Mihaela Manolova (matr.No.

800222) RILM International Affairs

Chinas oil diplomacy under Xi Jinping

Introduction

The current paper aims at pointing out the major priorities of the Peoples Republic of Chinas
president Mr. Xi Jinping in the vital provision of oil resources. It is trying to highlight the correlation
between the previously established principles and political courses and Mr. Xis strategic approach.
The analysis is focused on the significant multilateral Chinese projects in the Central Asia and Middle
East and Africa, attempting to give visibility of the deeper Chinese involvement and influence in the
particular regions. The paper itself does not pretend to have discussed the oil and energy diplomacy in
completeness, but only to mark the focal points of the future Chinese diplomatic strategies in the
sphere. The energy topic needs further, separate and in-depth research, however, for the aims of this
paper we consider the given facts for sufficient.

Overview

One of the strongest markers of the foreign policy and implications of the foreign policy strategy is the
diplomatic agenda of the head of the state. It indicates the main interests of the state and its priorities.
One of the main functions of diplomacy, which Ameri puts as representing a states interests and
conducting negotiations or discussions designed to identify common interests as well as areas of
disagreement between the parties, for the purpose of achieving the states goals and avoiding
conflict 1, is vital to be handled with precision and thoroughness. Following this same logic, finding a
common interest facilitates devising solutions, which can be in interest of both sides.

The main priorities of the Chinese foreign policy are in line with the UN Charter, which are incorporated
in Chinas five principles of Peaceful Coexistence 2:

1. Mutual respect for each other's territorial integrity and sovereignty.

2. Mutual non-aggression.
3. Mutual non-interference in each other's internal affairs.
4. Equality and cooperation for mutual benefit.
5. Peaceful co-existence.

Peaceful co-existence and peaceful conflict resolution being core strategic aims of the Chinese leader
open space for new type of diplomacy trying to implement mutually beneficial policies regionally and
globally. The anti-hegemony diplomacy is designed to shape a regional security environment where
US alliance systems will no longer be relevant or necessary. This new style shows the leading position
of China and its potential and confidence in its role, directly contesting its counterpart USA. Peace,
stability and predictability are of utmost importance for Chinas fast growing economy and prosperity.
Therefore, China will seek to establish as many as possible multilateral economic engagements for
those countries who are in need of financial aid.

Russia

Chinas strategic interest almost always leads to energy supplies and the security of its delivery in
China, because its ever-expanding economy would not function without energy and oil.

1
The Functions of Diplomacy, http://www.e-ir.info/2011/07/20/the-functions-of-diplomacy/
2
China's Initiation of the Five Principles of Peaceful Co-Existence,
http://www.fmprc.gov.cn/mfa_eng/ziliao_665539/3602_665543/3604_665547/t18053.shtml

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 Mihaela Manolova (matr.No. 800222) RILM International Affairs

Hence, the geographical proximity of Russias abundant oil and gas resources and its global political
influence justifies Xi Jinpings one of the first diplomatic visits abroad for 2013 3 (also first as a president
of Peoples Republic of China) and 2014 were in Russia. It was a direct signal to the USA and Europe
that China underlines the importance of its alliance with Moscow. The constantly growing need of
energy resources of China and its preoccupations of US pivot to Asia brought it closer to Russias
willingness to provide them and combine efforts with Beijing in the power competition with USA. It
can be seen as a good starting point of stable cooperation.

Another important effect of this strategic partnership is visible in their solidarity in the voting in the
Security Council of the UN on particular problematic topics. Russia and China have joined forces three
times to block Western-backed measures on Syria even if Beijing was reluctant. However, Russia
followed the lead of China over the North Korean issue.

Both countries strategic partnership is visible in other international formats such as BRICS, where they
are trying to establish cooperation with developing economies aiming at countering the Western clout.

One belt, one road countries

Cooperation with Russia means future cooperation with Russian partners and allies as well. Most of
who happen to be part of the grand strategy of Xi One belt, one road (OBOR).

Figure 1. One belt, one road initiative.

One belt, one road is Mr. Xis bold strategy for proving Chinas global power. It is a long term
investment project, comprising of at least sixty countries and its aim is to facilitate the trade between
Asia, Europe and Africa. The project consists of a continental and maritime trade routes essential for
the diversification of the lines of the communication (LOC) of China and the delivery of the goods. The
total project is considered to cost 1.4 trillion dollars.

The official ideology behind OBOR, contrary to the US hard power, is peaceful developmentto
sponsor infrastructure investments and facilitate economic development, promoting cooperation and

3
President Xi Jinping to Pay State Visits to Russia, Tanzania, South Africa and the Republic of the Congo and
Attend the Fifth BRICS Leaders Meeting,
http://www.fmprc.gov.cn/mfa_eng/topics_665678/xjpcf1_665694/t1022827.shtml

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 Mihaela Manolova (matr.No. 800222) RILM International Affairs

minimizing conflict. There is no doubt that peaceful development is more sensible and sustainable than
American-style militarized security; poverty and injustice are hotbeds for extremism. 4

The first investments under OBOR are made in Pakistan, Tajikistan and Uzbekistan 5 through Asian
Infrastructure and Investment Bank (AIIB), which includes some of the most prominent allies of the
USA Britain, France, Israel, Australia and Saudi Arabia. By integrating 70 countries worldwide, the
AIIB venture is a significantly challenging the US influence and power.

The main result for China will be long-term cooperation and stability of its trade partners and security
of its oil supplies. This process itself will keep the Chinese economic machine working smoothly,
ensuring oil for the fast growing oil-consumption needs.

Middle East countries

Chinas strategic coordination with the Arab world is an important part of its One Belt, One Road
vision, and China has proposed a comprehensive cooperation strategy known as 1+2+3 6. One refers
to the need for increased cooperation on energy, covering a range of issues that include oil and natural
gas production, ensuring the safety of energy transport routes, and establishing a mutually beneficial,
long-term China-Arab energy relationship. Two stands for the two wings of infrastructure
development, construction and trade/investment facilitation. Three relates to breakthroughs that
need to be made in the high-tech areas of nuclear energy, aerospace satellites, and new energy in
order to upgrade practical cooperation between China and the Arab world.

Arab countries as a whole have become China's biggest supplier of crude oil and the 7th biggest trading
partner. 7 This justifies the strategic inclusion of the Middle East countries in the OBOR. From one side,
China will secure the unhindered transportation of the oil from the Arab peninsula to China and by
gain access to the Persian Gulf will secure its vital sea lines of communication (SLOCs). From the other,
OBOR will facilitate and speed up the trade volumes to Europe and Africa. Seen from a different
perspective, such an investment will impose long-lasting impetus for good relations with China and
even dependence on its funding.

In January 13, 2016, China issues the first Chinas Arab Policy Paper 8, which coincided with the 60th
anniversary of China - Egypt diplomatic relations and Mr. Xis first official trip to the Middle East in
2016, paying visits to Saudi Arabia, Egypt and Iran 9. The notion cooperation in the Paper is used 132
times and development is repeated 59. Apart from Israel, all other Arab countries are developing
countries. Cooperation and active engagement with the Chinese strategic initiatives is the main slogan
of the Paper. In return, China offers low interest loans, cheap technology and armament, and last but
not least, diplomatic support in its capacity of permanent member of the Security Council of the UN.

Egypt and Saudi Arabia are strategic partners of China due to their geographical proximity to the Suez
Canal and the SLOCs. Iran, however, is a non-Arab country, yet rich of oil and pivotal for OBOR.
Meanwhile, Saudi Arabia, Egypt, and Iran also represent three great civilizations, which endowed Xis
visit with cultural implications. It was repeatedly stressed that, in the implementation of OBOR, China

4
One belt, one road, https://monthlyreview.org/2017/01/01/one-belt-one-road/
5
Our bulldozers, our rules, http://www.economist.com/news/china/21701505-chinas-foreign-policy-could-
reshape-good-part-world-economy-our-bulldozers-our-rules
6
Chinas Arab policy paper, http://news.xinhuanet.com/english/china/2016-01/13/c_135006619.htm
7
There again.
8
There again.
9
The future of Chinas diplomacy in the Middle East, http://thediplomat.com/2016/07/the-future-of-chinas-
diplomacy-in-the-middle-east/

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 Mihaela Manolova (matr.No. 800222) RILM International Affairs

will improve not only economic cooperation but also the dialogue among civilizations. 10Egypt is the
traditional leader of the Middle East and it has proved that is willing to mediate the different Arab
moods if benefiting financially. China and Mr. Xi perfectly understand the case and therefore continue
their strategy of financial support for development and cooperation, while leaving the diplomacy to
the other four permanent members of the U.N. Security Council, the United States, Britain, France and
Russia. 11 China is playing the invisible, sneaking power that does not want to manifest any world
ideology, but to establish and protect its economic stability by importing and exploiting resources while
exporting and trading off its products. Consequently, it is vital that China cooperate.

China does not remain indifferent to the conflict in Syria and Iranian nuclear issue. In December 2015,
China hosts a mediation meeting between the Syrian official authorities and the opposition in an
attempt to promote its support for the resolution of the conflict. However, this proactive involvement
of the Chinese diplomacy is precedent. It is mainly provoked by the omission of efficient reaction of
the USA and UN community. This is also a chance for stabilization of the Chinese position in the Middle
East. Most importantly, Syria is strategically positioned on the Silk Road project and the stability of the
region is vital for the success of the Chinese initiative. All of the above will inevitably reflect upon the
status of China as a global power.

Africa

Africa is the second largest crude oil resource of China, after the Middle East. There is a long history of
the good diplomatic relations between China and the African states. Nowadays, China has diplomatic
relations with 51 out of 53 African states and provides financial support to all 53 12.

For decades China has launched various financial initiatives extensively in the oil-rich, underdeveloped
African countries, as part of its Aid for oil strategy, based on loans for the exchange of raw materials.

Package of loans and aid worth $2 billion to Angola to secure a major stake in future oil production
there. Angolas government uses the loans to build key infrastructure (roads, railways, hospitals) and
in return 25% of its exported oil is sent to China. In 2006, Angola decided that it no longer required
IMF funding. It is worth noting that the Chinese government gives loans without the necessity of the
beneficiary to adhere to principles such as human rights or democratic political development. This
policy of China makes it preferable money lender in comparison to the West.

Apart from the direct investments of China in the petroleum sector in the African states, in 2000 China
started the project Forum of China-Africa Cooperation (FOCAC). It is initiated by a few African states,
but very welcomed by the Chinese authorities as a possibility to increase the foreign investments and
trade and introduce the Chinese technologies to the Africans. FOCAC is another multilateral forum
aiming at bringing common interests together and realize win-win projects. The ever-growing capacity
of the Chinese economy needs more space to trade their domestic overproduction and investment
opportunities for their fast-growing companies. While the African states need funding for constructing
and renovating their road and rail infrastructure, hospitals, schools, etc.

10
There again.
11
China's Xi visits Egypt, offers financial, political support, http://www.reuters.com/article/us-egypt-china-
idUSKCN0UZ05I
12
Chainas oil rush in Africa, http://www.iags.org/chinainafrica.pdf

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 Mihaela Manolova (matr.No. 800222) RILM International Affairs

In 2013 Xi Jinping pays visit to Africa for the BRICs meeting in Durban, South Africa 13, but also held a
meeting with the presidents of Angola, Cote d'Ivoire, Benin, Mozambique, Uganda, Equatorial Guinea,
Guinea, Chad, representatives of Ethiopia and Algeria. All of these countries have proven oil reserves 14
and China is their major exporting partner. The leitmotif of the speech of Mr. Xi is again long-term
cooperation, peace and development. Mr.Xis official visit continues also in Tanzania and Congo.

Not only oil itself is important for China. The new diplomacy requires more complicated approach
towards the ever-more entangled global relations. In this regard, South Africa is not primary or even
medium oil exporter to China, but major trading partner and a key getaway to Sub-Saharan Africa 15.
However, its geographical position is important also for the transit of the South American export line,
which passes close to Cape Town. Friendly relations with South Africa would mean unproblematic
passage of the goods towards their final destination China.

Figure 2. Main oil roads heading China

The most remarkable success, however, for the reliable friend and partner of Africa 16 is the political
support that the African countries can provide in the voting at the UN. All the 53 African countries are

13
President Xi Jinping to Pay State Visits to Russia, Tanzania, South Africa and the Republic of the Congo and
Attend the Fifth BRICS Leaders Meeting,
http://www.fmprc.gov.cn/mfa_eng/topics_665678/xjpcf1_665694/t1022827.shtml
14
List of countries by proven oil reserves,
https://en.wikipedia.org/wiki/List_of_countries_by_proven_oil_reserves
15
Trade, Investment, Power and the China-in-Africa Discoursehttp://apjjf.org/-Barry-
Sautman/3278/article.html
16
During the Breakfast Meeting with the Leaders of African Countries, President Xi Jinping Stresses That There
Is No Perfect Tense Only Continuous Tense for China-African Relations,
http://www.fmprc.gov.cn/mfa_eng/topics_665678/xjpcf1_665694/t1026805.shtml

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 Mihaela Manolova (matr.No. 800222) RILM International Affairs

stimulated to vote in favor of China when needed. Actually, Egypt votes 93% in accordance with China
for the period 1999-2011 17 and it will certainly continue to be the case.

Conclusion

Multilayered and multilateral diplomacy is the natural answer of the continuously globalizing economic
relations. In a world, abundant of contesting products, one needs to cooperate on different levels in
order to be more competitive and efficient. Efficiency is the measure of success, because it makes one
a winner not only in a battle, but in an on-going inextricably encompassing struggle.

China in the future will continue to diversify its oil resources and not risking to put all its eggs in one
basket. Simultaneously, devising new opportunities and new technologies in order to keep
progressing and improving its own strategies.

It is not all roses and flowers in the Chinese attempt to impose their soft diplomacy. But it is their
intrinsic Confucian way of exporting influence that they are obliged to apply if they want to be the next
great power.

17
Diplomacy and aid in Africa, http://www.economist.com/blogs/graphicdetail/2016/04/daily-chart-10