London: In the port of Dongying in eastern China in early 2024, several tankers docked simultaneously to unload Russian crude oil at a new 31. 5-million-barrel garage facility completed late last year.
According to traders, this is part of a concerted and planned Chinese effort to build up strategic reserves for a likely uncertain future.
Estimates of the overall diversity of China’s strategic energy reserves range from 280 million to 400 million barrels, with the increase coinciding with an amount that exceeds the U. S. strategic petroleum reserve, which amounts to about 364 million. China consumes about 14 million barrels of oil per day in peacetime.
What is clear, however, is that China is intentionally accumulating reserves, as part of a much larger domestic effort to collect critical raw materials and resources.
On the energy side, much of the new capital flows now come primarily from Russia, whose energy exports to China rose by about a quarter last year to a record 2. 14 million barrels a day.
That makes the Kremlin the Kremlin’s biggest energy supplier for the second year in a row, overtaking Saudi Arabia and allowing China to take advantage of discounted Russian oil, while U. S. and Western sanctions have pushed away many other buyers since Vladimir Putin’s invasion of Ukraine in 2022.
Beijing’s oil stockpiling is just one example of what appears to be a vast national effort to dramatically increase reserves of key raw materials. There is a growing suspicion that the move is aimed at protecting Beijing from any long-term war or foreign sanctions, such as those that may be triggered simply by a possible Chinese invasion of Taiwan.
In an April 17 article on the foreign affairs and engagement blog War on the Rocks, Mike Studeman, former commander of the Office of Naval Intelligence and director of the U. S. Indo-Pacific Command, called for the U. S. The U. S. Department of Homeland Security argued that this component of a much larger process.
“Xi Jinping is your country for confrontation,” he wrote, describing the Chinese leader as “militarizing Chinese society and his country for a possible high-intensity war. “
This, he said, would involve building strategic reserves of goods and resources, to protect China from the kind of sanctions imposed on Russia after its invasion of Ukraine — or, of course, from a military blockade imposed as a component of a regional or global war.
Other examples of increased preparedness, he added, come with the much faster speed of the Chinese military’s operations around Taiwan, designed to train the Chinese military or implicitly threaten the Taipei government with the consequences of its own full-scale military blockade.
U. S. officials say Xi has given his military until 2027 to prepare to invade Taiwan, though both inside and outside the U. S. government remain divided over whether the decision to attack was actually made.
This week, the outgoing head of the U. S. Indo-Pacific Command said Beijing continues to invest resources in its military despite economic turmoil caused by a real housing crisis and a slowdown in industry between the U. S. and China.
“Despite a failed economy, there is a conscious resolve to fund the capabilities of the military,” Adm. John Aquilino said at a naval convention in Japan. “That worries me. “
What is clear, Western experts and officials say, is that the Beijing government has learned lessons from Russia’s complicated experience in Ukraine.
These come with the opportunity to tackle any military takeover incredibly quickly, presenting to the outside world – and especially the United States – a lightning replacement of the government in Taipei, Taiwan’s capital, before anyone can react.
Communications
Over the past year, U. S. President Joe Biden and his counterpart Xi held a cordial meeting in California in November and at least one follow-up bilateral phone call, while military officials held direct meetings aimed at finding tactics to ensure communication and reduce tensions. in any long-term crisis.
So far, neither Washington nor other Western states have taken steps to particularly isolate China from its raw material; The U. S. has increasingly worked to deprive Beijing of access to high-tech electronic chips, especially those that can only be used for weapons.
European states remain publicly divided over their approaches to Beijing, with German Chancellor Olaf Scholz visiting China this month in what appears to be an effort to maintain industrial ties.
German officials say Scholz has emphasized his Chinese counterparts, adding Xi, on multiple issues, adding human rights and Beijing’s stance for Russia in Ukraine.
More broadly, however, relations between the West and China continue to worsen, and also in Taiwan, which Beijing considers a rebel province with which it promises to seek “reunification,” either peacefully or by force.
This month, U. S. Secretary of State Anthony Blinken told fellow NATO foreign ministers that more and more Chinese parts in Russian weapons were being discovered in Ukraine. Beijing’s bet on Moscow, Blinken said, is on the verge of delivering deadly weapons systems.
This week also saw two rounds of arrests in Europe related to allegations of espionage through China, adding two British parliamentary investigators and three German ones working on defence programmes. Chinese embassies in both countries have denied any involvement in espionage activities.
After recovering first from the Covid pandemic, the U. S. -China industry plummeted in 2023 and so far shows little sign of recovery.
U. S. and European officials have also said they are introducing price lists for Chinese production of electric vehicles in particular, accusing Beijing of planning overproduction in a way that threatens its U. S. and European rivals.
If such price lists were introduced, relations would almost get even worse.
Chinese government investors have never been the type to turn down a bargain, replenishing their domestic inventories when short-term prices fall. Recent Western sanctions imposed on Russian nickel, aluminum and copper, which came into force this month, are seen as the most likely. stimulate additional Chinese purchases.
When it comes to lithium, a critical component of many types of batteries, Beijing has only bought reserves, but also processing facilities and mines, and added them overseas.
In March, investment bank UBS estimated that China could account for just a third of the world’s lithium source as early as 2025, taking advantage of falling prices to further bolster its holdings.
A 2016 Geological Survey report from EE. UU. de showed that China’s mineral deposits contain aluminum, cadmium, cobalt, copper, gallium, germanium, iridium, tantalum, tin, tungsten, zinc and zirconium, as well as other rare terrestrial elements.
Since then, China has sold off parts of its strategic reserves when costs were high, thus reducing costs for Chinese industry. More broadly, however, those stocks have continued to grow.
When it comes to a specific product, those purchases seem to go beyond the government. Chinese consumers and businesses, as well as state-owned institutions, have been on a buying spree this year, pushing their global value to a record high above $2,400 an ounce.
This has led to the hypothesis that China is on the verge of a concerted effort to free itself, along with major emerging economies, from its long-term dependence on the US dollar.
But it may also reflect the fact that the Chinese elite expects a more damaging global situation for the rest of the 2020s and beyond, and would prefer to consolidate their wealth within China’s borders long before the scenario worsens.
Deccan Herald is on WhatsApp channels | Sign up now to receive the latest and editor’s picks