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Experts See Potential US-Chinese Cooperation, Competition as Oil Needs Grow - 2004-09-28

The United States and China now rank as the Number One and Number Two top consumers of oil in the world, with demand in both countries still growing. U.S. officials are hopeful that common energy interests with China will bring the two countries closer together, rather than force them into potentially harmful competition.

China has imported oil for more than a decade. But last year, as the Chinese economy grew more than nine percent, the country's impact on the world oil markets became increasingly significant.

"Since 1993, China has become a net importer of oil. And especially, I think, since the latter half of last year, Chinese oil consumption, I think, we have replaced Japan as the second-largest oil consumer in the world," said Chinese Embassy spokesman Sun Weide, who said his government places great importance on working with the United States.

"Of course, as our two economies continue to grow, we both need reliable and, I think, affordable energy supplies," continued Sun Weide. "So, there is very good basis for cooperation between the two countries."

In Washington, Deputy Assistant Secretary of State Randall Schriver has a positive assessment of U.S.-China ties.

"I think the bilateral relationship continues to be pretty good," concluded Mr. Schriver. "And it's characterized by good cooperation on a number of things that are of great importance to the United States, things like the nuclear challenge on the Korean peninsula, worldwide efforts against terrorism, cooperation in the United Nations, and such. But there's still a lot of challenges and problems and tensions in the relationship, as well. And, I think, first among those would be differences over Taiwan. We also have concerns over human rights and religious freedoms."

He adds, however, that China's increasing demand for oil could become an important factor in relations between Washington and Beijing.

"I think it's just a fact that China's consumption is growing, and it's growing quickly, and the numbers are quite significant," he said.

Mr. Schriver says the growing U.S. and Chinese demand for oil could lead in two very different directions - bitter competition for supplies, or increasing cooperation, not only on energy issues, but others as well.

"This could also create opportunities, and lead us to have views that are more in line with one another," he said. "If you think about it in a certain way, China will have a greater interest in free sea-lanes and protection of commerce on the high seas, something that we're very interested in, and we're working in the Asia region with our friends and like-minded countries. China is going to have a strong interest there. They're going to have an interest in stability in oil-producing regions, as we do. So, I think it's a question we can't fully answer yet."

The possibility for U.S.-Chinese energy cooperation is also an issue raised by Amy Jaffe, an energy analyst at Rice University.

"For the Chinese to look at us and for us to look at the Chinese when it comes to oil, it's like looking in the mirror," she described. "The fact that we can't get it together and have a joint policy is kind of too bad, because our strategic interests totally are aligned.

"We both need to have new technologies in our automobile sectors," continued Amy Jaffe. "We both need to have conservation and environmental policies. We both would benefit from having a stable Middle East. So, there's a lot of interplay, potentially positive interplay, between the United States and China, that's possible."

Ms. Jaffe says there are strong voices in both countries, though, that argue for a more confrontational approach.

"The problem is, of course, in certain factions, both in China and the United States, you have these hard-liners that look at it in a totally different way," she said. "They look at it like [with the perspective of], 'oh, we're all going to be competing for the same oil.'"

The competition for resources like oil could have a negative effect on U.S. - China relations, according to David Lampton, director of China Studies at Johns Hopkins University's School of Advanced International Studies.

"As China becomes a rapidly bigger consumer of the global petroleum, unless there's some new bonanza that dramatically increases supply, prices are going to go up," he predicted. "And as that occurs, the competition will become more intense. The resentment against that inflationary pressure, meaning against Chinese demand, will probably go up. And so, I think you have the sort of energy competition here, also. So, that will create some conflict."

Mr. Lampton adds that many of the countries with which China is expanding its oil cooperation are nations that the United States and other western countries have largely stayed away from.

"The other conflict is where China can secure this energy is places like Iraq, Iran, Sudan, even Venezuela, and so forth. And these are regimes with which, often, the United States has difficulty," he reminded. "And, so, we are continually going to be seeing the Chinese trying to improve relations with countries we have more difficult relations with. So, I think this whole energy diplomacy area is going to be one of increasing friction."

Chinese experts, like Ruan Zongze, vice-president of the China Institute of International Studies, say it is not Beijing's strategy to befriend oil-producing countries that are shunned by the United States.

"No, not at all," he said. "Actually, I don't see it that way, because we are always getting what we want from the market. So, I think there's no distinguishing about the political sense, whatsoever."

When asked about whether oil was a factor in China's recent lack of support for a tough United Nations resolution against Sudan, Mr. Ruan said China traditionally maintains good relations with developing countries, including Sudan.

Meanwhile, Chinese Embassy spokesman Mr. Sun downplays fears of an oil-hungry China, pointing out that his country still lags far behind the United States in terms of global demand for oil.

According to the U.S. Energy Intelligence Administration, the United States consumed an average of about 20 million barrels of oil a day in 2003. By contrast, the EIA says, China's total oil demand last year was only 5.6 million barrels a day.