By Mike Ramsey
News Business Reporter
China's need for fuel to sustain its rapid economic growth has major political and economic consequences for the United States and the rest of the world.
A group of top experts on energy and U.S.-China relations will hold a day-long seminar on the subject Wednesday at the Ross School of Business at University of Michigan. Professor Ken Lieberthal, who served as senior director for Asia on the National Security Council under President Clinton, is hosting the event.
"How China seeks to gain access to energy resources abroad is a major issue for the international arena," he said.
In the short term, it has contributed to the rise in oil prices. Long-term impacts, if not managed properly, could mean supply interruptions or even security concerns. The U.S. needs to work with China to develop a strategy on conservation and a system to avoid supply shortages that could roil the energy markets, but so far very little has been done by either side, Lieberthal said.
"This is not an issue that either side has said warrants the attention of the very highest levels of the administration - I think it does," he said.
Until 1993, China was exporting excess oil. Now it is the world's second biggest importer and second largest consumer behind the U.S. In 2005, it brought in 127 million tons of oil. Oil imports have risen rapidly in recent years and now account for 40 percent of the country's total oil use.
Experts predict that figure will grow to 70 percent in the next 15 years. Until China became a big importer, the supply of oil was deftly handled by the International Energy Agency, a collection of democratic states that worked together to prevent supply disruptions, Lieberthal said.
China isn't a member and because it isn't a democratic nation, granting it membership would be difficult. So there's no instrument in place to help prevent supply chain interruptions. While China and the U.S. leaders have little to gain by upsetting one another, they also don't trust one another. And things aren't made easier by China's energy connections to countries like Iran.
Jeffrey Bader, a senior fellow of Foreign Policy at the Brookings Institution and one of the panelists at the conference, said China's late start in the oil exploration business has forced it to go to countries that other nations won't deal with for political reasons, including Iran, Sudan and Burma. China is one of five nations that has a permanent seat on the United Nations Security Council.
The International Atomic Energy Agency, the nuclear proliferation watchdog for the U.N. referred Iran to the council last week. China agreed with the move, but it did so grudgingly and with a lot of diplomatic pressure, Bader said.
"As we move along in this Iran situation, it's going to take China making one tough decision after another," Bader said.
The keynote speaker for the luncheon at the seminar is Chas. W. Freeman, Jr., who served as principal interpreter on President Nixon's 1972 trip to China. He later became assistant Secretary of Defense for International Security Affairs, U.S. Ambassador to Saudi Arabia during Operation Desert Storm, Principal Deputy Assistant Secretary of State for African Affairs and Deputy Chief of Mission at both Bangkok and Beijing.
The seminar is free and open to the public. It begins at 10 a.m. in room D1273 of Davidson Hall at the Ross School of Business. Mike Ramsey can be reached at mramsey@annarbornews.com or (734) 994-6864.