CHINA’S BOOMING ENERGY RELTIONS WITH AFRICA

ippr conference

‘The role of China in Africa’Wednesday 28th June 2006, 9.30am – 5.35pm

Canada House Trafalgar Square1 Cockspur Street, London, SW1

Wenran Jiang, Ph.D.Director, China Institute

University of Alberta, Canada

Overview

I. China’s growing appetite for energy

II. China & Africa: Energy as a new focus

III. Engaging Africa with Chinese characteristics

IV. Questions for policy formation and research

I. China’s growing appetite for energy

1st in foreign direct investment inflow1st in foreign trade to GDP radio1st in foreign currency reserve2nd largest energy consumer2nd largest energy producer2nd largest power market2nd largest CO2 emitter3rd largest oil importer4th largest economyHome to16 of 20 most polluted cities

China Energy and GDP Growth

0

100

200

300

400

500

600

700

800

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000

1980=100

80

100

120

140

160

180

200

220

2000 2001 2002 2003 2004 2005

GDPEnergy

GDP in 2000 was 6.4 times the level of 1980, energy was 2.16. By 2005, while GDP is 57.3%

above 2000 level, energy is 98% above. SOURCE: BP

Comparison of the Energy Demand Structure (by sector)

China’s Energy Structure

China’s Energy Structure

China World

Year 1980 1990 2000 2003 2003

Coal 72.2 76.2 66.1 67.1 26.5

Oil 20.7 16.6 24.6 22.7 37.3

NG 3.1 2.1 2.5 2.8 23.9

Elec. 4.0 5.1 6.8 7.4 12.3

Primary Energy Mix（％）

Source: China Energy Research Society, Energy Policy Research, 2003.6

China oil use & production US, China & world oil use

(SOURCE: NPR)

II. China & Africa: Energy as a new focus

Most of China's foreign aid,totaling 7.5 billion yuan (US$950 million) last year, has gone to more than 50 African countries. Premier Wen claimed that China has offered Africa more than US$44 billion in aid over the past 50 years to finance 900 infrastructure projects.

2001 to 2005, China's trade with Africa increased 268 percent, slower only than the growth of China's trade with the Middle East in the same period (367 percent), but faster than China's trade growth with Latin America (238 percent), ASEAN (170 percent), European Union (184 percent) and North America (163 percent).

II. China & Africa: Energy as a new focus

The seven countries on Chinese Premier Wen Jiabao's latest African itinerary -- Egypt, Ghana, the Republic of Congo, Angola, South Africa, Tanzania and Uganda -- have a combined trade volume of over US$20 billion with China, or 50.6 percent of total China-Africa trade last year.

In the first quarter of 2006, China's trade with these seven countries amounted to $6.56 billion dollars, a surge of 168.2 percent.

Today, Africa supplies China with nearly a third of its oil imports.

III. Engaging Africa with Chinese characteristics

1. Willing to get into the "troubled zones" with bold investment and aid packages in exchange for energy

2. Committing large amounts of funding and labor for exploration and development rights in resource-rich countries

3. entering into joint-ventures with national governments, state-controlled energy companies or individual enterprises for long-term local presence

4. not taking into consideration particular concerns of the US or other Western countries when selecting energy cooperation partners, having a different set of standards on how to advance political reform and human rights in Africa

IV. Questions for policy formation and research

1. What is the nature of China’s global quest for energy?

2. Are all Chinese energy companies’ activities a part of the Chinese state agenda?

3. Will China’s coming to Africa be different from old colonial powers?

4. What is a sound engagement strategy for China-Africa relations?

Thank youDr. Wenran JiangDirector, China InstituteUniversity of Alberta110D TELUS Centre87 Ave. & 111 St.Edmonton, Alberta T7G 2R1Tel. 780.492-9898Fax. 780.492.8200Email: wenran.jiang@ualberta.caWebsite: www.china.ualberta.ca