China and Energy: The Price Angle
One of the most frustrating things about writing a thesis on contemporary international issues is that, once you have handed in the text, new developments occur and new information becomes available. This Economist Intelligence Unit brief on China and energy could almost have been cut and pasted from my opus magnus, but it does offer extra information. The 'energy intensity' (ie. inefficiency) element didn't occur to me; nor did the economic effects of subsidies.
One sentence is particularly prescient: "For one thing, the need to maintain political stability limits the government's ability to improve efficiency." The point is that an energy crisis will trigger political unrest, but a cut in subsidies to improve efficiency will do too.
Energy for China | Economist.com
China's energy crunch is exacerbated by the country's high energy intensity (the ratio of energy use to economic output). This is partly due to the large share of industry in the economy, but it is also because many sectors—such as steel and cement—are plagued by over-production, waste and inefficiency. China's overwhelming reliance on coal for the bulk of its energy—around 70%—also poses problems. Coal is relatively dirty, inefficient and difficult to transport, but it is by far the most abundant energy resource in China.
China's energy needs are also having geopolitical repercussions, as the country's relative paucity of domestic oil reserves prompts efforts to expand imports and secure supplies abroad. For example, energy competition is a factor in China's territorial disputes with its neighbours, particularly in the East China Sea (with Japan) and the South China Sea (with eight South-east Asian countries). Large potential reserves of oil and natural gas are at stake in these disputes. China's energy security concerns also bolster its determination to develop its naval power, and to impose its rule on Taiwan, a de facto US ally that is adjacent to the shipping lanes to northern China.
