How La Niña’s icy grip may bolster China’s resolve in the South China Sea
La Niña is back, as China’s current cold snap attests. But it’s an ill wind that blows no good and for those who argue that China’s strategic interests lie in reinforcing its position in the South China Sea, La Niña merely bolsters their stance. It might be a weather event, but it has profound economic and geo-economic implications.
As defined by the US’ National Oceanic and Atmospheric Administration, La Niña is “a natural ocean-atmospheric phenomenon marked by cooler-than-average sea surface temperatures in the central Pacific Ocean near the equator.” That lends itself to a colder winter in China and by extension to higher energy use for heating.
China’s changing energy mix can only reinforce Beijing’s determination to secure its presence in the seaways of the South China Sea
Colder weather conditions and higher demand for energy for heating, coupled with China’s drive to curtail air pollution by reducing its dependency on coal as an energy source, has led to a spike in the country’s demand for liquefied natural gas (LNG) as an alternative fuel source.
That increase in Chinese demand has, in turn, helped drive up both the spot price for LNG and the rates for hiring the tankers by which that energy is delivered.
Strong demand from China has helped to push up the spot price for the Asia-delivery LNG benchmark. As the Post reported on Saturday, data from China’s national bureau of statistics showed the price of LNG in the first 10 days of December reached 6,967 yuan per tonne (US$1,053), representing a 23.6 per cent increase when compared with the last 10 days of November.
But while the influence of La Niña may be currently adding to China’s energy import bill, its greater significance surely lies in re-emphasising how important to China are the seaways of the South China Sea.
La Niña brings the connected issues of energy security and geopolitics into even sharper focus.
Analysts at Platts LNG Analytics forecast “China’s LNG demand growth will amount to a substantial 25 per cent of total supply growth next year and will keep growing.” China is going to be buying a lot more LNG and much of that will be arriving by sea even though there will also be an increased supply by pipeline from Russia.
And however amicable relations between China and Russia may currently be, it is not in Beijing’s strategic interests to become too dependent on any one single energy provider.
Perhaps it is no surprise then that, following assertions from a US think tank that China has recently again been expanding construction in parts of the South China Sea where other nations also claim sovereignty, China’s foreign ministry spokesman Lu Kang retorted on Friday that “it’s completely normal for China to conduct peaceful construction and build essential defence equipment on its own sovereign territory.”
As the British author Tim Marshall wrote in his 2015 bestseller Prisoners of Geography, “China must secure the routes through the South China Sea, both for its goods to get to market, and for the items required to make those goods – oil, gas and precious metals among them – to get into China. It cannot afford to be blockaded.”
Of course neither Japan nor South Korea, themselves both already dependent on imported energy that arrives via the South China Sea and equally vulnerable to the effects of La Niña, can easily countenance China dominating those seaways.
In 2016, according to energy specialist S&P Global Platts, Japan imported 31.3 per cent of the world’s LNG with South Korea accounting for another 12.5 per cent. By the end of this year China may have overtaken South Korea as the world’s second largest LNG importer.
Indeed earlier this month, analysis of vessel-tracking data by Bloomberg up to December 4, revealed that LNG tankers with a total capacity of 33.6 million metric tons had visited China this year. That was just 1.7 million below South Korea’s total. As recently as 2011, the annual gap was more than 24 million tons.
China’s changing energy mix can, anyway, only reinforce Beijing’s determination to secure its presence in the seaways of the South China Sea. La Niña’s icy grip, while adding to China’s imported energy bill in the short-term, merely stiffens that resolve.
The geo-economic implications of La Niña will remain long after the current cold snap has ended.
