Yemen's security challenge tests China's foreign policy

PUBLISHED : Tuesday, 23 August, 2011, 12:00am
UPDATED : Tuesday, 23 August, 2011, 12:00am


Libya's unrest shone a spotlight on China's growing foreign policy challenges. Within a few short weeks earlier this year, Beijing was forced to evacuate 35,000 Chinese nationals, even as Libya's oil exports, including those to China, were disrupted and international oil prices soared.

Still, this is not the China of old. And the country's navy quickly dispatched an armed frigate to participate in the evacuation, signalling China's growing assertiveness and willingness to be viewed as a military power so far away from home.

Yet if Libya offered insights into China's evolving foreign policy, then Yemen will seriously put it to the test.

Yemen poses a potentially much larger problem for China than did Libya. It might not appear so at first: after all, the country is among the poorest in the world, while its oil production accounts for a small, and declining, fraction of the world's total.

But it is Yemen's geography that makes the country so important - it is both a gatekeeper to one of the world's busiest shipping lanes and shares a border with the world's largest oil supplier.

The Bab al-Mandeb is a 30-kilometre stretch of water separating Yemen from Djibouti and Eritrea at its narrowest. It is through this strait that 22,000 vessels, from container ships to oil tankers, pass annually as they travel between Asia and Europe.

But the straits and its surrounding waters have become more recently famous for acts of piracy. Somali pirates have been responsible for a rise in hijackings since 2006, which continue in spite of a multilateral naval force in the region.

The risk is that violent upheaval in Yemen would only worsen the risk of piracy or terrorist attacks in or near the strait.

This matters for China.

Most of the country's US$355 billion worth of trade with Europe travels through Bab al-Mandeb. Europe now buys as much from China as does the United States, accounting for around 25 per cent of the country's total exports. And any threat to that trade, however small, would be a challenge to the export sector.

Major powers would beef up patrols

Rising prices are already resulting in factories leaving for cheaper locations, whether Bangladesh or Vietnam.

Disruptions in supply, because of piracy or a terrorist attack, might only encourage European retailers to look at options in Eastern Europe.

Caveats are of course warranted. First, the major powers could be expected to beef up naval patrols in the region. Second, container ships might be armed. Neither is there a clear alternative to China's export sector, because of its sheer size relative to its competitors.

Nonetheless, the importance of the strait to China's commercial interests means it will view with suspicion any increased European and US military activity in the area.

The second concern relates to Yemen's border with Saudi Arabia. The Saudi government has long worried about extremists slipping across that border to enter Saudi Arabia itself. It also worries about Shia movements in the region.

The risk of Yemen's collapse creating problems for Saudi Arabia would clearly add to the already high risk premium on international oil prices.

With Saudi Arabia providing 19 per cent of China's oil imports, the physical security of supply is also important.

I am certainly not arguing that trade through the Bab al-Mandeb strait will be halted or that the Saudi government will topple. Far from it.

But China's interests in what happens in Yemen are far greater than commonly perceived. And the upshot is that Yemen may be the spark that energises China's greater military and political engagement abroad or, at the very least, in the Middle East.

Ben Simpfendorfer is an adviser to the China Energy Fund Committee and managing director of Silk Road Associates. He is a China and Middle East specialist and the author of The New Silk Road