China in the News - Energy and Influenza

Continuing yesterday's theme of looking a bit closer at the deluge of recent news reports about China, today the topics are a bit more serious and urgent. Instead of the long-term prospects for the U.S. dollar and red ink spilt on trade ledgers, today's subjects are global competition for energy and a possible bird flu pandemic.

Like Japan, China must import nearly all of its oil. To sustain economic growth rates anywhere close to what has become almost a double-digit norm, assuring a constant flow of oil and natural gas into the Chinese mainland is a top priority.

Recall that China combines a market economy with an authoritarian government that routinely suppresses free speech. The citizenry tend to have less desire to speak freely when the economy is doing well, and the economy performs best with an uninterrupted supply of imported energy.

If global growth continues near the pace of recent years, maintaining this flow may prove to be a challenge. But, they are working on it.

China's Race for Energy Resources Only Just Heating Up

China's 2.3-billion-dollar Nigerian oil venture is a major step forward for the energy-ravenous country as it seeks to power its fast-growing economy but analysts have said the race was just heating up.

China National Overseas Oil Corp (CNOOC)'s purchase of a 45 percent stake in the Akpo field off the West African nation is the biggest overseas investment by Beijing since China National Petroleum Corp's (CNPC) took over central Asia's PetroKazakhstan Inc for 4.18 billion dollars in October.

That deal was the largest ever by a Chinese corporation and added to a small but growing list of successes around the globe as China desperately seeks fuel for its economy.
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China has no choice but to secure more energy as the world's most populous nation continues its near double-digit economic growth.

China, already the world's biggest consumer of oil after the United States, became a net importer in 1993.

To help assure stable supply and prices, China is now teaming with their Indian neighbors to the south. Having competed with India over energy in recent years, this cooperation comes at a particularly good time as competition for energy intensifies around the world.

India, China to Sign Pact on Cooperation

India and China, competing worldwide in their search for oil and gas reserves, will jointly bid for, explore and produce energy under an agreement to be signed this week, India's oil minister said Tuesday.

Petroleum Minister Mani Shankar Aiyar said at least five agreements are to be signed between Indian and Chinese companies, with seven others likely to be finalized during his Jan. 12-13 visit to China.

"In all spheres of energy development, there is a great deal we could learn from China and perhaps something we could give them," Aiyar said.

The agreements provide for cooperation in exploration, production, storage and stockpiling, research and development and conservation, the petroleum ministry said in a statement.
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India and China have a four-decade boundary dispute that arose after their 1962 war. They are also economic and military competitors and have found themselves competing for oil and gas reserves around the world.

"This visit is the opening of a new chapter in our relationship ... it will lead to new levels of understanding," Aiyar told reporters.

Then there are the neighbors to the north and to the east. Understandably, the recent spat over natural gas prices between Moscow and Ukraine is disconcerting to other importers of Russian energy.

With a difficult decade and a half in its recent history, commodity-rich Russia must be looking for a little better seat at the G8 meetings, and with difficulties of its own in recent years, Japan looks ready to reemerge economically in a big way.

China, with no official membership in the G8, is the country that much of the world figures will be the economic superpower of the 21st century. It seems energy will play an increasingly important role in the relations between these three nations in the years ahead.

Ukraine Row has China, Japan Worried about Over-reliance on Russian Energy

Unfortunately for China and Japan, Russia has the world's largest natural gas reserves and is the second largest exporter of crude oil, making it too big an actor to be ignored in Asia's great energy game.

So the most the region's oil and gas guzzlers can do in reaction to the Russian-Ukrainian dispute is prevent over-reliance on the Kremlin.
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Nowhere is the complexity of the tripolar relationship between Moscow, Beijing and Tokyo more in evidence than in Russia's plan to build a pipeline transporting Siberian oil to the Pacific coast.

Russia announced on Friday it expected to start construction this summer of the pipeline, which will cost an estimated 15 to 16 billion dollars and have a capacity of 80 million tons a year.

When complete, it will run for 4,200 kilometres (2,600 miles) from Taishet in central Siberia to Perevoznaya Bay on the Pacific coast close to Russia's southeastern border with China.

Russia appears to have left it up in the air which of the two Asian economies gets first priority on the pipeline -- perhaps, observers said, in the hope of squeezing out the best possible deal.
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If anything, the Chinese are more concerned about American energy policies, having received a wake-up call with the US invasion of oil-rich Iraq in 2003, according to Engdahl.

"They realized that the American agenda had nothing to do with weapons of mass destruction, but had to do with control of world energy chokepoints," he said.

"Therefore, China really began an aggressive program to find energy security," he said.

Yes, American energy policies and their foreign adventures.

So, what about Iran? Iran has been pretty cozy with both China and Russia in recent years with China becoming increasingly dependent on energy from both countries.

Where's all this headed?

Maybe we need a good recession to knock down global demand for all natural resources for a few years so everyone can kind of regroup before someone starts another war.

Attack on Iran: A Looming Folly

While the ominous possibilities of heightened Iraqi chaos, missiles in the Gulf, and Syrian involvement loom large if the US attacks Iran, all pale in comparison to the involvement of China in any US/Iran engagement.

China's economy is exploding, hampered only by their great thirst for petroleum and natural gas to fuel their industry. In the last several months, China has inked deals with Iran for $70 billion dollars worth of Iranian oil and natural gas. China will purchase 250 million tons of liquefied natural gas from Iran over the next 30 years, will develop the massive Yadavaran oil field in Iran, and will receive 150,000 barrels of oil per day from that field. China is seeking the construction of a pipeline from Iran to the Caspian Sea, where it would link with another planned pipeline running from Kazakhstan to China.

Any US attack on Iran could be perceived by China as a direct threat to its economic health. Further, any fighting in the Persian Gulf would imperil the tankers running China's liquefied natural gas through the Strait of Hormuz. Should China decide to retaliate against the US to defend its oil and natural gas deal with Iran, the US would be faced with a significant threat. This threat exists not merely on a military level, though China could force a confrontation in the Pacific by way of Taiwan. More significantly, China holds a large portion of the American economy in the palm of its hand.

What China is holding in the palm of their hands are a pile of IOUs from the U.S. Treasury which should they decide they don't need them anymore, would cause U.S. mortgage rates to skyrocket, which then of course would kill U.S. consumption, on which their economy is dependent. So, there's the potential for lots of bad things to happen in the global competition for energy.

Maybe bird flu will change all the calculations.

The bird flu story just doesn't seem to want to go away. Like a low-grade fever this is just kind of there in the background, taunting us humans and our hubris.

There are probably many more blogs and websites on this topic by now, but Avian Flu - What You Need to Know has been a pretty good source of information on this subject so far. While the real news in recent days has been coming from Turkey, there have been more bird flu infections in China.

China Warns Against Bird Flu Complacency

"We cannot lower our guard in the slightest degree against the risk of bird flu triggering a new epidemic," Mao Qun'an, health ministry deputy director general, told a briefing.
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The health ministry announced late Monday that a six-year-old boy in the central province of Hunan had become the country's eighth human case of bird flu.

The boy first showed symptoms of the lethal H5N1 strain on December 24 and is now under treatment in hospital, the official Xinhua news agency said.

Among the eight confirmed human cases there have been three fatalities, while there have been 33 outbreaks among poultry reported in several provinces since early 2005.
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Observers have expressed concerns that China may not have the resources to keep track of all developments in its vast countryside.

And now a couple more deaths.

Two more deaths from bird flu reported in China

The deaths of two more people on the Chinese mainland, revealed yesterday, raised the toll from bird flu to five.

Of the two recent deaths, one was a 10-year-old girl surnamed Tang in Ziyuan County of South China's Guangxi Zhuang Autonomous Region and the other, a 35-year-old man surnamed Guo in Suichuan County of East China's Jiangxi Province.

They contracted the H5N1 virus and died of complications from the disease on December 16 and 30 despite medical treatment.

Eight confirmed human cases of avian influenza have been reported on the mainland.
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"The latest deaths indicate that H5N1 is a particularly virulent pathogen, as we have seen in cases in other countries," Wadia said.

Globally, the human bird flu fatality rate is between 50 per cent and 60 per cent.
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In particular he warned against the nightmare scenario of bird flu starting to spread from human to human, rather than the current transmission pattern from bird to human.

Medical experts have warned human-to-human transmission could lead to a global pandemic that could kill millions of people.

Maybe somehow all the problems with energy will be worked out, all the nations of the world will learn to cooperate for their collective well-being, and bird flu will turn out to be just another passing scare.

Maybe.