China's Energy Policy - English

A Broken String of Pearls

By Stefano Casertano18.04.2012Global Policy

China is revamping its energy supply: Away from global trade routes, and towards regional cooperation with Russia.


In 2004, the consultancy firm Booz Allen Hamilton coined a term for China’s energy supply strategy, terming it a “String of Pearls.” Loading barrels in the Middle East, Chinese tankers travel half of the globe to their home ports and are escorted by Chinese vessels along the way. A complex network of alliances provides for supplies and happy sailors’ nights out. The “pearls” are all those countries that are adjacent to the tankers’ sea lanes, such as Pakistan, Sri Lanka, Bangladesh, the Maldives, and Burma.

But what happens if Burma has the idea of turning a little more democratic, and turn its head in the direction of Washington, instead of Beijing? Would this mean that China’s string of pearls is broken, and that the pearls are ready to roll in the direction of the US?

As for Burma, there is still a long road to go towards real political representation for its people. It is a good sign that the country’s rulers allowed opposition leader Aung San Suu Kyi to take part to the April 1 elections, leading her “National League for Democracy” to grab 43 seats (out of 45 seats that were up for election). Yet the power structure of the country is still largely military-centric: ground troops still account for “the lion’s share”: in the state budget and control the obscure markets and trades of oil and gas.

The international aspect of Burma’s reform agenda is as impressive as its domestic one, since it may represent the first case in recent history of a country turning its back to China (albeit just slightly) after years of wooing the regime in Beijing. Several developments point in this direction, most significantly the choice “to let the national currency float”: (the “kyat”). This is to satisfy basic IMF demands and win Washington’s favor, and it stands in contrast to Beijing’s “cast-in-stone” approach of fixed exchange rates. Burma wants to have economic sanctions lifted, and the country’s leadership seems to have concluded that an alliance with the US will compare favorably to a partnership with China. Obamas strategy is working nicely: In November 2009, he shook hands with Burmese President Thein Sein in Singapore during a meeting of the “Association of Southeast Asian Nations.” Somehow, charm seemed to work.

For the Chinese, this may represent an abrupt geopolitical awakening. The basic rationale behind Burmese foreign policy is similar to what happened to the Soviet Union after WWII: big, undemocratic and nationalist powers are good at making friends with distant and developing countries. But if those countries are too close to the big power, they start looking for another godfather to avoid being swallowed up politically. For China, losing Burma has the potential of breaking the line that keeps the “String of Pearls” strategy together. The string has never been a full-fledged structure but rather a “strategic model” to be pursued through progressive actions that ranged from financial assistance to navy maneuvers and the construction of military bases abroad.

Burma provides evidence of the fact that the “String of Pearls” strategy is too unreliable for a country like China. The country has not been able to influence events in Iran, despite the fact that China is one of Iran’s most important oil trading partners. In the case of Sudan, geopolitical events and international pressure put Beijing’s oil ties with the African country at risk.

The point is this: Burma will not cause the “String of Pearls” to break. The “String of Pearls” is already broken because China has changed focus. Given the increasing (and newly-reached) energy independence of the US, Washington – once again – is turning its attention away from the fossil fuel resources in Central Asia. In September 2010, Putin’s placeholder Dmitry Medvedev and China’s President Hu Jintao signed a set of agreements after opening a pipeline that will supply the Chinese with Russian oil for some 20 years. In 2009, the two countries had already signed contracts for a total value of some 100 billion US Dollars. And South America comes in focus as well, with Brazil and Venezuela leading the way.



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