China’s energy vulnerabilities drive Xi’s policies

The long-awaited 20th Communist Party of China Congress, widely seen as Chinese President Xi Jinping’s crowning achievement for a third term, began with a two-hour speech focusing on security, continuing global awareness and maintaining peace. cap. domestically. None of this comes as a surprise to Chinese analysts, who predicted these trends well in advance. China’s domestic politics and foreign adventurism are so conditioned by its energy problems that it doesn’t matter how much China obscures the details by indefinitely postponing the release of basic economic data.

An aggressive military posture, especially in the South China Sea and the Taiwan Strait, is a tempting remedy to Beijing’s energy security concerns that avoids liberalizing policies. These waters are at the heart of its “regional hegemonic” conceptions of 2049 and its economic growth. In 2021, 70% of China’s oil and LNG exports, 60% of its total trade and 20% of all global maritime trade passed through these waters through the Strait of Malacca. This geographic choke point is under the firm tactical control of the US Navy and is vulnerable to blockade. It is China’s dream to break or circumvent this bottleneck. Much to Beijing’s chagrin, these problems have only gotten worse in 2022. This is the heart of the “Malacca dilemma” that Chinese strategists and politicians are struggling to solve.

The nine-dash line, China’s largest direct territorial extension claiming thousands of square kilometers of territory in the South China Sea, is one of many attempts to resolve this dilemma. The massive claim brings China’s borders and military assets hundreds of miles closer to the Strait of Malacca while giving it an Exclusive Economic Zone containing 11 billion barrels of oil and 190 trillion cubic feet of natural gas.

While China has leeway and artificial islands in the south, in the Taiwan Strait, there is no such leeway. Around 50% of the world’s container ships passed through the Taiwan Strait in 2022, making it vital for Chinese exports. This strategic reality combined with the eternal question of the status of Taiwan makes it a focal point of Chinese action. The fact that the well-defended Taiwan Straits and the Strait of Malacca are controlled by increasingly suspicious foreign powers, Beijing.

Solving these strategic problems by military force remains unlikely in the short or medium term. The military imbalance is skewed against China while the United States’ Indo-Pacific strategy has succeeded in attracting a host of cooperative allies. The buffoonish diplomacy of Beijing’s “Wolf Warrior” has backfired. China’s relatively weak military-industrial complex, its various economic problems, the presence of the US Navy, a recently strengthened ASEAN and the enormous tactical difficulties of amphibious warfare force China to take a different path.

To circumvent geographical choke points and obtain alternative energy sources, Beijing is investing in land energy connections to Pakistan, Myanmar, Russia, Central Asia, Iran and Turkey. In the long term, the development of these routes could end China’s vulnerability to naval power and undermine the US strategic position. Washington does not pay enough attention to China’s mainland strategy.

Through the China-Pakistan Economic Corridor (CPEC), China enjoys direct access to the Indian Ocean and nearby energy sources in the Middle East. The construction of the new natural gas “peace pipeline” by the Chinese company SINOPEC linking Iran and Pakistan will allow Beijing to connect to high-demand energy sources (it already derives 7% of its oil from Iran) and to enter further into the kingdom of the Middle East. Politics. Bottlenecks in supply and transit constantly interfere with Beijing’s plans. Difficult topography, transit costs and anti-China sentiment are all obstacles to this vision, but given the strategic imperative, not unbearable.

Other transportation corridors present similar obstacles. In Myanmar, the China-Myanmar Economic Corridor (CMEC) has faced problems stemming from a military coup in 2021, thwarted democratization, and ethnic disorder bordering on civil war. Even the distant northern sea route via the Arctic to dodge Malacca is politically threatened by Russia’s invasion of Ukraine. Be that as it may, Beijing has not yet found a short-term solution to circumvent Malacca.

If foreign markets cannot solve China’s energy problems, Xi hopes domestic investment can. Much of Xi’s “Chinese Dream” involves the “energy of the future”, not only for its environmental benefits, but also because it is a way to reduce China’s strategic vulnerabilities. The realities of moving such a massive economy and population through the energy transition, especially when hampered by excessive state planning, have caught up with Xi, forcing him to revert to earlier plans even more. unrealistic.

Much of China’s economic planning and domestic policy is energy-focused and relies on a proven trio that the United States would be well advised to examine and emulate wherever possible. First, massive investments in nuclear power, uranium refining and modular reactors are expected to make China the leading nuclear power in Asia. Second, China’s massive investment and dominance at every step of the rare earth mineral supply chain, especially coltan and lithium, is helping China monopolize the energy infrastructure of the future. Third and finally, large investments in hydroelectricity (although this can hardly be imitated in the United States for lack of capacity, environmental and permitting reasons). China’s high-profile investment in renewable energy complements this trifecta, but is not central to any energy plan.

While Xi plans, circumstances (and God) laugh. For all the braggadocio exhibited at the 20^e party congress, China remains incredibly vulnerable to energy disruptions, whether from a foreign actor or its own domestic failings. These misfortunes guide Chinese policy, foreign and domestic. Energy security is at the heart of Chinese policy and strategy, arguably more so than many other state actors. When trying to understand China, don’t look at tea leaves, look at power lines.