China’s Trade and Investment in Africa by Alpha Furbell Lisimba

Author:Alpha Furbell Lisimba
Language: eng
Format: epub
ISBN: 9789811595738
Publisher: Springer Singapore

Africa in China’s Energy Supply Calculation

The limited availability of primary resources in China and also in the neighbouring Asian region has forced the leadership in Beijing to recognise resource-rich developing countries in the African continent such as Angola, as a strategic supplier of energy (Jiang 2009). Therefore, taking into account the growing global demand for energy resources such as oil and minerals, China’s own role in generating that demand, and Angola’s position in supplying some of that demand adds to the increasing importance of RRDCs for China (Corkin 2013). Consequently, China’s foreign policy towards Africa has changed over the last two decades from purely political and ideological objectives to increasing diplomatic and economic goals that ensure China access to energy resources, other raw materials, and a marketplace, all of which are crucial for China’s economic growth and political stability (Corkin 2013).

According to the International Energy Agency’s (IEA), Africa Energy Outlook (2019), Africa is perhaps the only continent with huge quantities of untapped resources that will last far longer than the present known reserves in other regions, such as the Middle East. This prediction, in part, pushes China to expand its investment in oil-producing states in Africa, particularly in their resource sectors (Alden 2007; Brautigam 2009; Kaplinsky and Messnerm 2008). To secure the supply of energy resources from Africa, the Chinese government opened the doors for its National Oil Companies (NOCs), which are also regarded as State-Owned Enterprises (SOEs), so that they could expand their business operations and invest in resource-rich states in the African continent with full economic and political support of the government in Beijing (Taylor 2007).

The Middle East is a major source of oil for China with Saudi Arabia and Iran being the two most important suppliers of crude oil to China since the country started importing oil from overseas (Alden 2007). Research firm Wood Mackenzie estimates that China will import 9.1 million barrels per day of crude in 2020, with some 3.5 million barrels, or 38 per cent, of that total coming from the Middle East (Wood Mackenzie 2020 and Nicolas and O’keefe 2020). However, constant conflict and political instability in oil-producing states in the Middle East prompted China to become more dependent on Africa as an essential alternative source of its energy supply. However and while China has been long dependent on importing oil from the Middle East, the recent attack on Saudi Arabia’s oil reserves on September 2019 by the Yemen’s Houthi rebels has raised concerns in Beijing about the stability of supply from the region, although Saudi Aramco, the giant company that manages Saudi oil facilities has assured China, giving a guarantee that supply will continue (Meidan 2019). Another problem is that US sanctions on two of the subsidiaries of China’s largest shipping company could cause a more significant disruption in China’s oil trading activities (Meidan 2019).

Obtaining oil from Africa was one way to reduce China’s dependence on Middle Eastern oil (Smith 2004; Downs 2004). Other emerging powers source most of their energy resources

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