Beijing's South China Sea Gamble
Image Credit: U.S. Navy

Beijing's South China Sea Gamble

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Beijing seems to be doubling down in the South China Sea. Why? In large part it’s to secure access to potential deep sea hydrocarbons like oil and natural gas – many describe the South China Sea as the next Persian Gulf, given the possible richness of resources that supposedly lay beneath the seabed. And while there are significant differences between the two regions that complicate such a comparison – including the ease of access to fossil fuel resources and the cost of developing them – it’s a useful analogue for understanding why China views the region as critical to its core interests.

But Beijing may in fact be overestimating the strategic significance of the region’s oil and natural gas – and taking unnecessary risks that could undermine its peaceful rise.       

China’s voracious appetite for energy to feed its continued economic development will become increasingly important as the state continues its transition into an industrial powerhouse. In 2009, China just barely overtook the United States as the largest consumer of energy in the world; by 2025, its energy consumption is projected to eclipse the United States by nearly 50 percent. In order to secure access to the energy resources it needs to fuel its economy, Beijing is developing a broad range of energy sources, including investments in solar technology and hydroelectric development. Yet conventional fossil fuels, China is betting, are likely to remain dominant.  

As a result, Beijing is developing a robust portfolio of fossil fuel resources from a variety of locations, including the Middle East, Central Asia and the South China Sea, in an effort to reduce its vulnerability from any one source. Middle East oil must transit through the Strait of Malacca, which, as Beijing is acutely aware, poses a strategic vulnerability should any state choose to compromise the sea lines of communications by blocking the strait. Beijing’s investment in a vast infrastructure of overland energy pipelines from Central Asia means oil must cross volatile transit states like Burma and Pakistan and is delivered to western China where Beijing’s influence waxes and wanes. Consequently, Beijing is eying the South China Sea as a safer way to ensure access to the energy its needs to thrive.

Yet Beijing’s plan may be flawed. Estimates vary widely as to the size of the hydrocarbon reserves beneath the sea floor. The U.S. Geological Survey calculates that there may be roughly 28 billion barrels of oil – enough to feed global oil consumption for about 11 months according to 2009 statistics. The Chinese government, meanwhile, estimates that the South China Sea region contains nearly 200 billion barrels of oil, or enough to meet global oil consumption for more than 6.5 years. Analysts tend to agree that China’s estimates are wildly optimistic. These disparate estimates need to be resolved, yet recent efforts to survey fossil fuels reserves by states like Vietnam have been stalled by the China Maritime Safety Administration, which has taken to cutting survey cables of vessels chartered to provide better information. 

Moreover, Beijing’s bet that fossil fuels will remain the dominant energy source seems to ignore developments in energy technology and the broader energy market. Indeed, the once-single energy source transportation sector, which accounts for about 60 percent of oil consumption in OECD countries, is now being diversified by electric vehicles as well as serious research and development of second-generation liquid biofuels derived from feedstock like algae that can displace the demand for oil.

However, serious research and development of second-generation liquid biofuels derived from feedstock like algae that can displace the demand for oil. Indeed, the scaling up of alternative fuels will alter the strategic value of whatever resources lie beneath the South China Sea floor as they reach price parity with conventional fossil fuels. Experts contend that if production continues apace, these alternative fuels may be commercially available and at price parity with petroleum in a decade.

Comments
169
Observer
December 20, 2012 at 07:19

LOL @ this statement from chinese such as Liang1a… "As I said many times, China should not take even one inch of land that does not belong to China but must every inch of its sovereign territories. The thieves of Chinese sovereign territories must be punished."
 
Oh, really? Then why not a word about how Russia slaughtered chinese like sheep and took all the land at the Amur River in 1858? Why not a word about Russia Navy shot and killed several chinese poachers a few months ago? Shall I go on?
 
How sad and pathetic. All the big talk and big empty words but so cowardice and yellow. Typical of china and chinese.
 

daozi
November 4, 2012 at 09:59

china should return Tibet, Inner Mongolia, Manchuria, Nanyue to their original states. China has stolen these lands.
when china sees things it likes it is part of china. one day, china claims california is part of china because there is a fact of chinese's bones … ha ha .. what a funny claim. sconful , shameless  claims…

daozi
November 4, 2012 at 09:53

@Historian,
you are right, never trust china!. i wish all the companies withdraw from china.
if liang1a claims its lands of thousands years ago then Japan should claim china is part of Japan.Now Japan wants its back!!!!
talking to the dead brain has no sense. better cut him off the …
 

Enoliv
July 29, 2012 at 16:13

@John Chan
I have read most of your arguments and it is really an eyesore.
@everyone
if you want to debate with John Chan, ask one question at a time

Alex
March 23, 2012 at 22:58

The saddest truth from this whole thing: the majority of Chinese population has been systematically brainwashed to the point of no possible reversal. It is sad to see so many PRC netizens, devoid of historical facts and current news, made claims that are laughed at by people around the world. I pray for your souls.

ACT
February 22, 2012 at 17:08

I agree with anon.

@liang1a: an excellent argument. you have shown your mastery of the knowledge of law, which makes me wonder why your arguments in other articles aren’t as perceptive or organized as the one you made here. However, it still doesn’t change the fact that you are making claims based on the territorial exploration of empires that are well over 400 years dead and who willingly and voluntarily shut themselves off from the outside world rather than settle those lands. Arguing today that the PRC has a right to the islands is like a citizen of the Russian Federation arguing that his nation has a right to the territory of the Soviet Satellite states that the USSR conquered at the end of WWII.

Cyrus14
February 12, 2012 at 06:12

Who is a thief I believe it is your communist pals. It is not a made up believe it is written in the history books by all the renowned historians of the world and has been verified by facts.

Now, can you say the same?

Lars
February 10, 2012 at 22:44

The Chinese just love to make believe. Make themselve feeling falsed pity and victimized, then used those excuses to bully weaker and smaller nations in Asia.

China is becoming the World leader? Just forget about it! Bullying, supporting rouge regime, rouge nations like Khmer Rouge, North Korean, Syrian, Iran, etc. China should become the World leader for gangs of thugs. Good luck with the heading south economy. China shoud go to the back seat where it is belonging to. Good luck, goodbye and good ridden, China.

UnlessBlind
February 10, 2012 at 12:49

The map it-self say more than any word. Only the blind one can’t see who right and who wrong.

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