China’s energy security at 70

As China celebrated the 70th anniversary of the founding of the People’s Republic of China (PRC) on 1 October 2019, it seems to have gone full circle back to its 1949 assessments of the US: “a greedy and violent nation, struggling to remain the wealthiest and strongest on earth”. For the first two decades of the PRC’s existence, Mao Zedong used anti-Americanism in his efforts to rally the country’s vast population in support of the communist revolution and realise international communist solidarity. Over the years and despite Mao’s (and subsequent leaders’) efforts to make China a strong and prosperous state—which in the 1970s also included a rapprochement with the US—Beijing never fully shed its conviction that Washington was determined to contain and transform China, keeping it weak and divided. Similarly, in the US, the Chinese Communist Party’s (CCP) takeover from the Nationalists in 1949 after decades of assistance from the US government, missionaries, businessmen and soldiers, was regarded as “the loss of China”, and was greeted with disillusionment and a sense of betrayal. These narratives of anxiety and disillusionment have been latent over the past fourty years, as the US and China normalised diplomatic ties and their cooperation deepened. But they are now re-emerging as defining features of US-China relations as the trade war continues to highlight the deepening gulf between the two countries. In this context, China’s biggest oil supply vulnerability is now the US, as crystalized by events in September 2019. While China has long seen Middle Eastern geopolitics as a source of energy insecurity, and even though the attacks on Saudi Arabia’s oil facilities on 14 September 2019 raised concerns among Chinese buyers, these have faded since. Aramco has sought to guarantee supplies to its largest buyer and global crude prices have essentially fallen back to their pre-strike levels. But US sanctions on two subsidiaries of China’s largest shipping company could cause a more significant disruption to China’s oil trading activities. Going forward, even if a trade truce is reached in the next few months, Beijing and its traders will increasingly seek to nationalise their commodity supply chains, insurance providers and financial flows.

By: Michal Meidan