South China Sea Conflict May Escalate Due to Energy Insecurity by Alfredo Montufar-Helu Jiménez

For many years sovereignty over the South China Sea (SCS) has been a contentious subject for China and several of its Southeast Asian[1] neighbors due to their overlapping territorial claims. At the core of the dispute lies the zone’s energy potential, given the region’s energy vulnerability due to an overall dearth of fossil fuels. To validate claims to the region, some countries have occupied several islands by force, while some have used international law to defend their positions. As for China, the government has been unable to legitimate its sovereignty claims due to competing claims by the other powers.  Furthermore, China needs to maintain a peaceful environment in the region to ensure its continued economic prosperity. Until now, peace in the SCS has been achieved by a precarious balance. However, this balance will likely vanish in the near future.

In “Energy and Geopolitics in the South China Sea,” Michael Richardson explains that the biggest risk for the fragile equilibrium in the SCS is that “economic recovery, rapid growth, and a resurgence of strong demand for energy in Asia will again push China and its Southeast Asian neighbors into contention.”[2] Unfortunately, this is precisely what is happening. Though there have been efforts to develop joint development zones to explore and exploit the energy resources, these have not borne any substantial outcome, and recent events show China’s willingness to take a more assertive position.

This year, both the Vietnamese and Filipino governments reported that Chinese patrol boats deliberately cut the seismic cables of their countries’ oil and gas exploration vessels. Last year’s clash between China and Japan regarding the Senkaku/Diaoyu Islands has also shown China’s strong interest in asserting its interests in territorial disputes.

It is pertinent to examine the GDP growth rates in the involved countries, since this is arguably an indicator of likely increases in energy demands. The 2008 financial crisis certainly took its toll on China and its Southeast Asian neighbors. However, in recent years these countries have shown signs of economic recovery with clear effects for energy consumption. From 2009 to 2010, Malaysia’s total oil and natural gas consumption grew by 3.3 and 6.2 percent respectively; the Philippines by .1 percent and -5.8 percent; Indonesia by .7 percent and 7.8 percent; Taiwan by 4.7 percent and 24.3 percent; Vietnam by 10.4 percent and 16.7 percent; and China by 10.4 percent and 21.8 percent. None of these countries substantively reduced their energy consumption from 2008-2009, and as of 2010, with the exception of the Philippines, these countries’ energy consumption all surpassed their pre-financial crisis consumption levels.

Moreover, the 2009 Energy Demand Outlook of the Association of Southeast Asian Nations estimates that its members’ oil consumption will grow at an annual rate of 4.5 percent for the next 19 years. China, which already surpassed America as the world’s largest energy consumer,[3] will, of course, continue expanding its demand of fossil fuels as its economy continues to grow.

All these figures have to be put into context to understand why it is likely that the SCS territorial disputes will escalate into more serious clashes in the upcoming months or years. On the one hand, other than the potential SCS oil and gas fields, almost all countries in the region suffer from a lack of local energy resources. Simultaneously, these countries are experiencing some of the world’s highest GDP growth rates, as well as high fertility rates. As these countries’ energy consumption increases in the coming years, their will become increasingly dependent on energy imports.

The most worrying case is China: as of 2010, it consumed 428.5 million tons of crude oil, of which 234.5 million tons were imported. In comparison, with the exception of the Americas, Japan, Australia, and Singapore, total imports of crude for the Asia-Pacific region reached 225.5 million tons.[4]

China’s high dependence on imports, which mainly come from the Middle East and Africa, diminishes its energy security for two reasons. First, these regions’ energy supplies are extremely vulnerable to political and military shocks, which affect oil and gas prices, as demonstrated in the recent Arab Spring. Second, supplies must cross vast oceans where security has deteriorated in recent years due to increasing incidences of piracy. Guaranteeing the security in the sea lines is thereby another reason the Chinese government would like to have exclusive jurisdiction over the SCS.

Thus, we should not be surprised to continue hearing about Chinese provocations in the SCS. In the context of rising energy prices and political uncertainty in the Middle East and Africa, China will take a more assertive position to fulfill its sovereignty claims. Securing energy resources is a “core interest” of the Chinese government; sustaining China’s outstanding economic growth rate, and thereby its social and political stability, depends on it.

Alfredo Montufar-Helu Jiménez is a second year student in the Master of Science in Foreign Service program at Georgetown University. He previously worked for the Embassy of Mexico in Beijing and is interested, among other subjects, in energy security and Asian security issues.   

For Lucas Chan's piece on the appropriate response to Chinese provocations in the South China Sea click here

[1] These nations are Brunei, Indonesia, Malaysia, Philippines, Vietnam and Taiwan.
[2] Michael Richardson, “Energy and Geopolitics in the South China Sea,” in Amy Lugg and Mark Hong (eds.), Energy Issues in the Asia-Pacific Region (Singapore: Institute of Southeast Asian Studies Publishing, 2010), 189.
[3] BP Statistical Review of World Energy June 2011.
[4] Ibid.