365 Days of Climate Awareness 312 – China and Oil

As China’s economy and middle class—now the largest on earth, at nearly 350 million, 25% of their population—have grown, so has its thirst for oil, which is used predominantly for transportation. According to 2016 data, China is now the second leading national oil consumer, at 12.8 mmbd (million barrels per day--behind the US at 19.5 mmbd), the fourth-leading oil producer (4.9 mmbd, behind the US, Saudi Arabia and Russia), and imports 7.6 mmbd, about 60% of its consumption. Meanwhile, China’s oil reserves are not extensive, amounting to 25 billion barrels, equivalent to 1.5% of the world’s total reserves, and enough to last for five years at current consumption levels (assuming 100% recovery, but 50% is typical).

China oil consumption and production, 1980-2017.

Registered vehicles in China, 2010-2021.

With the rapid growth of business and the middle class has come increasing demand for travel, for both commerce and convenience. Two good indicators of that are the steadily growing number of registered vehicles—310 million as of 2019—and the even-more-rapidly growing (until COVID) number of air passengers in the country. However, China’s growing need for oil, in pursuit of a perpetually expanding economy, has contributed to a number of global initiatives.

Air passenger count in China, 1975-2020.

Economically and to a lesser extent militarily, China has increasingly asserted its interests in recent years. It has pursued global markets for valuable minerals including oil, securing long-term contracts with Nigeria, Venezuela and other countries throughout Africa and Central and South America. China’s primary oil producer, the China National Petroleum Corporation, is active both on- and offshore, and is central to the country’s claims of the South China Sea as a matter of trade and energy security.

South China Sea and disputing maritime claims

This security is twofold: to gain access to the oil deposits beneath the floor of the South China Sea (estimated 11 billion barrels—more than 75% of China’s current reserves--plus huge gas deposits, which the Philippines, Malaysia and Indonesia also claim); and to better guard the Strait of Malacca, which links the South China Sea to the Indian Ocean. Malacca is the world’s most important maritime chokepoint, and it is the passage through which most of China’s imported oil—roughly 50% of the country’s total consumption—passes. China is rapidly militarizing the islands of the South China Sea and this promises to be a major international point of friction in years to come.

The Strait of Malacca.

Corollary to this global, massive push for access to resources and geopolitical security is China’s long-term development strategy of the Belt and Road. It draws its inspiration from the ancient Silk Road connecting China and Europe via central Asia, but modernized to include less-expensive maritime travel. China’s purpose is to secure land routes to Europe as a developing market for its products, as well as to further secure access to the mineral (including oil and gas) wealth of central Asia and Siberia. With the current war in Ukraine, however, progress on the Belt and Road initiative has stalled.

The modern Belt and Road concept.

The ancient Silk Road.

Tomorrow: China and renewable energy.

Be brave, and be well.