China`s oil strategy and its implications for U.S.-China relations

Abstract

China`s surging oil demand and dependence on oil imports have forced the Chinese government to adopt domestic administrative measures and to try to secure foreign oil supplies. It is essential to understand China`s domestic energy structure in order to understand China`s oil strategy and its hunting behavior in its quest for oil. On the whole, China has relied on a mercantilist approach to guarantee its oil security rather than on a market approach, because of the constraints imposed by institutional fragmentation, strategic thinking, and vested interest concerns. China`s domestic structure still determines whether institutional reforms will be adopted to guarantee the country`s oil security. Meanwhile, the U.S. response to China`s oil strategy is to play either a conductive or an impellent role in satisfying or hampering China`s desire for oil security. In U.S. opinion, China`s oil diplomacy has more or less challenged U.S. geopolitical interests and ignored international norms. To prevent oil tension and an uncertain China, the current U.S. government has adopted a hedging strategy toward China consisting of energy cooperation and military preparedness. Through a variety of bilateral dialogues and cooperation, oil and energy issues between the two hegemonies have so far been manageable and will remain so as long as both sides continue to adjust to each other. For the sake of oil security, China needs to show its determination to apply domestic demand-side measures and a market approach, as well as a willingness to cooperate with the United States and multi-lateral mechanisms without neglecting international norms. © Institute of International Relations.