China, Africa, and Oil

[jpak]

http://www.washingtonpost.com/wp-dyn/content/article/2008/06/09/AR2008060900714.html

As global demand for energy continues to rise, major players like the United States, European Union (EU), and Japan are facing a new competitor in the race to secure long-term energy supplies: China. As its economy booms, China is intent on getting the resources needed to sustain its rapid growth, and is taking its quest to lock down sources of oil and other necessary raw materials across the globe. As part of this effort, China has turned to Africa, an oil-producing source whose risks and challenges have often caused it to be overlooked economically. Some reports describe a race between China and the United States to secure the continent's oil supplies. Others note that while Chinese interests in Africa have surged, Western states still make the vast majority of investments in Africa and remain highly influential.

China's Demand for Energy



China's booming economy, which has averaged annual 9 percent growth for the last two decades, requires massive levels of energy to sustain its growth. Though China relies on coal for most of its energy needs, it is the second-largest consumer of oil in the world behind the United States. Once the largest oil exporter in Asia, China became a net importer of oil in 1993. The International Energy Agency projects China's net oil imports will jump to 13.1 million barrels per day by 2030 from 3.5 million barrels per day in 2006. China currently imports about half its oil supplies from the Middle East, and that percentage is projected to grow in coming decades. Yet the extent of the country's energy demand has also compelled China to push into new markets, and particularly Africa.

Africa holds a fraction of the world's proven oil reserves -- 9 percent compared to the Middle East's nearly 62 percent -- but industry analysts believe it could hold significant undiscovered reserves. As a result, China is seeking to increase its oil imports from the continent. It now receives about one-third of its oil imports from Africa, 9 percent of the continent's total exports in 2006 (by contrast, the United States purchased 33 percent of that year's exports from Africa). China's biggest suppliers in Africa as of 2006 were Angola, the Republic of Congo, Equatorial Guinea, and Sudan. It has also sought supplies from Chad, Nigeria, Algeria, and Gabon.

Sino-African Trade

Eighty-five percent of Africa's exports to China come from five oil-rich countries (Angola, Equatorial Guinea, Nigeria, the Republic of Congo, and Sudan), according to the World Bank. But Chinese interest in Africa extends beyond oil. China now ranks as the continent's second-highest trading partner, behind the United States, and ahead of France and Britain. From 2002 to 2003, trade between China and Africa doubled to $18.5 billion; by 2007, it had reached $73 billion. Much of the growth was due to increased Chinese imports of oil from Sudan and other African nations, but Chinese firms also import a significant amount of non-oil commodities such as timber, copper, and diamonds. China recently began to import some African-manufactured value-added goods, such as processed foods and household consumer goods.

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