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Kenneth Lieberthal
  Kenneth Lieberthal
 

WDI Conference Will Address the Energy Future of China and the U.S.

1/23/2006 --

China, which is dependent on coal for about 70 percent of its energy, will see oil imports grow to 70 percent in the next 15 years.

ANN ARBOR, Mich.—The influence of China's relentless global pursuit of energy resources on international energy markets, the environment and future relations with the United States will be the subject of a one-day conference Feb. 8 sponsored by the William Davidson Institute at the University of Michigan and the National Bureau of Asian Research in Seattle.

The conference, "The Energy Future: China and the U.S.," will bring together top experts who have experience in academia, business and government service to address China's domestic energy constraints and dilemmas, its strategy to gain energy security, the implications for America and the actions the United States ought to take in response.

"The stakes on whether and how the U.S. and China are able to cooperate in the energy sphere are potentially very high," said WDI Distinguished Fellow Kenneth Lieberthal, a professor at the Stephen M. Ross School of Business who served as senior director for Asia on the National Security Council under President Clinton. "Outcomes could influence in a major way the functioning of the international energy markets, especially during a potential supply disruption. Environmental outcomes are also very much at stake.

"And strategically, energy could either become a bridge for U.S.-China cooperation or contribute very seriously to future tensions and distrust, with important spillover consequences for other aspects of the relationship."

China is dependent on coal for about 70 percent of its energy, which has major environmental consequences, Lieberthal said. Oil imports have risen rapidly in recent years and now account for 40 percent of the country's total oil use. That figure will grow to 70 percent in the next 15 years. China also is short of natural gas and other non-coal energy sources.

The conference will be split into two sessions, one in the morning and one in the afternoon, separated by a lunch.

The first panel, "China's Global Search for Energy Security," will be chaired by Mikkal Herberg, director of the Asian Energy Security Program at the National Bureau of Asian Research. Speakers include: Mark Levine, director of the Environmental Energy Technologies Division at the Lawrence Berkeley National Laboratory; and Steven Lewis, director of Asian studies at Rice University and research fellow in Asian politics and economics at Rice's Baker Institute for Public Policy, where he has been heavily involved in the institute's Energy Forum, including a number of projects on Asian energy issues.

A keynote luncheon presentation, "Wealth, Power, Oil and Gas: Chinese Affluence and the Global Energy Balance," will be given by Chas. W. Freeman Jr., principal interpreter on President Nixon's path-breaking 1972 trip to China. He later became Assistant Secretary of Defense for International Security Affairs, U.S. Ambassador to Saudi Arabia, Principal Deputy Assistant Secretary of State for African Affairs, and Deputy Chief of Mission at both Bangkok and Beijing. He currently co-chairs the United States-China Policy Foundation.

The second panel, "How the U.S. Should Respond," will be chaired by Lieberthal. Speakers include: Jeffrey Bader, senior fellow and director of the China Initiative at the Brookings Institution and former Deputy Assistant Secretary of State for East Asian and Pacific Affairs, Director of Asian Affairs at the National Security Council, Ambassador to the Republic of Namibia, and Assistant U.S. Trade Representative for the People's Republic of China; and Ed Morse, executive adviser at Hess Energy Trading Co., past publisher of Petroleum Intelligence Weekly, and former Deputy Assistant Secretary of State for International Energy Policy in the Carter and Reagan administrations.

Lieberthal said the timing of the conference is right because of the growing "sense of malaise" over how to respond to the rapidly growing impact of China on the international arena. China has become a key player in the global manufacturing system, holds a major share of American debt instruments, is rapidly expanding its influence in Asia, and is acquiring greater military capabilities.

China's future, though, is uncertain, with enormous domestic pressure for ongoing rapid economic development bumping up against very serious natural resource constraints, environmental problems, and social and institutional strains, Lieberthal said.

"Many of these issues come together in the energy sector," he said. "How China seeks to gain access to energy resources abroad is a major issue for the international arena."

The Chinese have major concerns about the security of supplies of energy from the international market, Lieberthal said. These concerns grow from a combination of distrust of the market itself, which is dominated by major Western oil companies, Russia and OPEC. The Chinese also are uneasy about having the U.S. Navy guard its long sea-lane supply lines and concerns about instability in Middle East politics.

As a result, Beijing, in recent years, has directed its three major national oil companies to try to purchase equity stakes in oil resources abroad wherever possible, he said. Since these companies are not very competitive with major Western oil companies, this has driven them to focus on fields in areas where, for political reasons, the major oil companies are not allowed to operate—problem states such as Sudan, Burma, Iran and Argentina.

"But oil investments bring with them political requirements to protect the interests of the states involved," Lieberthal said. "This basic dynamic is sharply increasing distrust between the U.S. and China, as seen vividly last year when CNOOC made a hostile bid for Unocal."

The conference begins at 10 a.m. in Room D1273 of Davidson Hall. The event is free and open to the public. Space for the lunch in Phelps Lounge is limited. Those interested in attending must register with Kristen Roy of the Davidson Institute at (734) 936-0041 or by e-mail at royk@umich.edu.



For more information, contact:
Dan Shine
Phone: (734) 615-4563
Email: danshine@umich.edu