[A-List] China: Central Asia interests

["Michael Keaney" <michael.keaney@xxxxxx>]

The importance of Central Asia to China
By Ehsan Ahrari
Asia Times, March 13 2003

While the world is busy reading tea leaves to figure out whether or when
Iraq will be invaded, China is quietly enhancing its strategic presence in
Central Asia. Tuesday's Financial Times reported that China Petrochemical
Corp (Sinopec), the country's No 2 oil producer, became the second Chinese
oil company "to buy into Kazakhstan's giant North Caspian Sea project".

English geopolitician Sir Halford Mackinder (1861-1947) once observed that
whoever controlled Central Asia would wield enormous power in the world. In
the 21st century, that notion of "control" is outmoded. Even the lone
superpower, the United States, cannot think in those terms. However, Central
Asia is wide open for that country, and two other great powers - China and
Russia - to make their influence and presence felt. For China, having a
presence in Central Asia, above all, means having access to the enormous
Caspian Sea oil reserves.

China is the third-largest consumer of energy after the United States and
Japan. It is also a country whose economy is rapidly growing but which has
unevenly developing regions. Its southeastern coastal area is experiencing
particularly rapid economic development, compared with other areas. This
characteristic alone underscores the fact that its energy needs in the
coming years will rise.

The official target for growth of gross domestic product (GDP) for the
2001-05 Five Year Plan is 7 percent. Even though the economic data issued by
the China's government have questionable reliability, its GDP growth is
reported to be down from 8 percent for 2000 to 7.3 percent for 2001. For the
year 2002, it is reported to have registered an increase of 7.5 percent.
Given the large amount of China-US trade, China's economic growth was
interrupted as a result of the September 11, 2001 attacks in the United
States. But that interruption proved to be ephemeral. People's Daily on
January 2 reported that for this year, the increase in China's GDP is
expected to be more than 8 percent. However, in order to maintain an average
of 7 percent or even higher GDP growth, China will need guaranteed access to
secure energy sources.

China's energy consumption has reported a noticeable jump from a total of
4.36 million barrels per day (bbl/d) in 1999 to 4.78 million bbl/d in 2000.
The consumption for 2001 was reported to be 4.9 million bbl/d, while oil
production from domestic sources was at 3.3 million for that year. As an up
and coming economy, China's energy consumption is expected to exceed that of
Japan's within the next decade, reaching 10.5 million bbl/d by 2020.

In an age marred by turbulence involving the regions holding the world's
major oil reserves, China recognizes the need to diversify its sources of
energy supplies. Thus, it is acquiring interests in exploration and
production in different regions of the world. Its largest oil company, China
National Petroleum Corp (CNPC), already holds oil concessions in Kazakhstan,
Venezuela, Sudan, Iraq, Iran, Peru, and Azerbaijan. Of these, the most
significant deal, according to one report, is CNPC's acquisition of a 60
percent stake in the Kazakh oil firm Aktobemunaigaz, whereby the Chinese
company pledged to invest significantly in the Kazakh firm's development
over the next 20 years.

In addition, the China National Offshore Oil Corp (CNOOC) - that country's
third-largest oil company - purchased an 8.33 percent stake from BP Group.
There have also been discussions of a possible oil pipeline from Kazakhstan
to China.

There is no suggestion here that China's oil-related activities are
potentially troubling either to Russia or the United States. In fact, China
is also involved in a discussion with Russia to build a pipeline for oil
exports. What is important to note is that the Central Asian region remains
an area of high interest to China, Russia, and the United States. This is
also an area where the future great-power presence, if not competition, is
likely to intensify in the coming years. Russia and China already have
tremendous stakes merely because it is their region of immediate
propinquity. Russia itself is busy negotiating an ever-increasing number of
oil agreements with countries bordering the Caspian Sea area, save Iran.

For the United States, Central Asia is especially important in the aftermath
of the September 11 attacks on its territory, and also because
anti-status-quo Islamist forces are very much alive. At least for now, those
groups are lying low in the immediate aftermath of the conclusion of
Operation Enduring Freedom in Afghanistan. Once the United States gets busy
with the Iraq invasion, and its rebuilding after the ravages that invasion
is expected to cause, the Islamist groups in Central Asia will reassess
their own next move.

Central Asia is also a region where misery prevails, and where the world's
worst despots rule. This is also an area about which it can be stated with
reasonable certainty that political instability will occur in the near
future. Of all the great powers, China is only too cognizant of that
contingency. Besides, within its own borders, China's rulers have been
suppressing the aspirations of Uighur population to be free. Ethnically and
religiously, the Uighurs are the same people as the rest of Central Asia
(with the exception of Tajiks, who though of Islamic faith, are not of
Turkic ethnicity).

Aside from quenching its ever-escalating appetite for energy from the
Caspian Sea and other oil resources of the region, China appears to be
reminding itself of that observation of Makinder with a slight twist:
whoever makes its presence felt in Central Asia would wield enormous power
in the world.

Ehsan Ahrari, PhD, is an Alexandria, Virginia, US-based independent
strategic analyst.