China’s relentless pursuit of economic development turned the country from a petroleum exporter to an importer by 1993. Beijing’s new target is to quadruple its economy again by 2020, as it did from the late 1970s to the mid-1990s. To achieve this goal, China must rely more and more on an exter- nal energy supply. In 2007, the middle kingdom was burning 7.8 million bbl/d.10Although still far behind the United States, which consumes 20.7 mil-
lion bbl/d , Chinese consumption is projected to reach a daily level of 16 mil- lion barrels within the next two decades, according to International Energy Bureau Agency estimates.11
This quest for energy and other resources has swiftly directed China’s atten- tion to Africa. From 2001 to 2007, China’s trade with Africa increased 681 per- cent, only slightly slower than the growth of China’s trade with Latin America in the same period (687 percent) and faster than China’s trade growth with the Middle East (546 percent), the Association of South East Asian Nations (487 percent), the European Union (415 percent), and North America (378 per- cent).12In 2007, China’s trade with the seven African countries on Premier
Wen’s June 2006 touring list was $38.4 billion, a surge of 130 percent from the previous year.13
It is not surprising that in such a broad economic context, Africa has turned into a major energy supplier for China. In 2003, both President Hu and Premier Wen, along with Chinese energy company executives, visited several oil-producing African states, and, since then, China has been involved in increasing the number of energy deals on the continent. By the end of 2006, Africa supplied nearly 30 percent of China’s total oil imports; the same was true in 2007.14
The Chinese-African energy deals share a number of characteristics. First, Beijing is willing to move into the “troubled zones” with bold investment and aid packages in exchange for energy. When Angola ended its twenty-seven- year civil war in 2002, few foreign countries were willing to go there, but China arranged a $3 billion oil-backed credit line to rebuild the country’s shattered infrastructure. Angola soon became the second-largest supplier of crude to the Chinese market after Saudi Arabia, and during the first 10 months of 2006 it became the largest supplier of oil to China, losing out by just 0.42 million tons to Saudi Arabia by year’s end. Angola replaced Saudi Arabia as the top supplier of crude oil to China in the first half of 2008, by 0.47 million tons.15Beijing also made Angola its largest foreign aid destination,
adding another $2 billion in aid to Angola during Premier Wen’s 2007 two-day visit.16As of 2007, Angola produced 1.4 million bbl/d, second only to Nigeria
in sub-Saharan Africa—and one-third of that total went to China, making up 13 percent of total Chinese imports. Similar arrangements have been made in Nigeria and other countries. In April 2008, Angola topped Nigeria for the first time, producing 1.87 million bbl/d, compared to Nigeria’s 1.81 million.17
Second, Chinese energy companies are committing large amount of funds and labor for exploration and development rights in resource-rich countries. A project in the Sudan, for example, is one of the earliest and largest overseas energy projects conducted by China’s major energy companies. Chinese oper- ations in the Sudan include investment, development, pipeline building, a large Chinese labor deployment, and continuous operations. China has a $4 billion investment in the country. The China National Petroleum Corpo- ration (CNPC) has a 40 percent controlling stake in Greater Nile Petroleum, which dominates the Sudan’s oilfields. In 2006, China purchased more than half of the Sudan’s oil exports. Early in 2007, China National Offshore Oil Corporation (CNOOC) bought a 45 percent stake in a Nigerian oil and gas field for $2.27 billion and also purchased 35 percent of an exploration license in the Niger Delta for $60 million. Chinese companies have made similar investments in Angola and other countries.18
Third, Chinese energy majors enter into joint ventures with national gov- ernments, state-controlled energy companies, and individual enterprises to establish a long-term, local presence. It appears that Chinese companies often outbid their competitors in major contracts awarded by governments of African countries because their concerns are not just short term but strategi- cally oriented so as to position themselves for the future.19After the U.S. Con-
gress effectively blocked the $18.5 billion bid by CNOOC for the U.S. energy firm Unocal Corporation in 2005, Chinese energy companies’ investments in other parts of the world intensified. “If you can’t do it somewhere, then you
can always do it somewhere else,” Fu Chengyu, chairman of CNOOC, said in an interview in Beijing. “We’re looking at opportunities in Africa as a whole.”20
Fourth, China’s selection of energy cooperation partners does not mirror the particular preferences of the United States or other Western countries. The Sudan is a case long known in the international community.21As of 2007,
China accounted for 65 percent of Sudanese total exports.22In addition, in
2004 China and Zimbabwe reached an energy and mining deal worth $1.3 bil- lion.23In exchange for building three coal-fired thermal power stations,
among others, Zimbabwe is likely to repay the Chinese investment with rich deposits of platinum, gold, coal, nickel, and diamonds.24