The geopolitics of China’s new energy route

Author: K. Yhome, Observer Research Foundation

China’s state-run China National Petroleum Corporation (CNPC) completed construction of a natural gas pipeline from Myanmar to China on 28 May 2013 and is close to finishing an oil pipeline.

A view of the Myanmar-China gas pipeline project in Kyauk Phyu, Rakhine State, Myanmar, 28 May 2013. (Photo: AAP)

The pipeline will start delivering gas from Myanmar’s west coast in the Bay of Bengal to Kunming (the capital of China’s Yunnan province) on 1 July, while the oil pipeline will transport China’s crude shipments from the Persian Gulf and Africa when it is completed later this year.

The new route for oil and gas imports to China is a significant imprint in the geopolitical landscape of the region and forms a key factor in the strategic calculus of major actors. The pipelines are also the first signs of China realising the dream of opening up its southwest provinces to the Indian Ocean. China is moving closer toward establishing what has been described by some Chinese scholars as Beijing’s ‘two-ocean strategy’ — achieving naval control in the Pacific and Indian oceans.

The pipelines have been completed at a strategically propitious time. Energy security has come to dominate regional geopolitics, and the oil pipeline will allow one-third of China’s crude imports to bypass the strategically vital Strait of Malacca. Beijing views the narrow sea as a US-controlled sea lane and thinks dependence upon it for resources makes China vulnerable in a conflict. Presently, about 80 per cent of China’s crude oil imports pass through the Strait.

The pipelines’ location is important for other reasons too. Myanmar has become the focal point of major power competition for influence. While China has steadily increased its stake in Myanmar, recent changes in the country have created challenges for Beijing, forcing it to confront the ‘New Myanmar’ and recalibrate its policy against renewed American and Japanese interests.

China has developed strong political, economic and military ties with all the Bay of Bengal littoral states, primarily with a view to secure its access to energy from the Middle East and Africa. Of all these countries, Myanmar is the most important to China’s strategic ambitions in the Indian Ocean. While China officially welcomes Myanmar’s re-engagement with the international community, it also wants to secure its long-term strategic interests.

Beijing sees the opening of this alternative energy-supply route against the backdrop of maritime territorial disputes in the East and South China Seas. The Myanmar–China pipelines give China the chance to move in to the Indian Ocean and present a new dynamic to Asia’s great power games.

But China is no longer alone in Myanmar. Thein Sein’s visit to the United States in May came only six months after Barack Obama’s historic visit to Myanmar. The increasing exchange of high-level visits point to growing US interest in Myanmar, which the United States views as useful for its pivot strategy. The United States has reiterated its support for Myanmar’s reform initiatives and Myanmar hopes its president’s visit to the United States will encourage American investment. Chinese scholars view US–Myanmar rapprochement as part of America’s attempt to ‘contain’ China’s rise.

Japan has also been reviving its engagements with Myanmar. Japanese Prime Minister Shinzo Abe’s visit to Myanmar in May follows the visit to Japan by opposition leader Daw Aung San Suu Kyi. Japan offered about US$500 million in new loans and wrote off US$1.74 billion of Myanmar’s debt to Japan during Abe’s visit. Japan’s reasons are clear to the Japan Times, at least. In an editorial just before Abe’s visit the paper commented: ‘One of the purposes of Japan’s move [to Myanmar] is to counter China’s growing influence in the country’.

India has stayed in the background of these developments — so far. When Chinese Premier Le Keqiang visited India in May he stated that India and China agreed to ‘support each other in enhancing friendly relations with their common neighbours for mutual benefit, and win–win results’.

The pipelines will provide an alternative route for Beijing to import energy supplies. This is important for China given US maritime supremacy in the region. But the strategic advantage that Beijing gains out of the pipelines in the long-term depends on developments inside Myanmar and China’s relations with it.

Dr K. Yhome is a Research Fellow with the Observer Research Foundation, New Delhi.

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