China's Quest for Energy

This is quite an important article that lays out China's relationship with all of its neighbors on the continent, including Vietnam, and how it aims to achieve its interest through the various strategies.

The Ecology of Strategic Interests: China’s Quest for Energy Security from the Indian Ocean and the South China Sea to the Caspian Sea Basin

Tarique Niazi*

ABSTRACT

This article attempts to explore the ecological dimensions of strategic interests by examining China’s Asia-wide quest for key natural resources and safe seaways for their shipment. It takes a close look at three cases – one in the Indian Ocean region, the South China Sea region, and the Caspian Sea region – to explain interaction between natural resources and China’s emerging strategic interests in Asia. The article shows that Beijing’s quest for key natural resources underlies its economic and strategic alignments with the respective nations of Indian Ocean, South China Sea and Caspian Sea regions. The article implies that International Relations (IR) Theory and policy makers pay very close attention to the anchorage of strategic interests in the struggles over access and control of critical natural resources.

Introduction

As industrial economies continue to be dependent upon fossil fuels and their safe shipping, security scholarship has come to define key natural resources and critical waterways as strategic interests.1 With competing claims on dwindling resources and their ever-riskier passages, the security dimensions of the world’s resource supplies have become too obvious for strategists to ignore. Yet there is a visible lack of scholarly interest in exploring the ecological dimension of strategic interests, i.e., tracing national interests to their roots in the struggles over access and control of critical natural resources. Environmental Security Scholars such as Mike Klare,2 Conca3 and Homer-Dixon4, among others, did attempt to make up for this inattention by demonstrating linkages between natural resource supplies and strategic thinking. Klare and Conca have shown how national concerns for key natural resources are shaping strategic thinking. Homer-Dixon has offered a conceptual framework to understand what he describes as the struggle for resource capture that yields probabilities of intra-and-inter-state conflicts. Rosenberg5 has rather more directly addressed the issues of interaction between nature and state, and demonstrated the strategic implications of resource-use policies in the South China Sea. Freudenburg and Gramling6 have employed Environmental Sociological perspectives to explain tensions between the natural economy (oil drilling) and the social economy (impacted communities). They have since continued to pursue this productive line of inquiry, enriching the literature with theoretically grounded empirical work. Niazi7 developed a combinatory framework of interchange between nature, state, and society to explain genocide in Rwanda. He built this framework on the core assumptions of Environmental Sociology and Political Sociology.

The need, however, is to further explore the ecological dimensions of strategic interests, which seem to have set off a competitive quest for natural resources and ever-contested access routes for their shipment. Nowhere are such competitive tensions more evident than in Asia, which is the world’s largest continent. At the heart of these contestations are China and its neighbors. China, which is the largest nation on the Asian continent with borders that abut 13 countries, is traversing the globe in search of energy resources, and is seeking to keep the sea lines of communication (SLOCs) safe for their shipment. It is therefore of great interest for security scholars and strategists alike to gain a deeper understanding of how China’s search for key natural resources and its concerns for safe seaways are defining its strategic interests. This analysis attempts to answer this question by examining three cases –one in the Indian Ocean region (South Asia), the South China Sea region (East and Southeast Asia), and the Caspian Sea region (Central Asia)—to explore interaction between natural resources and China’s emerging strategic interests. The analysis will show that Beijing’s quest for natural resources is forging its economic and strategic alignments with the respective nations of the Indian Ocean, South China Sea and Caspian Sea regions.

In the Indian Ocean region, Beijing is engaged with countries that are endowed with energy resources and in control of key waterways. Among them, Bangladesh, Pakistan and Sri Lanka stand out as China’s trusted allies. Beijing’s engagement with these nations is born of its enduring interest in gaining access to the Indian Ocean.8 Similarly, China is moving closer to those countries in the South China Sea region that contest its claims to the Paracel and Spratly islands in the South China Sea. Most importantly, Brunei, Malaysia, the Philippines, and Vietnam are rival claimants to the Nansha (Spratly) Islands. The waters surrounding these islands boast of immense untapped energy resources, which led China to bill them as the second Middle East.9 Also, China has a territorial dispute with Indonesia, which is the region’s major military power, over a major natural gas field around Natuna Island.10 These contested territories tend to cast their shadows on the Strait of Malacca as well, which is predominantly policed by Indonesia and Malaysia, and through which three-fourths of Chinese energy imports are shipped.11 In Central Asia, China has drawn energy-rich nations into an economic and security umbrella group – the Shanghai ooperation Organization (SCO). Most importantly, it has moved closer to Kazakhstan, Kyrgystan, Tajikistan, and Uzbekistan. All of these nations are rich in hydrocarbon and hydel power resources – natural gas, oil, and electricity – and make up the “Silk Route” for Chinese energy imports.12 What follows is an account of China’s strategic interests that are developing around its quest for energy resources in the regions of the Indian Ocean, South China Sea and the Caspian Sea.

The Indian Ocean Region (South Asia)

The Indian Ocean provides major sea routes connecting the Middle East, Africa, and East Asia with Europe and the Americas. Four critically important access waterways in the Indian Ocean are the Suez Canal (Egypt), Babel Mandeb (Djibouti-Yemen), Strait of Hurmuz (Iran-Oman) and Strait of Malacca (Indonesia-Malaysia). The Indian Ocean carries a particularly heavy traffic of petroleum and petroleum products from the oilfields of the Persian Gulf and Indonesia. Larger resources of hydrocarbons are being tapped from the offshore areas of South Asia, Iran, India and Western Australia. An estimated 40% of the world’s offshore oil production comes from the Indian Ocean,13 which no nation dominates yet.


China has long nursed hopes to extend its reach into the Indian Ocean14 to pursue its diverse interests: First, it wants to secure the sea lines of communication (SLOC) for its very substantial commerce across the Indian Ocean.15 Second, it seeks to secure farther waterways, such as the Strait of Malacca, through its access to the Indian Ocean in order to have uninterrupted energy supplies. Third, it wants to be able to neutralize any potential hostile action to choke off its energy shipments across the Indian Ocean or the Strait of Malacca. The realization of these interests hinges on Beijing’s access to the Indian Ocean, an access which is gaining growing importance in its strategic thinking.16 The importance of the Indian Ocean thus continues to shape Beijing’s strategic relations in the South Asian region, which is home to the Indian Ocean. China has built alliances with nations that are vital in helping to build greater access to the Indian Ocean. Of these, Bangladesh, Pakistan, Sri Lanka, and Myanmar stand out because of their geographical proximity to the Indian Ocean. Although Myanmar is a member of the Association of Southeast Asian Nations (ASEAN) and is geographically located in Southeast Asia, its aquatic placement is in the Indian Ocean region rather than the South China Sea region. Bangladesh occupies the Bay of Bengal; Pakistan sits on the shores of the Arabian Sea; Sri Lanka is an island nation on the Indian Ocean; and Myanmar’s coast meets the Indian Ocean. All these nations can bridge China’s presence in the Indian Ocean, where India currently is the major player due to its geographical proximity, a proximity that works to the disadvantage of China. Beijing, however, hopes to make up for this disadvantage by deepening its alliance with Bangladesh, Pakistan, and Sri Lanka.

Sino-Myanmar Relations

While China has long worked with all the major South Asian nations, its primary focus has been on Myanmar, which is not only a bridgehead to the Indian Ocean, but also a powerhouse of energy resources, especially natural gas, in its own right. Since the late 1980s, when military leaders seized power in Yangon, China and Myanmar have taken their bilateral relations to the next level of friendship. Yangon grew to rely on Beijing’s support after the former was internationally isolated due to its crackdown on democratic movements. In return, Myanmar offered China smooth access to the Indian Ocean, as the former’s northeastern Shan Plateau provides an easy route for southwestern China to the Valley of the Irrawaddy River. For over 2 millennia, this route has been the favored corridor for moving goods and people between southwestern China and the Bay of Bengal region.17 To achieve its broader goal, China needed stability in Myanmar, which bristled with rebellion in its northern and northeastern region. China lent Yangon a much-needed helping hand to pacify its restive region. In addition, a large number of ethnic Chinese migrated into northern Myanmar, integrating the region into the Chinese economy. In the 1990s, China financed the building of a road network that connected China’s Yunnan region with Myanmar. In particular, Beijing contributed to the construction of rail, road, and river networks in Myanmar, which linked China to Myanmar’s coast.18 At the same time, Chinese companies worked to improve Myanmar’s harbors, modernize its naval facilities, and construct new naval bases.19 In addition, they constructed maritime telecommunications and surveillance facilities on Myanmar’s littoral and beyond. One such facility was situated just opposite of India’s Port Blair on Andaman Island near the Strait of Malacca.

Sino-Pakistan Relations

Some observers such as Garver20 argue that Myanmar provides China much easier access to the Indian Ocean than Pakistan’s Karakorum Highway, commonly known as KKH or the “Silk Road.” This argument, however, ignores Pakistan’s paramount maritime importance as the leading steward of the Arabian Sea at the mouth of the Indian Ocean. As the later events have shown, Pakistan’s strategic significance as a naval power was not lost on China, which, together with Islamabad, began to build a Deep Sea port in 2002 in Gwadar,21 an obscure fishing village in Pakistan’s southwestern province of Baluchistan. Gwadar, after which the port is named, sits along the Arabian Sea coast. The Gwadar Port signifies the summit of the Sino-Pakistani strategic partnership. The second phase of the US$1.6 billion port22 is underway. As many as 500 Chinese engineers, technicians and workers were engaged in the building of this project since its inauguration on March 22, 2002.23

The port will serve five Chinese ends: First, it will ensure safe shipping for China’s energy imports from the Persian Gulf that supplies 60% of its fuel needs. Second, in the event of any hostile action to block its energy supplies through the Persian Gulf, the Gwadar Port will serve as a safe alternative supply route. Third, it will eventually become the substitute passage for all of Chinese shipments through the Persian Gulf and the Strait of Malacca, where China is totally dependent upon the goodwill of the U.S. and its allies who police it. Fourth, as the Gwadar port sits opposite the Strait of Hurmoz, through which the bulk of the world’s energy resources, importantly Japanese fuel imports, are shipped, it will give China a strategic lever to retaliate in case its shipments are obstructed elsewhere. Fifth, above all, the port provides China a strategic foothold in the Arabian Sea and the Indian Ocean. Its presence on the Indian Ocean will further deepen its strategic influence with major South Asian nations, with which its relations are already thriving.

China’s arrival in Baluchistan is even more meaningful for the latter’s untapped wealth of hydrocarbon, mineral, and metallic resources. Baluchistan sits on estimated reserves of 29 trillion cubic feet of natural gas and 6 billion barrels of oil.24 China is building a vast network of road and rail links, including a US$200m coastal highway running from Gwadar to Pakistan’s primary naval base in Karachi. The coastal highway will connect Gwadar to western China, including its Muslimmajority autonomous region of Xinjiang, through the Karakorum Highway (KKH).25 Western China has become the hub of the massive development that China has undertaken with a phenomenal investment of 730 billion Yuan (roughly US$88 billion),26 which will be fueled by energy supplies. Baluchistan’s oil reserves will be the most precious commodity, however. China wants its energy shipments from Central Asia and the Middle East, especially (liquefied) natural gas from Turkmenistan, Qatar and Kuwait, tankered to Gwadar and then piped or trucked to western China through Karakorum Highway.27 China is also interested in Baluchistan’s metallic resources. It is already developing Pakistan’s largest reserves of gold and copper in the Saindak area of Baluchistan.

Sino-Bangladesh Relations

Energy and strategic waterways have beckoned Beijing to Bangladesh as well. For China, Bangladesh is a doorway into India’s turbulent northeastern region, including the Indian state of Arunachal Pradesh to which China lays territorial claim.28 Above all, China prizes Bangladesh’s immense natural gas reserves that are estimated at 60 trillion cubic feet (tcf), which are more than twice the volume of Pakistan’s.29 In fact, Bangladesh’s natural gas reserves rival even Indonesia’s. What makes Bangladesh even more attractive to China is its geographical proximity with Myanmar, which sits on even larger reserves of natural gas. The geographical proximity between Bangladesh and Myanmar makes the latter’s gas reserves accessible to China through Bangladesh’s flagship port in Chittagong.

Sino-Lankan Relations

In the same way, Beijing cherishes friendly relations with Sri Lanka, which occupies a strategically important heft of the Indian Ocean stretching from the Middle East to Southeast Asia. Colombo’s strategic location makes the world’s major powers woo it. After 9/11, the U.S. sought access to Sri Lanka’s ports, airfields, and air space for its armed forces under the Acquisition and Cross Servicing Agreement (ACSA).30 The ASCA is the first such agreement between Sri Lanka and a western power since its independence in 1948, although in the early 1980s Colombo allowed the U.S. to site a radio transmitter on its soil, which enabled the Voice of America (VOA) to beam its broadcasts into China, Myanmar and North Korea.31 Since the 1980s, the ethnic conflict between Sri Lanka’s Sinhalese majority and Tamil minority has worsened, which, in turn, caused it to turn to China. Unlike India or western powers, China boldly vouches for Sri Lanka’s territorial integrity. In April, 2005, China and Sri Lanka signed a pact of friendly and strategic cooperation. During Chinese Premier Wen Jiabao’s visit to Colombo,32 China also offered generous financial support to help Colombo out of the devastation wrought by the Tsunami. What brings China and Sri Lanka even closer to each other is their commitment to socialism, as Sri Lanka is officially a Socialist Republic. In no small measure, the Lankan Buddhist majority works to the advantage of Beijing in its Buddhist but restive autonomous region of Tibet.

China Joins the SAARC China’s deepening relations with South Asia’s major nations have thus yielded handsome pay-offs for China, especially in its diplomatic triumph over India, which is its main contender in the region. On November 13, 2005, China won a long-sought place on the South Asian Association for Regional Cooperation (SAARC),33 which is a political grouping of seven South Asian nations – Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka. Despite India’s opposition, China’s entrée into the SAARC was a testimony to Beijing’s sweeping reach into the region. All major nations of the SAARC voted for China, while India stood alone, with the tiny state of Bhutan, to watch as its efforts to block China’s passage to the SAARC fail.34 The South China Sea (East and Southeast Asia) Unlike the Indian Ocean region, the South China Sea region is perceived as China’s home turf. Yet China has several challenges even here. Most of these relate to the contested ownership of the South China Sea, especially its islands and their surrounding waters, which boast of immense untapped natural resources, especially natural gas and oil. Thus, the battle is over natural resources as well as the critical shipping seaways in South China Sea region.

Who Owns the South China Sea

China and Taiwan lay territorial claims to the South China Sea and all its islands, reefs and rocks.35 Yet their claims do not go uncontested. Many of China’s Southeast Asian neighbors are rival claimants to an assortment of islands in the South China Sea, which is bordered by China and Taiwan in the north, Vietnam in the west, Malaysia, Indonesia and Brunei in the south, and the Philippines in the east.36 China’s neighbors also assert their claims to the waters that surround the contested islands. The major conflict, however, is over two sets of islands: the Xisha (Paracel) Islands and the Nansha (Spratly) Islands. All of the Xisha (Paracel) Islands are contested among three contenders: China, Taiwan and Vietnam, although only China has physically occupied them since 1974. The Nansha (Spratly) Islands, on the other hand, are claimed by Brunei, China, Malaysia, the Philippines, Taiwan, and Vietnam.37 Most of these claimants occupy several of the Nansha (Spratly) Islands, which will subsequently be referred to as the Spratlys. China occupies 8, Taiwan 1, the Philippines 9, Malaysia 9, and Vietnam 27. Brunei lays territorial claims to several of these islands, but occupies none.38 The total area of Spratlys is less than three square miles, but each are important as the basis for staking out claims to the surrounding waters as an Exclusive Economic Zone (EEZ), which, under the United Nations Convention on the Law of the Sea (UNCLOS), extends to 200 nautical miles from the territorial sea. China grounds its claims to the Spratlys through its history by invoking their ownership by successive Chinese dynasties.39 Beijing points to the fact that the international community has continued to accept its sovereignty over these islands since China’s independence in 1949. Yet many authorities believe that the Chinese claim of sovereignty over the disputed islands is inconsistent with the UNCLOS, which limits sovereignty claims to 12 nautical miles.40 Article 3 of the UNCLOS says that, “every state has the right to establish the breadth of its territorial sea up to a limit not exceeding 12 nautical miles.”41 Articles 55-77 define the concept of an Exclusive Economic Zone (EEZ) as an area up to 200 nautical miles beyond and adjacent to the territorial sea. The EEZ gives coastal states “sovereign rights for the purpose of exploring and exploiting, conserving and managing the natural resources, whether living or non-living, of the waters superjacent to the seabed and of the seabed and its subsoil…”42 Observers argue that it is also unlikely that any of the South China Sea islands, especially the Spratly islands, meets the criteria to extend the territorial claims to the surrounding waters as an EEZ.43

Natural Wealth of the South China Sea

Nonetheless, it is not just the islands and their surrounding waters that drive the disputants’ territorial claims; it is rather sub-surface natural wealth, which lies unexplored in the waters surrounding these islands, that fuels the contested claims. According to the U.S. Energy Information Agency, the South China Sea has proven oil reserves of 7.8 billion barrels.44 Current oil production in the region is over 1.9 million barrels per day. According to a 1995 study by Russia’s Research Institute of Geology of Foreign Countries, 6 billion barrels of oil might be present in the Spratly islands, in addition to vast reserves of natural gas.45 Chinese media describe the South China Sea as the second Persian Gulf. Some Chinese specialists have asserted that the South China Sea could contain as much as 150 billion barrels of oil and natural gas.46 In the Spratlys, which are the most contested territory, the exploratory work has yet to be done to quantify proven oil reserves. In 1995, a China Youth report stated that the Spratlys are the key to controlling 10 billion tons of oil, more than one-eighth of China’s reserves of about 78 billion tons.47 The report claimed that the South China Sea is destined to be another Middle East.

The South China Sea’s Shipping Edge

Besides its natural wealth, the South China Sea is equally important to Beijing as the primary seaway for its energy shipments, especially those from the Middle East. In recent years, the South China Sea has become one of the world’s busiest international sea lanes. More than half of the world’s annual merchant shipping traffic sails through the Straits of Malacca, Lombok, and Sunda.48 Crude oil, liquefied natural gas, coal, and iron ore comprise the bulk of shipping traffic. Over 100,000 oil tankers, container ships, and other merchant vessels transit the straits each year.49 Oil tankers carry over three million barrels of crude through the straits each day. Over 9.5 million barrels of oil per day flow through the Straits of Malacca alone. More importantly, major East Asian nations such as Japan, South Korea and Taiwan have over 80% of their oil imports shipped through the South China Sea. The estimated volume of future fuel shipments, across the South China Sea, further enhances its strategic significance, and makes the Strait of Malacca a major chokepoint in the world’s oil transport system. Given its congestion, insecurity, and China’s near-total dependence on it, leads one observer to describe the Strait of Malacca as China’s dilemma.50

Because of its unequaled strategic significance, the South China Sea and its islands, especially the Spratly islands, are hotly contested between China and the neighboring East-and-Southeast Asian nations. All but Brunei have backed up their respective claims with a military presence on at least one of the Spratlys. Although their claims to EEZs overlap, all six claimants – Brunei, China, Malaysia, the Philippines, Taiwan, and Vietnam – invoke the UNCLOS in support of their claims.51 China, Taiwan and Vietnam tend to claim even part of Indonesia’s territory in the Natuna Island area.

Sino-Indonesian Relations
Like China, Indonesia is also a littoral state of the South China Sea. It is the region’s second most populous nation, with 200 million people spread over 740,000 square miles, and almost straddles four straits that are critical to international maritime traffic.52 Indonesia has long contested the gas-rich offshore fields of Natuna Island. This contestation embittered Sino-Indonesian relations. What irked Indonesia the most was Chinese cartography of the disputed territory that implied Chinese ownership of the natural gas field that sits 180 kilometers northeast of Natuna Island.53 Jakarta contracted the gas field to the Exxon Corporation for exploitation. In early 1994, Indonesia questioned China’s redrawn maps that purported to ring the entire South China Sea as its territory.54 Initially, China justified its claim to the area as a historic “inheritance from past dynasties.”55 Indonesia, however, countered that, without continuous occupation of the disputed territory, such claims had no validity in international law. Beijing, nevertheless, insisted that only bilateral negotiations could address conflicting claims, thus implicitly omitting the possibility of international arbitration. Jakarta responded that no bilateral settlement was possible as three or more nations have always been party to the conflict over this area.

Although Indonesia achieved incremental gains through quiet diplomacy, a final resolution to the conflict has yet to emerge. Beijing has since made no claim to Natuna Island itself, however. In January 1990, Indonesia sponsored an annual “Workshop on Managing Potential Conflicts in the South China Sea” where China could join other claimants to address non-sovereignty issues informally and privately.56 The agenda focused on cooperative studies of various problems, including biodiversity, sea level and tide monitoring, resources assessment, and safety of navigation and shipping. Jakarta hoped that this forum would advance preventive diplomacy through confidence-building measures to bring about a reduction in confrontation over competing claims. China however opposed the multilateral approach to what it believed were bilateral issues.57 In September 1996 Indonesia, after a hiatus of five years, held its first major military exercises around Natuna Island. One observer describes these exercises as the largest Jakarta ever conducted in the South China Sea.58

Sino-Philippines Relations

China and the Philippines also have a dispute over the ownership of the Spratly Islands. The Philippines’ Malampaya and Camago natural gas and condensate fields are located in the waters of the South China Sea, which are claimed by Beijing. Yet the Philippine government licensed the Shell Philippine Exploration to build a 500-kilometer undersea pipeline to ship gas from the Camago-Malampaya fields to the main island of Luzon.59 Despite its territorial claims, China did not raise objections to the development of these fields. In a dramatic turn of events, however, China forcibly occupied Mischief Reef, a circular reef within 200 miles of the Philippine island of Palawan, and within the area claimed by the Philippine government as its EEZ.60 China had first covertly established its presence in these waters and in an area claimed by the Philippines within its EEZ. The Mischief Reef, which the Philippines calls the Panganiban Reef, is 150 miles west of Palawan, the Philippines’s nearest land mass, and 620 miles southeast of China.61 The Philippines immediately protested China’s advance on Mischief Reef. In March, 1995, the Philippine Navy removed Chinese markers on several reefs and atolls and detained Chinese fishing vessels in the area.62 In August 1995, the two nations were finally able to reach an agreement to resolve the dispute through diplomatic means and vowed to observe the United Nations Convention on the Law of the Sea (UNCLOS).

Sino-Vietnamese Relations

Of all disputants, China has been most actively engaged with Vietnam to resolve their respective overlapping claims to undeveloped blocks off the Vietnamese coast. A block referred to by the Chinese as Wan Bei-21 (WAB-21) west of the Spratly Islands, is claimed by the Vietnamese in their blocks 133, 134, and 135.63 Sino-Vietnamese inability to resolve these disputes has kept Conoco and Petro Vietnam from undertaking the exploration work in these blocks as planned. In addition, Vietnam’s Dai Hung (Big Bear) oil field is on the boundary of waters claimed by the Chinese. In 1974, China invaded and seized the Paracel Islands from Vietnam. In 1987, it set up an observation station in the Spratlys and five years after passed a law declaring sovereignty over the entire China Sea.64 In 1988, another confrontation occurred between the Chinese and Vietnamese over the occupation of the Fiery Cross Reef (Yung Shu Jiao). Chinese forces sank three Vietnamese vessels, killing 72 people. These military engagements, however, pushed the two countries to resolve their disputes through talks. On December 25, 2000, Vietnamese leader Tran Duc Luong and Chinese President Jiang Zemin signed two agreements in Beijing to settle a long-standing territorial dispute over resources in the Gulf of Tonkin. The two pacts demarcated territorial waters and exclusive economic zones, and outlined fishery cooperation in the Gulf of Tonkin, known as the Beibu Bya in China.65 Beijing has since kept military bases in Hainan and the Paracels. In November 1991, it normalized relations with Hanoi after Vietnam withdrew from Cambodia. By the end of 1994, there were three rounds of talks between Beijing and Hanoi on disputes over their 1,130-kilometer-long land border. There have since been sporadic conflicts involving the Philippines, China and Vietnam over control of these islands. In March 2005, however, the three countries peacefully resolved the conflict by agreeing to jointly search for natural resources, i.e., oil and gas, in the disputed area.66 The Caspian Sea Region (Central Asia) The disputes over natural resources and strategic seaways mark interstate relations in the Caspian Sea region as well, where many Central Asian nations are claimants to the natural resources of the Caspian Sea Basin, of which Azerbaijan, Iran, Kazakhstan, and Russia are most important. Although China has no such claim to the Caspian Sea Basin’s natural resources, it has emerged as a major potential consumer of these resources, and as such it is making large investments in their development. The region’s natural wealth in general has set off a competitive race among its potential consumers who are scrambling for the largest chunk, including monopoly control.

The Natural Wealth of the Caspian Sea Region

Although Central Asia is landlocked, the tremendous untapped hydrocarbon wealth of the Caspian Sea region makes it the world’s envy. The region’s proven natural gas reserves alone are more than 236 trillion cubic feet.67 The region’s total oil reserves may well reach more than 60 billion barrels, while some estimates are as high as 200 billion barrels.68 In 1995, the region was producing only 870,000 barrels of oil per day, which could be increased to 4.5 million barrels per day by 2010, accounting for 5% of the world’s total oil production.69 Geographically, Turkmenistan, Uzbekistan, Tajikistan, and Kazakhstan make up the eastern side of the Caspian Sea Basin, beneath which lie oil reserves that rival those of Saudi Arabia and the world’s richest reserves of natural gas.70 UNOCAL wanted to pipe this oil from existing pipeline infrastructure in Turkmenistan, Uzbekistan, and Russia. The 1,040-mile-long oil pipeline would have extended through Afghanistan to an export terminal that would be constructed on the Pakistan coast.71 The 42-inch diameter pipeline would have a shipping capacity of one million barrels per day. China is seriously interested in Caspian Sea hydrocarbon resources and has even reported an interest in a pipeline to the Arabian Sea, with a view to importing gas and oil by supertanker.72 China’s gateway to Central Asia is its only Muslim-majority autonomous region of Xinjiang. Trade between Xinjiang and the five Central Asian states accounts for 40% of the total trade between China and Central Asia.73 Xinjiang’s trade with Kazakhstan alone was valued at about US$3.3 billion in 2004, which accounted for 73% of China’s national trade with Kazakhstan.74 Xinjiang is critical to Beijing’s future for its vastness, geographical proximity with Central Asia, and above all its immense natural resources. The Tarim Basin alone has proven reserves of over one billion tons of crude oil and 59 billion cubic meters (BCM) of natural gas. These oilfields are expected to provide 50 million tons of crude a year by 2010.75

Border Disputes Between China and Its Neighbors

China has further solidified its relations with Central Asia through massive economic investments in Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan. A major irritant, however, were border disputes between China and its resource-rich neighbors. China has since moved fast to remove that irritant in order to begin burgeoning relations with its neighbors. Kazakhstan, which is the largest economy of the region with a Gross Domestic Product (GDP) of around US$43 billion in 2005 was the first to have its territorial claims settled, largely to its satisfaction.76 The border settlement was an important part of a hefty oil deal that was signed between Astana and Beijing.77 Similarly, China and Tajikistan have reached a negotiated settlement of their territorial conflict, except the still contested Babakhshon region.78 China and Kyrgyzstan, with the latter sharing a border with Xinjiang, have also settled their border claims. Having mended its frontiers with its neighbors, China earned a great deal of their goodwill, which helped raise its profile in the region. Some observers, however, believe that Chinese presence in the region appears to be an attempt to dominate Central Asia in order to secure China’s energy needs.79 Given its immense energy resources and strategic location, Central Asia has come to be known as China’s Dingwei (Lebensraum). In the 1990s, China increased its military presence in Xinjiang to 200,000 troops.80 Xinjiang is “Beijing’s giant oilfield”, and it must be remembered that China’s domestic oil resources are located in the north and northwest, most importantly in Xinjiang. Many trading centers of historical significance were also located in Xinjiang or west of China’s current borders, such as Jarkand, Samarkand, Urumuqi, and Kokand. Today, oil and gas dominate China’s trade with Central Asia because of these commodities’ easy availability and accessibility. China, as next-door neighbor, is a natural beneficiary of Central Asia’s key energy resources.

Sino-Kazakhstan Relations

In terms of investment, however, China largely concentrates on Kazakhstan, followed by Kyrgyzstan, Tajikistan, and Uzbekistan. Besides being the largest economy of Central Asia, Kazakhstan also has proven oil reserves of 2.7 billion barrels.81 In 1997, China pledged US$10 billion in investment for oil exploration and construction of infrastructure.82 In December 2005, it bought Kazakhstan’s flagship oil company, PetroKazakhstan, for US$4.18 billion.83 In addition, it invested US$700m in building a pipeline that will connect Kazakhstan to China through Kyrgyzstan. The last 240 kilometers of the 3,000-kilometer Kazakhstan-China pipeline will run through Xinjiang, where crude will be refined and sent eastwards. Similarly, China is building a vast network of rail and road links in Kyrgyzstan, which is a transit state, to connect China with Uzbekistan. For this communication network, Beijing pledged in 2005 an investment of US$900 million in Kyrgyzstan, which is almost half of its US$2 billion GDP.84 In all, China has committed US$9 billion to building a region-wide network of overland pipelines to ship Kazakh oil.85 In addition, China Petroleum Corporation has invested US$4 billion in Kazakhstan’s oil industry.86 Earlier in August 2002, China gave Kyrgyzstan US$970m in military aid.87

Sino-Uzbekistan Relations

Beijing is also helping Uzbekistan to develop its modest oil fields in the Fergana Valley. In May 2006, the Uzbek President Islam Karimov visited China, a visit which yielded Beijing’s first serious pledge of investment in the Uzbek energy sector.88 Although Uzbekistan is not so well-endowed in oil resources, it sits on vast reserves of uranium, which make it attractive to power-short nations such as India and China, and even power-exporting Russia. With its annual production of 2,900 tons of uranium, Russia has recently seen its uranium reserves decline. It has since brought Uzbekistan into a framework of nuclear partnership. Russian President Vladimir Putin views Uzbekistan as a long-term “stable nuclear fuel energy base”89 to power the Eurasian economy. In 2004, Putin asked Russian oil and gas giants Lukoil and Gazprom to sign a US$2 billion contract with Uzbekistan.90

Mindful of Tashkent’s potential for supplying key natural resources, especially natural gas, Beijing also signed a framework agreement with it on investments worth US$1.5 billion in July 2005.91 In addition, China and Uzbekistan signed an agreement for a US$950 million long-term loan, as well as for an additional US$350 million soft loan. China has since invested nearly US$600 million in Uzbekistan’s energy sector. Uzbekistan boasts of 1.2% of the world’s natural gas reserves,92 which make it the region’s second-largest gas-rich nation. Uzbek gas riches make it attractive to a China that is quickly moving away from oil consumption, which is currently 6.3 million barrels per day and is projected to grow to 10 million barrels per day in the next two decades.93 Although China’s current gas consumption accounts for only 3% of its total energy intake, it is growing at an annual rate of 7.8%.94 With the gathering realization that fossil fuels are finite in supply, China is working on diversifying its energy resource base. It has already unveiled plans to invest US$150 billion on developing renewable and alternative energy resources in the next 15 years.95

Sino-Turkmenistan Relations

The region’s ultimate site of gas reserves, nevertheless, is Turkmenistan. In April 2006, Beijing signed a 30-year deal with Ashgabat, under which Turkmenistan will provide China with 30 billion cubic meters (BCM) of gas from 2009 to 2039.96 The major challenge, however, is the shipment of gas, which is receiving urgent attention of both countries. During Turkmen President Sapirmurad Niyazov’s visit to China on April 2-7, 2006, the two countries agreed to take swift measures to complete the Turkmenistan-China gas pipeline project. The proposed gas pipeline will run through Kazakhstan. Both governments would jointly explore and develop gas deposits and conclude comprehensive purchase agreements.97 Recently, it also became clear that China intends to pipe Turkmen gas through Tajikistan in a pipeline scheduled to be completed in 2009-10.98 Earlier, China announced its plans to connect a natural gas pipeline from Kazakhstan to China that would run parallel to its Atasu-Alashankou oil pipeline.99

The Shanghai Cooperation Organization (SCO) and Central Asia

To integrate Central Asia economically and politically, on June 15, 2001 China launched the Shanghai Cooperation Organization (SCO) with Kazakhstan, Kyrgyzstan, Russia, Tajikistan, and Uzbekistan as its founding members. By 2004 China had invested US$4 billion in Central Asia, excluding Kazakhstan.100 Under the Shanghai Cooperation Organization (SCO) umbrella, Beijing has set aside a credit of US$900 million for Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan.101 China also has brought Iran, Pakistan, and India on board the SCO as observers. China has recently sealed a US$100 billion deal to develop Iran’s giant Yadavaran oilfield near the Iran-Iraq border.102 Besides Iran, Pakistan is another nation that is of key importance to China, especially for its strategic transit advantage, both land and maritime. In fact, Pakistan is China’s “Silk Route” to energy-rich and trade-hungry Central Asia, access to which Pakistan denies India despite persistent U.S. intercession on the latter’s behalf. In Southeast Asia, Pakistan is also China’s bridge to Beijing-wary Indonesia, Malaysia, and energy-rich Brunei, all nations with predominantly Islamic populations. Beijing’s major concern, however, is the Strait of Malacca, which is patrolled by Jakarta and Kuala Lumpur and through which three-quarters of Beijing’s oil imports pass. Pakistan plays an indispensable role as an Islamic ambassador of good will for Beijing among Muslim-majority nations of Southeast and Central Asia.

Conclusion

China’s engagement with respective nations of the Indian Ocean, South China Sea and Caspian Sea regions sufficiently demonstrate that its quest for energy resources is defining its economic and strategic alignments. In the Indian Ocean region, it is employing economic diplomacy to strengthen its relations with the key nations in the region—Bangladesh, Pakistan and Sri Lanka. It has bound them with strategic and defense pacts.103 In the South China Sea region, China is deftly deploying both coercive and cooperative diplomacy to assert its territorial claim to the South China Sea and its islands, reefs and atolls. Beijing’s measured use of force, duly tempered with its willingness to negotiate, worked to its advantage in defusing potentially fraught conflicts with Indonesia, the Philippines and Vietnam. Use of force, however, showed China’s willingness to raise the stakes in defense of its territorial claim to the South China Sea. Yet its readiness to back down and seek a negotiated settlement to its disputes with Jakarta and Manila served to confirm its credentials as a responsible power. So much so that in the face of Manila’s putative armed provocation in the South China Sea,104 Beijing chose not to retaliate. Above all it successfully brought major contenders in the South China Sea into a cooperative framework of joint exploration and exploitation of its resources,105 all the while standing by its sovereignty claim over the entire South China Sea. In the case of the Caspian Sea region, China moved fast to settle its border disputes with its smaller neighbors such as Kazakhstan, Kyrgyzstan and Tajikistan, which went a long way to secure its energy supplies as all of its Central Asian neighbors are either energy-rich nations or strategically located to serve as transit points for their shipments. Beijing’s energy diplomacy infused the region with a massive inflow of capital investment, especially in energy-infrastructure building. To further integrate Central Asian nations with the region’s economic and strategic interests, China deftly used the Shanghai Cooperation Organization (SCO), which was founded in 2001, as a major diplomatic instrument to create a “multipolar world.” In all these diplomatic initiatives, energy security, both in terms of energy resources and their safe shipping, is driving China’s economic and strategic alignments from the Indian Ocean and the South China Sea to the Caspian Sea Basin. This conclusion has obvious implications for International Relations Theory and policy makers alike to pay even closer attention to the ecological dimensions of strategic interests, i.e., their anchorage in the struggles over access and control of critical natural resources. The conventional focus on security dimensions of strategic interests tends to entail a competitive framework in military planning to secure such interests. Renewed attention should be paid to ecological dimensions of strategic interests that are likely to entail a cooperative framework within the international system to bring critical natural resources within the reach of all stakeholders and users.

1 Michael T Klare, Resource Wars: The New Landscape of Global Conflict, (New York: Owl Books, 2002).
2 Ibid.
3 Ken Conca, “The Case of Environmental Peacemaking,” in Ken Conca and Geoffrey D. Dabelko, eds., Environmental Peacemaking (Washington, D.C.: Woodrow Wilson Center Press, 2002), 1-22. Also see Ken Conca, “In the name of Sustainability: Peace Studies and Environmental Discourse,” Peace and Change 19, 2 (1994): 91-113.
4 Thomas Homer-Dixon, “Environmental Scarcities and Violent Conflict: Evidence from Cases,” International Security 19, 1 (1994): 5-40.
5 David Rosenberg, "Resource Politics and Security Flashpoints in the South China Sea," in Carolyn W. Pumphrey, ed., The Rise of China in Asia: Security Implications for the United States (Carlisle, Pennsylvania: Strategic Studies Institute, 2002), 229-261.
6 William R. Freudenburg and Robert Gramling, Oil in Troubled Waters: Perceptions, Politics, and the Battle over Offshore Drilling (Albany: State University of New York Press, 1994).
7 Tarique Niazi, “Global Inaction, Ethnic Animosity, or Resource Maldistribution? An Ecological Explanation of Genocide in Rwanda,” In Kinloch, Graham C. and R. P. Mohan, eds., Genocide: Approaches, Case Studies and Responses (New York: Algora Publishing, 2005), 163-193. Also see Tarique Niazi, “The Ecology of Genocide in Rwanda,”International Journal of Contemporary Sociology 39, 2 (October 2002): 219-247.
8 Sumit Ganguly, “Assessing India’s Response to the Rise of China: Fears and Misgivings,” In Carolyn W. Pumphrey, ed., The Rise of China in Asia: Security Implications. (Strategic Studies Institute, 2002), 95-110.
9 Quansheng Zhao, “Chinese Foreign Policy in the Post-Cold War Era,” In Guoli Liu ,ed., Chinese Foreign Policy in Transition (New York: Aldine De Gruyter, 2004), 295-322.
10 Ibid.
11 Ian Storey, “China’s Malacca Dilemma,” China Brief 6, 8 (2006): 4-6.
12 Tarique Niazi, “Sino-Indian Rivalry for Pan-Asian Leadership,” China Brief 6, 4 (2006):5-8.
13 Donald L. Berlin, “India in the Indian Ocean,” Naval War College Review (March 22 2006).
14 Tarique Niazi, “China’s March on South Asia,” China Brief 5, 9 (2005): 3-6.
15 John W. Garver, “The Gestalt of Sino-Indian Relationship” In Carolyn W. Pumphrey (ed) The Rise of China in Asia: Security Implications (Strategic Studies Institute, 2002), 263-285.
16 Ibid.
17 Ibid.
18 Ibid.
19 Ibid.
20 Ibid.
21 Tarique Niazi, “Gwadar: China’s Naval Outpost on the Indian Ocean,” China Brief 5, 4 (2005): 6-8.
22 Ibid.
23 Ibid.
24 Tarique Niazi, “The Geostrategic Implications of the Baloch Insurgency,” Terrorism Monitor 4, 22 (2006): 8-11.
25 Tarique Niazi, “Thunder in Sino-Pakistan Relations,” China Brief 6, 5 (2006): 1-4.
26 Niazi, “Gwadar: China’s Naval Outpost on the Indian Ocean”.
27 Niazi, “Thunder in Sino-Pakistan Relations”.
28 “Arunchal is an integral part of India: Pranab,” UNI, November 14 2006. The Indian Minister of External Affairs made this statement in response to a televised interview of the Chinese Ambassador to India in which the he claimed Arunchal as part of Chinese territory.
29 Niazi, “China’s March on South Asia”.
30 Ibid.
31 Ibid.
32 Niazi, “Sino-Indian Rivalry for Pan-Asian Leadership”.
33 Ibid.
34 Niazi, “China’s March on South Asia”.
35 Rosenberg, "Resource Politics and Security Flashpoints in the South China Sea".
36 Elizabeth Economy, “China’s Rise in Southeast Asia: Implications for Japan and the United States,” Japan Focus, October 6 2005.
37 Zhao, “Chinese Foreign Policy in the Post-Cold War Era”.
38 Ibid.
39 Sonika Gupta, “Chinese Strategies for Resolution of the Taiwan and South China Sea Disputes,” International Studies 42, 3-4 (2005): 247-264.
40 Rosenberg, "Resource Politics and Security Flashpoints in the South China Sea".
41 Quoted in Ibid, p. 233.
42 Ibid.
43 Ibid.
44 Ibid.
45 Ibid.
46 Ibid.
47 Zhao, “Chinese Foreign Policy in the Post-Cold War Era”.
48 Rosenberg, "Resource Politics and Security Flashpoints in the South China Sea".
49 Ibid.
50 Storey, “China’s Malacca Dilemma”.
51 Rosenberg, "Resource Politics and Security Flashpoints in the South China Sea".
52 Allen S. Whiting, “ASEAN Eyes China: The Security Dimension,” In Guoli Liu (ed) Chinese Foreign Policy in Transition (New York: Aldine De Gruyter, 2004): 223-256.
53 Ibid.
54 Ibid.
55 Ibid, p. 239
56 Ibid.
57 Ibid.
58 Rosenberg, "Resource Politics and Security Flashpoints in the South China Sea".
59 Ibid.
60 Ibid.
61 Ibid.
62 Zhao, “Chinese Foreign Policy in the Post-Cold War Era”.
63 Rosenberg, "Resource Politics and Security Flashpoints in the South China Sea".
64 Economy, “China’s Rise in Southeast Asia: Implications for Japan and the United
States.
65 Rosenberg, "Resource Politics and Security Flashpoints in the South China Sea".
66 Economy, “China’s Rise in Southeast Asia: Implications for Japan and the United States.
67 Congressional Record 1998. U.S. Interests in the Central Asian Republics Hearing Before the Subcommittee on Asia and the Pacific of the Committee on International Relations House of Representatives One Hundred Fifth Congress Second Session, February 12 1998 (Statement of John Maresca, Vice President of International Relations, Unocal Corporation).
68 Ibid.
69 Ibid.
70 Ibid.
71 Richard Tanter, “Pipeline Politics: Oil, Gas and the U.S. Interests in Afghanistan” (inaccessible).
72 Ibid.
73 Tarique Niazi, “Asia Between China and India,” Japan Focus, May 31 2006.
74 Ibid.
75 Martin Andrew, “Beijing’s Growing Security Dilemma in Xinjiang,” China Brief 5, 13 (2005): 8-10.
76 Niklas Swanstrom, ”China and Central Asia: a new Great Game or traditional vassal relations?,” Journal of Contemporary China 14, 45 (2005): 569-584.
77 Ibid.
78 Ibid.
79 See Ibid, for a detailed review of this debate. Swanstrom grounds contemporary concerns about Chinese military presence in Central Asia in history.
80 See Ibid. Two hundred thousand Chinese troops in Xinjiang, which Swanstrom argues are meant to calm the restive region, are larger than Coalition forces in Afghanistan and Iraq, and the U.S., Russian and Indian military presence in Central Asia put together. So Xinjiang, which is China’s gateway to Central Asia could be its “watchtower” for Central Asia as well. It is pertinent to note here that China maintains no military presence in any of the Central Asian Republics (CARs).
81 Tarique Niazi, “China, India, and Future of South Asia,” Japan Focus, August 21 2005.
82 Ibid.
83 Ibid.
84 Ibid.
85 Ibid.
86 Ibid.
87 Ibid.
88 Alisher Ilkhamov, “Profit, Not Patronage: Chinese Interests in Uzbekistan,” China Brief 5, 20 (2005): 6-7.
89 M.K. Bharakumar, “Why Uzbekistan Mattes to India,” Rediff.com, April 13 2006, (May 25 2006).
90 Alisher Ilkhamov, “Profit, Not Patronage: Chinese Interests in Uzbekistan”.
91 Ibid.
92 Wenran Jiang, “Beijing’s New Thinking on Energy Security,” China Brief 6, 8 (2006): 1-3.
93 Wenran Jiang, “China’s Booming Energy Relations with Africa,“ China Brief 6, 13 (2006): 3-5.
94 Ibid.
95 Stephen Blank, “China’s Emerging Energy Nexus With Central Asia,” China Brief 6, 15 (2006): 8-10.
96 Stephen Blank, “Turkmenistan Completes China’s Triple Play in Energy,” China Brief 6, 10 (2006): 6-8.
97 Ibid.
98 Ibid.
99 Ibid.
100 Also see Tarique Niazi, “Asia Between China and India,” Japan Focus, May 31 2006.
101 Tarique Niazi, “Sino-Indian Rivalry for Pan-Asian Leadership,” China Brief 6, 4 (2006):5-8.
102 Ibid.
103 Ibid.
104 Zhao, “Chinese Foreign Policy in the Post-Cold War Era”.
105 Economy, “China’s Rise in Southeast Asia: Implications for Japan and the United States.

China and Eurasia Forum Quarterly, Volume 4, No. 4 (2006) p. 97-116 © Central Asia-Caucasus Institute & Silk Road Studies ProgramISSN: 1653-4212

Tarique Niazi teaches Environmental Sociology at the University of Wisconsin, Eau Claire, U.S.. He specializes in Environmental Conflicts and Security. He may be reached via email:niazit@uwec.edu. The author would like to thank Dr. Niklas Swanstrom, Editor of the China and Eurasia Forum (CEF) Quarterly, and the anonymous reviewers for their exceedingly helpful comments and suggestions on an earlier draft of this manuscript.