The Empire And China
By G. Asgar Mitha
An interesting comment in the form of a question was posted on Noam Chomsky’s article “It’s the Oil, Stupid” published on Counter Currents. That question was “What about China?” I answered Jay Janson in the comments section of Chomsky’s article (http://www.countercurrents.org/chomsky100708.htm). That was a very brief comment so I now take the opportunity to elaborate in this article. Sitting on my shelf of books is one of the best that I’ve ever read on China. It’s titled “The Coming Conflict with China” by Richard Bernstein and Ross Munro published in 1997. Bernstein was Time’s bureau chief in Beijing and Munro had been Beijing correspondent for The Globe and Mail. These two distinguished correspondents know China from the inside. The book, however, dealt more with political, geopolitical, economic and Taiwan issues rather than oil. A lot of development has transpired since the book was published being predominantly 9/11, the ensuing occupations of Afghanistan and Iraq and the speed of economic development in China. The title of the book speaks for itself.
As per the IMF, China’s GDP in 2007 had surpassed that of Canada, Italy, France and UK to rank fourth after the US, Japan and Germany. At an annualized growth of 10% over the past 10 years, China is now poised to strip the economies of Japan and Germany in the next 5-7 years. China even now is doubtlessly rich. It is America’s lender nation and with its cheap exports to a consumer and indebted society, it has prevented inflation spiralling out of control in the US. China’s trade surplus with the US grew from a meagre $60 billion in 1998 to a whopping $260 billion in 2007. In 2007 China’s world exports and imports amounted to $750 billion and $520 billion, respectively. US imports accounted for 35% and exports only 15% ranking the US first and fourth places with China, respectively. In sharp contrast, the US world exports and imports in 2007 amounted to $1160 billion and $2000 billion, respectively, registering a huge global trade deficit of $840 billion.
No nation can become a superpower without being rich because it is only the wealth that builds a mighty army, air force and navy and subsequently leads to the nation becoming an empire. That was the cases with Turkey, Great Britain, Germany, USSR, Spain, Belgium, Italy and Japan in the last century. They all sought gold, silver, copper, iron and precious jewellery to amass a wealth and also robbed weaker nations of their essential resources but like the mighty Romans, they too were defeated only to become a chapter in the history of empires.
There is no dispute that it is about oil. It is oil and not gold, silver, copper, iron and precious jewellery that has now become the lifelines of all nations, including China and USA. Both these countries rank first and second as global consumers of the world’s oil production. Between them, they consume 30 million bbls crude oil per day or 35% of the global production. China was a net exporter of oil until 1993 and now, like the US, it is a net importer. Without oil, their industrial outputs would grind to a screeching halt. It is therefore natural that the source of the next conflict will be oil and the Middle East and the Indian Ocean as the fault lines between the nations of the east and the west.
Both the US and China are seeking security of energy supply but they both are doing so in different ways. For the US which has always had a strong foothold in the Middle East, yielded influence with Saudi Arabia, as an occupier of Iraq and with military bases in Qatar and Kuwait, it directly influences control over 20% of world oil production. The US now aspires to control another 5% from Iran’s oil production and the strategic shipping point, the Strait of Hormuz. Which country gets the oil and which does not and at what price would be determined by the US. Afghanistan features prominently for the US agenda which is to transform that country as an energy corridor for shipment of the oil wealth of the Central Asian countries. Because Afghanistan is land-locked, Pakistan is geopolitically of extreme importance to the US. Hence the Americans need Pakistan to fight its war on terrorism till the threats of al-Qaeda and Taliban are eliminated. If the US, EU and NATO succeed with their plans for the Middle East, Iran and Afghanistan, they may well have direct control over half of the global oil reserves and production.
It is interesting to note that less than 10% of the Middle Eastern Arab oil production of 20 million bbls/ day is imported by the US, mainly from Saudi Arabia. 60% of US crude imports are from Canada, Venezuela, Mexico, Nigeria and Libya. Yet the US aspires to have control over 50% of the global oil production and reserves. In contrast, Saudi Arabia, Oman and Iran satisfied nearly half of China’s total imports of 3.8 million bbls oil/ day. The remaining Chinese crude imports come from Angola, Russia and Venezuela.
China is also aspiring for energy security but, unlike the US which has the psyche of an empire, it is seeking security of supply through investments and not occupation. The goals for energy security are in reverse modes. The US has been transformed from democracy to a capitalistic oligarchy whereas China is moving from oligarchy to socialist capitalism. The US is an indebted nation whereas China is a lender nation. The Americans are becoming poorer, lavish and lazy because of a lack of incentives and ideology from their leadership. The Chinese, in contrast, are becoming richer, frugal and hard working because of incentives and a cultural ideology. China has been investing heavily in Iran’s energy to the tune of billions of dollars and also in Canada, Africa and Central Asian countries.
The China Institute of the University of Alberta (CIUA) on its web site has posted an article of May 2, 2005 by Arnold Gay of Singapore’s Straits Times that “the US is seen as an unpredictable country that violates the sovereignty of others and wants to 'encircle' China”. That has become very obvious. But what really does the US, in particular but the west in general, fear from China? It has to be its economic muscle. In leaps and bounds, China has become a regional superpower competing with India in Asia. It has economically surpassed four European nations and is only fourth behind the US in GDP. All Empires have had nightmares that their hegemony will eventually be challenged. The US is no different and it sees that threat from China. The US dollar is the dominating world currency but what if this currency is challenged with Euro and the Yuan? That too is America’s nightmare.
America has a goal of China containment because it believes that it poses a future threat to its survival as an empire. The only way for America to contain the threat is to choke the oil lifeline. Chinese leadership is not naïve and well understands the great western oil game. Central to the Chinese survival of energy security is ensuring that sea lanes from the oil producing countries are unhindered, primarily the Strait of Hormuz, Indian Ocean, the Straits of Malacca between Malaysia and Indonesia and the South China Sea. China has a strong land based army but lacks a strong navy in contrast to that of the US. Its principal competitor in the Indian Ocean is India which has been engaged in building up its naval and maritime presence because it fears China’s emergence as the regional superpower. With the wealth it has acquired over the past 15 years, China has been modernizing its army and air force and, at the same time, its naval prowess. China has invested in Pakistan’s Gwadar port, Hambantota port in southern Sri Lanka, Sitwi port in Myanmar and Marao in Maldives with the objectives of establishing naval bases and listening posts. By 2010, China will have its first aircraft carrier group. India already possesses an aircraft carrier, INS Viraat. Chinese navy has 55 (eight nuclear) operating submarines against India’s 16.
For China, the most critical players for countering US domination in the Indian Ocean as a maritime lane and securing energy supply thus remain Iran, Pakistan, Sri Lanka, Maldives and Myanmar. To achieve its goals, China has invested hundreds of billions of dollars in the energy, defence and infrastructures of these countries. Likewise for the US also the two most critical players for China containment are Iran and Pakistan. Whereas China is seeking to protect shipments of oil, the US, in sharp contrast, is seeking plans to deny shipments of oil to China. These two divergent views will have to ultimately clash along the critical maritime flash points from the narrow Strait of Hormuz to the long and very narrow Strait of Malacca as the energy game speeds over the next 5 years. This is basically the window of opportunity for the US and its allies to contain and encircle China because this is also the window in which China seeks to build up its dexterity to hold the hounds at bay.
In closing, it is the opinion of this author that west including Israel is seriously considering opening the window now and seeking a conflict with Iran and that it is just not threats. There are certain western surmises. For one, the US and its allies are confident that the window of opportunity is now rather than later to contain China. Two: the oil prices are being manipulated to prepare the world and predominantly the Americans for the consequences of a conflict with Iran, albeit short term. Three: Iran is bluffing about its defence and offense like Iraq had been in 1991 and 2003 and the west is willing to take a calculated risk. Four: The western powers are confident that Iran’s leadership will crumble within 2-3 months after the initial attack and subsequent aerial and naval blockade similar to the one imposed in 1941 by UK and USSR. Five: Iran’s oil production will be significantly reduced so it may not survive economically for more than 3 months in the event of an attack and the blockade. Six: China will suffer economically because its oil supply through Hormuz will be choked during the conflict (China will have to rely on its indigenous crude production which is half of its daily consumption of 7 million bbls/ day). Seven: China will blame Iran if it closes the Hormuz. Eight: The western plans for Pakistan will be accelerated because as a result of the attack on Iran, the country’s economy already in dire conditions will not be sustained and with a short covert nudge the break-up along USSR lines will be easily accomplished. This is but a short list to get the readers to contemplate further. My list comprising of 21 points is too long to be included in this article.