China’s main energy security threat: South China Sea, the Malacca Dilemma and the Spratly Islands

BY MARÍA MONTOSA

China invested 103 billion dollars in renewable energies in 2015, becoming the first country in the world which invested the most in this type of energy. China has several reasons for becoming greener and promoting this kind of resources, but in relation to this article’s nature, the most important motivation may be the diversification in the sources of energy supply.

China’s new Law of National Security states in the articles 28 and 30 that the protection of the channels through from which China obtains its energy sources are strategic for the country’s security and therefore they must be protected. Energy resources are a very important priority for China, determining Beijing’s foreign policy and investments.

This article addresses a general view of the different energy security strategies China is developing, including crucial issues regarding this topic like the Spratly Islands and the Malacca Dilemma, the New Silk Route and the recent importance of renewable energies.

1. China’s main energy security threat: South China Sea, the Malacca Dilemma and the Spratly Islands

Until China fulfills most part of its energy needs with renewable energies, Beijing continues being dependent hugely on the hydrocarbons imported from abroad. The hydrocarbons arrive to China through land and sea routes, being these last ones the most important. Beijing has several disputes with its neighbors in the Yellow Sea, the East China Sea and, especially, in the South China Sea.

The Strait of Malacca connects the Pacific Ocean to the east with the Indian Ocean to the west. Source: DoD, Wikipedia Commons.

In the South China Sea, the first problem for the Asian giant is the Strait of Malacca. The Strait of Malacca, between the Malay Peninsula and the Sumatra Island, is the main oil supply route to China. Beijing’s dependency on the oil’s imports causes what the President Hu Jintao in 2003 named as “The Malacca Dilemma”.

For the vessels coming from the Gulf, from where the majority of the oil imports come from, to arrive to China, they must all pass through the strait, which is near Singapore, Indonesia, Malaysia, all of them allies of the US. Then, the ships must navigate near the Philippines, another US ally, and finally, near Vietnam, which is progressively getting closer to the Americans due to China’s aggressiveness in the South China Sea.

Once the ships have passed through the strait, they must navigate near the Spratly Islands, China’s second problem in the South China Sea. The Spratly Islands are a group of 200 tiny islands and corals whose importance is their strategic character. By controlling the Spratly Islands, China could have the right to exploit economically their water resources, obtaining possibly part of the gas and oil that China is actually importing from abroad. However, the most crucial factor to take into account is not the islands’ resources but their position in the map. The Spratly Islands surrounding waters are close to China, Taiwan, Philippines, Malaysia, Brunei and Vietnam, which are fighting over their sovereignty. China demands the sovereignty of all the islands with a clear objective: ensuring its energy security and, therefore, its national security.

Furthermore, the Spratly Islands are one of the geostrategic points in the so called “String of Pearls”. The “String of Pearls” is a concept created by the American consultating firm Booz Allen Hamilton, which assured that China would try to expand its naval presence through the construction of different infrastructures in countries throughout the Indian Ocean, from the South China Sea until those areas from where China imports the biggest part of its natural resources, mostly Africa and the Middle East.

For this reason, Beijing’s main objective is becoming the hegemonic power in this sea, increasing its military presence in the South China Sea to assure the navigation of the vessels which provide goods and hydrocarbons to the country. In the case that there was any naval blockade which impeded the oil and gas arrival, the Chinese economy would risk to become paralyzed, increasing the unemployment rate which in turn would probably lead to a huge civil disorder and instability, threatening directly the communist government leadership.

Trump’s election as the new US president could worsen even more the existing tensions in this place of the world. China is currently building some artificial islands in the South China Sea and asking for legitimacy to control the waters surrounding them. Trump has warned that the US should block China’s access to these islands. The elected president’s intentions of starting a commercial war with China and the possible rapprochement between the US and Taiwan are some of the policies that could provoke an even more aggressive Chinese answer in the South China Sea. In face of the bigger instability’s risk in the region, the Southeast Asian countries are strengthening their alliances with Washington, increasing the security dilemma in which all parties feel more threatened.

2. The New Silk Route

While Beijing is trying to ensure its naval power in the South China Sea, it is also pursuing different projects and investments to reduce its energetic dependence on the Strait of Malacca, from where it obtains the 80% of its oil imports. One of these projects is “The New Silk Route”.

With an approximated cost of 890 billion dollars and present in 60 countries, the New Silk Route is a governmental policy which is based on the development strategy “One Belt, One Road” designed by the Chinese President Xi Jinping, whose main objective is recreating a modern version of the most ancient commercial routes which connected China, Europe and Africa. According to the Chinese government, the strategy’s main objective is promoting the free market.

While this may be true, a determinant factor which China’s takes into account are the different possibilities of importing hydrocarbons without having to navigate through the Strait of Malacca. There are many examples of the several infrastructures that China is financing to reduce its energy dependency from the South China Sea like the Irkutsk pipeline, which connects East Siberia with the Pacific Ocean, the Beyneu pipeline in Kazakhstan, and maybe more strategic, the Gwadar port in Pakistan and the pipelines in Myanmar. Both of them have been financed entirely by China and are crucial to transport hydrocarbons to China from the Gulf countries without navigating through the South China Sea.

In the case of Gwadar port, it gives China the direct access to the Indian Ocean, thus being the shortest route to reach the Middle East, Africa and Europe. Besides Gwadar port, China is also investing in deep water ports in the surrounding countries like Bangladesh, Myanmar and Sri Lanka. These deep water ports could be also essential in case Chinese military vessels needed to visit them.

3. The Nicaraguan Canal

Nicaragua Canal Proposals. Source: Wikimedia Commons.

Just as the US dominates two seas, the Atlantic and the Pacific Oceans, China wants to become a naval power with dominion over two oceans: the Indian and the Pacific. To ensure its energy security and strengthen its presence in the Pacific, China has designed a monumental project in Nicaragua: The Nicaraguan Canal.

China imports oil from Venezuela, the country with the biggest oil reserves in the world. However, the vessels with oil coming from Venezuela have to navigate through the Panama Canal, which despite being considered international waters are patrolled by Panamanians and Americans. This could be a big problem for China in case its relations with Washington got worst.

Therefore, the Nicaraguan Canal was born out of the need of having to ensure its energy resources. The Nicaraguan Canal is one of the most ambitious projects in the world. It is financed by the Chinese Hong Kong Nicaragua Canal Development Group and would have an approximated cost of 50 billion dollars.

The canal’s construction has not started yet and experts doubt about its feasibility, due to the need of reallocating around 27,000 people, who firmly oppose this project. But in case the canal is finally built, it would be longer than the Panama Canal, with 259.4 kilometers, and much deeper, allowing the navigation of bigger vessels, including Chinese military ships if China needed it. With the new canal, Beijing’s fears of a possible naval blockade in the Panamanian Canal would no longer exist.

4. Renewable Energies

After so many years sacrificing its environment on behalf of its economic growth, China invested 103 billion dollars last year in renewable energies, becoming the top investor country in green energies in this year.

Moreover, the Chinese government announced last week a massive 361 billion dollars investment until 2020 in wind, hydro, solar and nuclear projects in the country, which means 72 billion dollars per year only in China. As the investment in nuclear energy shows, China’s sudden shift towards alternative sources of energy is not motivated by the willingness to fight the climate change, joining in that way the international community, but there are other crucial explanations.

Firstly, there is the drop in the price of the machinery needed for producing renewable energies. China became the world’s top solar generator last year as the cost of building large-scale solar plants dropped by as much as 40 percent since 2010. Also in the solar sector, Chinese owners control five of the world’s six largest solar manufacturing companies.

Secondly, there is the huge pollution in the main Chinese industrial cities which normally have to face a weeks-long bout of smog. The pollution has become a very important topic in the country’s politics. The contamination is such that the Chinese people, quite angry, are organizing frequent protests demanding the government immediate measures to fight this problem which is causing 1 million premature deaths per year.

Thirdly, there is China’s determination to reduce its dependence on hydrocarbons. A country like China, being the second biggest economy in the world, must assure constantly the energetic resources flow which allows its dynamic economy to keep working. China is the biggest oil importing country in the world, with a percentage of 16,3 % in the global market. Beijing is forced to import gas, oil and coal from very remote countries, both by sea and land routes which, often, are in areas with a huge political instability, such as Pakistan and Venezuela, which could make the imports being threatened.

The investment is going to be also an opportunity for employment creation, with an estimation of 13 new million employments in the renewable sector by 2020. China is promoting the clean technologies development as the main economy’s engine. It seems Beijing is designing a strategy which connects its energy security with the environmental protection and the economic evolution towards high tech sectors.

However, this type of energy sources will only account for the 15% of the total energy needs by 2020, meaning that China still depends highly on hydrocarbon sources. Therefore, while China continues its policies towards cleaner energies, it will also continue increasing its military presence in the South China Sea and developing new infrastructures which ensure its presence in the Indian and the Pacific Ocean.