China's Controversial Energy Policy

China needs energy to keep its industrial base working. Further, the country’s standard of living is rising and so is demand for energy from consumers - while the country is becoming more and more dependent on foreign oil imports.

Ever since the Chinese government started to intensify diplomatic and business ties with Africa and the Middle East, both rich in oil resources, the EU has been getting more and more concerned about China’s oil diplomacy.

China's strategy a challenge for the EU

China gaining influence in Africa as well as in South America and in the Middle East is definitely an issue for the EU and for the USA. Western nations are losing influence in Africa, because African nations are now in a position to choose an alternative trading partner.

"They do not have to put up with European moral standards when they turn to China. And China won’t mess with their internal policy. This is why they are involved in countries like Sudan, which have maybe genocide going on. They invest in oil there, in Nigeria, in Angola and in countries like that," says Jonas Keller, expert on China's energy policy.

Today, China is the second largest crude oil consumer after the USA, despite the fact that it only possesses 2.4 percent of the known global crude oil resources. To secure its oil supplies, China is cooperating closely with African nations in particular.

Aid for oil

Elisabeth Inhester, an expert on Sino-African relations at the University of Bochum explains that African nations usually receive know-how from China in exchange for oil. In effect, "Chinese oil companies help to develop oil resources in these African countries. They bring technical know-how; for example to Sudan which does not have the technology to extract the crude-oil from the ground," Inhester says.

The Chinese companies often buy equity in domestic African oil companies and help them in drilling and exploration. Either the Chinese government or these Chinese companies are engaged in building streets, pipelines as well as in other infrastructural projects. And the Chinese Import-Export-Bank is also granting African countries financial loans.

Dependence on coal

Besides crude oil, coal also plays an important role in China’s resource strategy. For years China has sated its hunger for energy with its huge coal resources. 65 percent of China’s electricity is generated using coal. This has had dramatic effects on China’s air quality.

To ensure a sustainable development of China’s economy and environment, Chinese officials are also turning to renewable energy sources. Although some projects like the Three Gorges Dam in China's Hubei province, are controversial. Jonas Keller

says that China's dependency on coal for electricity generation and industrial usage was very high indeed, but that there were plans and alternatives being explored by the Chinese government.

Plans for sustainable development

"Today, China is one of the largest investors in renewable energies. It is the only developing nation, if China can be called that, which has a plan for the reduction of carbon emissions. It invests heavily in wind power, hydro-power, and energy efficiency plans," explains Keller.

By 2020 China could be the world’s largest emitter of CO2 if the current trend continues. But China has alternatives and it could be an example for sustainable development and renewable energy for developing nations as a whole.