Illustration: Peter C. Espina/GT
US President Donald Trump's energy independence policy aims to increase domestic oil production and reduce the country's dependence on oil imports. Specifically, he plans to remove restrictions on the production of shale, oil and natural gas and will encourage companies to drill for oil on the continental shelf. His retreat on climate change, multilateral trade and other global issues could help the US achieve energy independence. The Trump administration's energy policy is more aggressive than that of previous administrations. In addition, Trump has always seen the US as a victim of free trade and pledged to slap 45 percent tariff on imports from China and picked several cabinet members with a history of hawkish positions on trade with China. Against this backdrop, China's One Belt, One Road initiative appears to be even more important.
One of the Belt and Road's priorities is strengthening energy cooperation with countries along the route, including cooperation in traditional energy such as oil and gas as well as clean energy. An all-inclusive oil and gas distribution network via land and sea could, to a large extent, change the energy trade pattern in Middle East, Central Asia and Southeast Asia and improve China's energy transport security. In the past, China mainly imported oil and gas from the the Middle East and Africa. The Sino-Russia gas deal in 2014 not only allowed China to diversify its imports but also marked the establishment of four major gas import routes and helped China raise its ratio of gas consumption.
In fact, energy cooperation with countries along the Belt and Road route carries implications beyond just ensuring China's energy security. It could help China address its excess production capacity issue and encourage Chinese firms to expand globally.
The country's technology readiness means it can bring not only economic gains but also environmental benefits to its partners. For instance, thermal power cooperation remains a priority under the Belt and Road initiative. Despite China's excess thermal power equipment production capacity, there is a huge demand for thermal power plant construction along the route. In countries such as Pakistan and in African countries, residents have limited access to electricity and existing thermal power units are outdated and need to be replaced. In Serbia, no new power generation units have been added in nearly three decades and the service life of existing ones are about to expire. This offers tremendous opportunities for China's thermal technologies which are homegrown and advanced. And domestic firms have experience in running international projects. Thermal power cooperation between China and these route countries is complementary as these countries have a practical demand for upgrading their existing facilities and for gaining competitive edge through economic development or environmental benefits.
In clean energy, countries along the route such as Kazakhstan have abundant uranium mines, wind power, solar power and hydro power resources while China boasts mature technology and expertise in developing and applying clean energies such as nuclear energy, wind power and solar power technologies. Cooperation between China and Kazakhstan is not only complementary but could also help both countries transition to a green economy.
Overall, China and countries along the route are at a similar development stage and China can offer some guidance to other developing countries. For example, the smog and heavy pollution China is currently battling may likely occur in countries as they develop. These countries need to seek a balance between energy, economy and environment. In the early development stage, it is inevitable that the economy will expand at the cost of environment, a trap which can be foreseen but is difficult to overcome. The question is whether these countries can manage their issues better than China. Compared with China, these countries have a big advantage in terms of environmental governance given their smaller economic volumes and that it is easier for them to find alternative energy. Therefore, they need to lay out a reasonable energy utilization plan, promote clean energy and prepare for the future.
Route countries are not only vital to ensuring China's energy security but are also key markets for Chinese infrastructure companies. Chinese firms have played an important role in driving economic growth in these route countries and should honor their social responsibility, respect local customs and religions and try their best to integrate with local communities as they seek to expand their footprint. More importantly, they should seek to create more local jobs and contribute to environmental protection, social and community stability and social welfare.
The author is director of the Collaborative Innovation Center for Energy Economics at Xiamen University.email@example.com