U.S.-China Economic & Security Review Commission
Hearing on
“China's Energy Needs and Strategies”
October 30, 2003
Welcome to the U.S.-China Economic and Security Review Commission’s fourth hearing during the 108th Congress. Today the Commission will be examining China’s energy requirements and strategies and addressing the potential impact of those requirements on global energy markets and China’s geopolitical relations. These are very significant questions for both U.S. economic and national security interests, and ones that have not been given significant attention to date.
Today’s discussion is a timely one. Energy concerns in the U.S. have come to the forefront. There is an energy bill currently pending before Congress and the country is examining its antiquated electrical grid in the wake of last summer’s widespread blackout. Perhaps not since the 1970’s are Americans as focused on our increased dependence on oil imports and their vulnerability to political events overseas.
China’s energy picture posses a unique set of challenges for the United States. With a rapidly expanding economy and improved standard of living, it should come as no surprise that China is now the world’s second largest energy consumer (after the U.S.) and its third largest consumer of oil. In the early 1990’s, China became a net importer of oil, and now imports nearly 2 million barrels per day. At the same time, China remains both the largest producer and consumer of coal in the world.
Given these dynamics, it is clear that how China chooses to meet its future energy demands will have profound implications for global energy markets, the environment, and its relationships in Asia, the Middle East, Central Asia and beyond. This last point provides a clear indication of the intersection between economic and security concerns. In its 2002 Report to Congress, the Commission expressed concern that China’s energy needs may be a driver in its relations with certain oil producing state-sponsors of terrorism – particularly Iran and Sudan – and that arms sales and components for weapons of mass destruction (WMD) and missile programs may be a part of China’s efforts to secure oil and gas contracts and concessions. This potential nexus deserves more attention by the U.S. Government, and the Commission will continue to follow these developments closely, particularly with respect to Chinese energy relations with Iran, Libya, Sudan, and Syria.
I look forward to today’s testimony from a distinguished group of panelists and will now turn it over to our Vice Chairman Richard D’Amato and today’s hearing co-chairs, Commissioners Michael Wessel and Michael Ledeen.