The Eagle and the Dragon

The U.S.-China Economic and Security Review Commission was formed in October 2000. Its purpose is as follows:

To monitor, investigate, and submit to congress an annual report on the national security implications of the bilateral trade and economic relationship between the United States and the People’s Republic of China, and to provide recommendations, where appropriate, to Congress for legislative and administrative action.

The commission has 8 mandated areas of focus and responsibilities:

1) Proliferation practices
2) Economic transfers
3) Energy
4) United States capital markets
5) Regional economic and security impacts
6) United States-China bilateral programs
7) World Trade Organization compliance
8) Freedom of expression

The commission holds hearings from time to time, and releases research papers. This past November, they released their annual report for 2005. (The full PDF version of the report runs 271 pages, and is 1.33 MB.)

The entire report is worth considering, but I'll highlight some things from Chapter 4, entitled China’s Global and Regional Activities and Geostrategic Developments.

I've written a few posts (see here, here and here) about China's global strategies and its drive to secure the energy supplies necessary to continue its economic growth and to fuel its ambitions. This chapter reinforces the need for the United States to develop an effective energy policy to meet the challenge of China's expanding appetite for resources.

The chapter presents highlights of China’s global activities over the last year. Here are a few.

* China’s foreign policy has changed dramatically over the past ten years. China’s regional and multilateral goals are influenced by the need to obtain resources, particularly energy resources, and to gain access to export markets; the desire to isolate Taiwan; and the intention of diluting an international system it sees as dominated by the United States. In order to achieve its goals, China employed a more proactive and creative diplomacy and increasingly used aid, development and investment packages, and diplomatic support to win favor in regions such as Africa and Latin America.

* In part in order to obtain access to energy resources and raw materials, China utilized and expanded relationships with nations such as Iran, Sudan, and Zimbabwe that have earned international opprobrium for objectionable human rights, terrorism support, and other activities. In these interactions, China focused on its narrow interests while dismissing international concerns.

* The future success of China’s economic and political policies is tied to the success of its energy policies. Two-thirds of China’s energy needs are met by coal, but China’s demand for oil resources needed to fuel its economic growth is rapidly increasing, putting China on course to compete with the United States and other oil importing nations for global supplies. China’s policy of attempting to obtain control of oil resources at the wellhead rather than participating in the international petroleum market threatens to exacerbate tensions with the United States and other countries that are market participants. The attempt by a Chinese oil firm partly controlled by the central government to purchase California-based Unocal exemplified its policy and caused considerable U.S. concern before the attempt was abandoned.

The paper points out the US and China have developed different strategies when it comes to securing oil.

There is a clear distinction between U.S. and Chinese approaches to securing oil supplies. Whereas the United States has shifted from an oil import strategy that was based on controlling the oil at the wellhead to one that is based upon global market supply and pricing, China focuses on owning oil at the point of production. These different energy policies could bring both countries’ energy interests into conflict.

As such, this dictates how China approaches relations with other countries.

Here are some key findings from the section of the chapter on China's regional activities. (This section describes China's actions in various regions in some detail.)

* China has increased its presence in many geographic regions during the past decade.

* China’s decisions to become involved in specific countries and regions, the nature of its involvements, and its regional and multilateral goals appear to be frequently influenced by its need for resources, particularly energy-related resources, the search for export markets, and a desire to increase its geopolitical leverage and influence and advance national objectives.

* China’s regional strategies generally appear to be complementary and consistent and to reflect a larger global foreign policy strategy.

* China’s regional approaches appear to be value-neutral

In my post about China and Africa, I pointed out examples where China distributes largess in an attempt to buy goodwill. A section of the chapter on China's energy needs and strategies reinforces this. Some of the key findings:

* China’s energy acquisition efforts are expanding internationally,and specifically in Africa, the Western Hemisphere, Central Asia, and the Middle East.

* China appears to trade influence and assistance, including weapons technologies, arms, and other aid, for access to oil and gas in terrorist-sponsoring states, such as Sudan and Iran, greatly compromising U.S. efforts to combat terrorism, weapons proliferation, and human rights abuses.

This ought to concern us. The paper says that in the coming two decades, world energy consumption will increase by as much as 57 percent. Oil prices are already high. What impact will such an increase in consumption have on our economy? When we go to look for sources of energy to meet the demand, will we find China already there, holding all the cards?

The chapter says "seventy percent of China’s primary energy needs are met by coal", but that "China’s oil use is expected to grow by an annual average rate of 5.8 percent in the next ten years". Our competition with China for oil will only increase.

As a nation we need to recognize the challenge this will pose. China aims to become at a dominant power in at least East Asia and the western Pacific, if not a global power. They have shown that they do not share our same values of freedom and democracy.

Our failure even to do small things like drilling in a tiny corner of ANWR, or showing our weakness with the Democratic Party's endless anti-war, anti-military positions, will only embolden China, and lead them to believe that in the long run they can push us aside.

The coming years will require some boldness on our part. Are we up to it? The performance of our military in Iraq and Afghanistan suggests there is hope, but if we as a people fall asleep and turn the powers of government over to the feckless Democrats, are we prepared to live with the long-term consequences?