Help China in drive for resources, U.S. body says

PUBLISHED : Monday, 13 February, 2012, 12:00am
UPDATED : Monday, 13 February, 2012, 12:00am


The US should partner China's aggressive international expansion to acquire resources instead of viewing it as a threat, said some speakers at a recent hearing of the US-China Economy and Security Review Commission (USCC), a US body that advises Congress on Sino-US relations.

The speakers said the US should not confront China over the South China Sea, during the USCC hearing last month on 'China's global quest for resources and implications for the US'.

'The US and China share an interest in the international development of shale-gas resources,' said Sarah Forbes, a senior associate at the World Resources Institute, an international environmental think tank.

'In recent years, major investments or partnerships between US and Chinese companies in the shale-gas sector have been to the benefit of both countries.'

Shale gas, a new industry in China, is expected to reach significant production levels in China between 2015 and 2020. This would reduce China's need to import natural gas from Russia and the Middle East, Forbes said.

'The US Congress should help US firms maximise opportunities in China's shale-gas market.'

In 2009, US President Barack Obama and Chinese President Hu Jintao launched the US-China Shale Gas Resource Initiative, with the goal of sharing information on shale gas. In January, Sinopec and Devon Corporation signed a deal where the Chinese state-owned oil major would invest US$2.2 billion for a one-third stake in five US shale and oil-and-gas fields controlled by Devon.

US companies should also invest in Chinese shale-gas production, Forbes urged.

In fisheries, the US should increase co-operation with China, the world's largest fish exporter, said Lyle Goldstein, an associate professor at the US Naval War College.

There had been co-operation between China and the US in fisheries for decades, Goldstein said. For example, in 1993 the two countries signed a memorandum of understanding to act against driftnet fishing in the North Pacific.

Depleted fishing stocks were pushing Chinese fishermen farther offshore, Goldstein said. Over the last several years, China has been entangled in fishing disputes with South Korea, Japan, the Philippines, Indonesia and Vietnam. These disputes have sometimes resulted in violence.

However, Goldstein said there was little evidence that Beijing was recklessly pushing its fishermen into disputed zones.

'Rather, China appears to be trying to minimise the deleterious impact of fisheries on relations with neighbours. China is no rogue actor in global fisheries, nor does it seem to be using fisheries to coerce its neighbours, as alleged.'

The US government should therefore be less concerned with disputes in the East China Sea and South China Sea, Goldstein said, since these disputes did not directly involve US national-security interests. He said that the US should avoid triggering an escalation of these conflicts by intervening.

'China's quest for resources has brought thousands of Chinese enterprises and millions of Chinese workers to every corner in the world. China accounts for one-fourth of world demand for zinc, iron and steel, lead, copper and aluminium,' said Elizabeth Economy, director of Asia studies at the US Council on Foreign Relations.

But Chinese firms have encountered criticism and resistance in their overseas business.

In 2007, an attempt by a Chinese company, Jilin Fuhua, to lease nearly 1.2 million hectares of farmland in the Philippines failed in the face of substantial opposition. Brazil was considering a measure directed uniquely against China that would ban the Chinese purchase of land in the South American state, Economy said.

In January, the US imposed sanctions on Chinese state-owned oil company Zhuhai Zhenrong for trading oil with Iran, said Daniel Slane, USCC commissioner.

'Chinese mineral investments in African states like Zambia, Zimbabwe and the Democratic Republic of Congo have drawn criticism from human-rights groups and governments for their opaque and exploitative nature,' Slane added.

Nonetheless, the US and China should co-operate in oil, said Mikkal Herberg, research director at the National Bureau of Asian Research, a US institute that studies relations between the US and Asia.

'China and the US have profound common interests in working together to strengthen the stability of global oil markets,' Herberg said, and the US Congress should push the US administration to work with China and other major Asian oil importers to find common ground on ways to enhance stability in global oil flows and prices.

Most oil produced by Chinese state-owned firms abroad was sold in international markets, which were far bigger than all the oil produced by Chinese firms, Herberg said.

'China's efforts to secure overseas oil-and-gas supplies do not threaten US or Western energy security. China's energy security depends on promoting stability in global markets,' he said.

Separately, in an interview with The World Today, Harvard's Professor Niall Ferguson said: 'The Chinese are becoming informal imperialists. They are forced into this by their need for natural resources. Their incentive is clear: which is a better investment - a pile of paper claims on the US Treasury or a copper mine? Real assets are very attractive to the Chinese because of their fear of being on the wrong side of a currency war with the US. The Chinese have thus become reluctant players in African politics. They are at that early stage of empire. They own some mines, they've got a colony of settlers there and they've become rather too close for comfort to the local rulers.'