroleum reserve but have resisted being part of an international stockpiling plan, like the kind administered by Paris-based International Energy Agency.
Amy Myers Jaffe, Wallace Wilson fellow for Energy Studies at the James A. Baker III Institute for Public Policy at Rice University, said the US should encourage China to join IEA's stockpile system because the agency's continued effectiveness will depend on oil market developments, including Chinese and Asian demand trends.
"The omission of key consumer countries like China from the global emergency stockpiling system will increasingly put pressure on the effectiveness of limited, existing stocks in the Organization for Economic Cooperation and Development countries. Moreover, tensions created by Asian 'free-riding' or possible 'hoarding' actions during a crisis could hinder IEA's ability to stabilize international oil markets in the future," she said.
Meanwhile the US could offer technical assistance so the Chinese can expand their own stockpile, which now only provides a 7-day supply, compared with 60 days in the US and 100 days in Japan, said Kent Calder, director for East Asian Studies at Johns Hopkins University's School of Advanced International Studies.
