The Dispensable Nation: American Foreign Policy in Retreat (37 page)

The turn to China is part of a bigger push east for Turkey. Ankara has also signed an ambitious free-trade deal with South Korea and is encouraging investments from Singapore (which has even opened an office for its economic development board in Turkey) and Japan, which is looking for the same investment opportunities that China is keen on. The expanded trade deals with East Asian economic powerhouses will complement trade deals Turkey is planning with Southeast European, Caucasian, and Central Asian states. Through their investments in Turkish manufacturing, East Asian countries can reach deep into Europe and the broader region around Turkey.

Turkey’s “neo-Ottoman” vision is in one sense rather literal. Because
borders in this region are so artificial—drawn by colonial powers at the end of the First World War—there is a natural wish to transcend those boundaries somewhat and for Turkey to return to the regional family it left when the Great War ended and the Ottoman Empire collapsed. No single measure has done more to move Turkey and the region toward that vision than Turkey’s decision to abolish visa requirements for citizens of the broad region around it. That has spurred unprecedented travel and trade all centered on Turkey—a vast market of singular importance to China and its East Asian neighbors.

Turkey’s ambitious development plans rely heavily on Iraqi oil and East Asian markets and investments. As energy and investment enable Turkish growth, they will also bring together the two wings of Asia with Turkey as the critical linchpin. Proven oil and gas reserves in Iraq’s Kurdish region, where Turkish influence is ubiquitous, equal those of Libya, and the low cost of exploration matches that of Saudi Arabia. The Kurdish region expects to pump 1 million barrels a day by 2015 and double that by 2020.
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China is eyeing that production. So many Chinese companies have showed up in Irbil in the last year that local firms are looking for Mandarin speakers to serve the burgeoning Chinese business.

China sees rising Turkey as an economic partner, a new market for Chinese goods and technology (China is particularly proud of selling its old nuclear technology to Turkey), and a good place in which to invest. Turkey has a growing middle class and consumer market, and soon it will be Europe’s fifth-largest economy. Its transport corridor and commercial ties make it a convenient gateway to large European and Middle Eastern markets as well as smaller ones in the Balkans, the Caucasus, and Central Asia. Turkey also offers China potential access to energy sources in Iraq and the Caucasus. China is also keenly interested in Central Asia, and there Turkish influence runs deep. A Chinese-Turkish partnership could rival the influence that Russia and Iran exert in Central Asia and the Caucasus. China has a sizable footprint in all these markets, but Turkey can provide China with an even greater presence. Turkey’s special economic relations with Europe, its open border and relaxed visa policy with its neighbors, and its port, road, rail, and pipeline
infrastructure all add up to this: if China is in Turkey, then it will automatically be in many other places, too.

It looks, in other words, like Asia is getting smaller as Turkey moves east and China moves west. The two booming emerging markets now bracket the continent, and as economic integration takes root the vast expanse between the Mediterranean and the Yellow Sea will shrink into one geostrategic space. That should be how America thinks of Asia, as the geographic region, economic zone, and strategic space between Turkey and China.

Over the past decade western Asia has emerged as the energy hub for the rapidly growing economies of the Asia-Pacific and South Asia, China chief among them.
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These economies need the vast oil and gas reserves of Russia, Central Asia, and the Persian Gulf and the transport corridor of Iran, Afghanistan, and Pakistan to fuel their growth.

Coal still accounts for 70 percent of China’s energy consumption and 80 percent of its electricity supply,
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but oil is catching up fast and is already the main topic of concern when China considers its global outlook and interaction with international markets.

James Fallows of the
Atlantic
explains China’s growing hunger for oil as a peculiar facet of its growth. “As fast as [China’s] economy grows, its energy consumption grows faster still. Each percentage point increase in economic output leads to a more than proportional increase in demand for energy.”
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Two decades ago, China produced all the oil that it needed and even exported some.
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China started importing oil in 1993. By 2005, its demand for crude had doubled, and it had become the world’s second-largest oil importer, behind only the United States. China’s demand for oil will double again in the coming fifteen years or so. Well before then, in 2020, China is projected to be importing 7.3 million barrels of crude a day—half of Saudi Arabia’s planned output.
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By this time, China will be the world’s number one oil consumer, and the manic rate of urbanization is likely to keep China deeply dependent on oil. In the next decade alone, the rise of new Chinese cities, according to
a McKinsey report, “will account for around 20 percent of global energy consumption and up to one-quarter of growth in [global] oil demand.”
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To sate its burgeoning hunger for energy, China has gone on the prowl for coal, oil, and gas around the world.
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Around 1999, China adopted the “Go Out” policy of encouraging diplomats and state-owned companies to secure long-term oil contracts.
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Chinese interests looked first to low-hanging fruit (places where there is little competition or Western presence) in Thailand and Peru, and then sought larger deals in Sudan and South Sudan. China has invested $44 billion in oil projects beyond its borders, half of it in Africa. Between 2002 and 2003, trade between China and Africa doubled to $18.5 billion, most of it oil imports.
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But none of this is enough. China needs the larger supplies of Russia and the Middle East. It craves the stability of long-term supply contracts but also seeks to invest in “upstream” oil and gas exploration, which it has done in Iran. Iran’s rich oil and gas reserves remain a significant opportunity for the Go Out strategy.
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East Asia is emerging as the ultimate energy importer, whose needs are perfectly matched with the supply potential of western Asia (comprising the Middle East and Central Asia). The Middle East exports around 30 million barrels of oil per day, and East Asia imports the same amount.
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Securing fossil fuels at the source is not China’s only concern. It is also worried about the security of its supply routes.
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The first step in America’s pivot to Asia has been to build up military ties with Australia, the Philippines, Vietnam, and India. In a military competition, America has the clear advantage of using its superior sea power to squeeze China’s oil supplies. China, meanwhile, is worried about the U.S. Navy’s control of the Persian Gulf. Also a worry is the narrow, five-hundred-mile-long passage between Sumatra and the Malay Peninsula known as the Straits of Malacca. This shallow, heavily traveled, easily blocked stretch of water—in the Phillips Channel just south of Singapore it is less than two miles wide—is the eastern doorway to the Indian Ocean and one of the world’s critical maritime chokepoints. More than 85 percent of the oil and oil products bound for China pass through the Straits from west to east. For Chinese strategists, resolving what they call “the Malacca dilemma” is a major preoccupation.

The Chinese are concerned about American strategic relations from Japan to India, for they see in U.S. dealings the outlines of a noose that could choke China’s access to energy.
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In the run-up to World War II, America, Britain, and the Netherlands did deny energy- and resource-poor Japan access to oil, rubber, and iron shipments from Southeast Asia and the Dutch East Indies. This is a lesson that is not lost on China’s strategic decision makers. During the Cold War, the Soviet Union cast hungry eyes on the Persian Gulf with the idea of doing something similar to the West. Access to energy, and therefore the Middle East, will be at the heart of the next global rivalry.

In response to its concern, China is building a blue-water navy and has invested in the “string of pearls” strategy of building bases in the Indian Ocean (in places such as Sri Lanka) to protect its sea routes to Africa and the Middle East. There is already a brisk competition between China and India over which country will dominate the Indian Ocean. The two Asian powers eye each other with suspicion even as they cooperate to address the menace of piracy.
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But China in particular is also worried about U.S. control of the high seas, which, added to America’s dominant position in the Persian Gulf, puts China’s energy supplies at risk. The Scarborough Shoal row, in which China’s assertion of primacy over the South China Sea met with resistance from some Southeast Asian nations with U.S. backing, brought the problem into sharp relief. At that point, America had already announced that it would deploy 2,500 U.S. Marines to Australia and help the Philippines to upgrade its navy.

In order to escape the Malacca dilemma, China has turned to a series of overland pipelines linking the eastern industrial centers of Shanghai and Guangzhou with western China and Turkmenistan, respectively.
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China has also looked to Myanmar as an alternate route that avoids the Straits. There, Beijing has had to compete for influence with Delhi. India, too, is growing rapidly, and is looking to the same Middle Eastern and Central Asian sources to sustain its economy. India, however, already has a sizable navy and is America’s strategic partner; the Bush administration sought to bolster India as a counterweight to China by forging closer ties with Delhi through measures such as a deal regarding nuclear power for civilian uses.

China and India have a contentious history. They fought a short, sharp border war high up in the Himalayas in late 1962, and India remains China’s strategic nemesis. They do plenty of trading now, but their rivalry will come to the fore as they vie against each other to gain access to western Asia’s energy resources on the best terms. In its extensive efforts to secure its access to Middle Eastern and Central Asian oil and gas, China is acting upon its fear of India as well as its fear of the United States.

Myanmar also poses a challenge to China’s plans. In early 2011, Myanmar’s military regime began a surprising series of reforms that have led to a thaw in relations with Washington. This cannot be pleasing to China, which had been treating Myanmar as effectively a client state. In fact, fear of excessive dependence on Beijing seems to be one of the motives driving the reform advocates within Myanmar’s ruling regime. In mid-2012, Myanmar suspended work on the massive Myitsone Dam that China had been building across the Irrawaddy River—another signal that Naypyidaw is trying to put some modest distance between itself and Beijing.

Farther to the west, China has earmarked $12 billion to develop the port of Gwadar on Pakistan’s Arabian Sea coast. The idea is to create a place where petrochemicals piped down from Central Asia (Kazakhstan and Turkmenistan) and minerals shipped from Afghanistan can be loaded onto tankers and cargo ships bound for China. The Gwadar project has been hampered by instability and security challenges—the product of clashes between local Baluch separatists and the central government—of the kind that U.S. multinationals such as ExxonMobil have long had to cope with in Indonesia or Nigeria. But China continues to invest in Gwadar and work to bring the port facility under its control.
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Little wonder, then, that China has been interested in still other pipelines. These include one going from Iran into Pakistan and then perhaps eventually through the Hindu Kush mountains into Xinjiang. Another would start in the Central Asian gas fields of Turkmenistan and then snake its way through Afghanistan and Pakistan to Gwadar or into Xinjiang. Here again, however, there is U.S. competition. Washington is talking about a pipeline from Turkmenistan to India (not China) as part of America’s “New Silk Road” initiative to bring commerce and
economic development to Afghanistan and other countries along the historic overland trade routes between China and Europe. The New Silk Road is a lofty idea that would work if there were true American commitment to Afghanistan’s stability and substantial financial commitment to build infrastructure, develop industry, and facilitate trade, not to mention commitment to improved relations with Pakistan and engagement with Iran. Without this commitment, at best the idea will become the basis for a Chinese regional economic system.

Two decades ago, China’s large industrial and population centers lay almost exclusively along its east coast. That region remains a dynamo, but people and production—and the hunger and thirst for energy inputs—are moving west.
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China now needs more and more energy for its middle and western regions, and that is another reason why pipelines into China’s southwestern provinces of Yunnan (from Myanmar) and Xinjiang (from Pakistan) are increasingly attractive.
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Political scientist Kent Calder writes that energy interdependence is tying eastern and western Asia together in new ways. The Chinese-Turkish deal further shows that East Asia’s need for closer ties with West Asia is matched by West Asia’s need to trade with the East. In 1980, East Asia accounted for 20 percent of the Middle East’s imports; that number has now doubled to 40 percent and is likely to grow further.
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China now carries on a robust trade with the Persian Gulf monarchies and is rapidly filling the gap left by the withdrawal of Western interests from Iran and Pakistan. China’s economic reach in Asia is vast and rapidly growing. Its political touch and military sting are sure to be felt soon.

China’s rise has so far not been as disruptive as that of Japan or Germany (or Russia) in the last century. The economic rise of those countries had, to put it mildly, a distinctly militaristic edge. The hunger for resources and markets drove those powers to start expansionist wars. The Chinese mantra since Deng Xiaoping launched economic reforms in 1978, in contrast, has been “a peaceful rise in a harmonious world.” There is a detectable air of caution and patience in China’s strategic thinking, but that barely masks the country’s determination in protecting its interests
and realizing its goals. Beijing has ambitions but doesn’t want trouble.
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Given China’s manifold domestic challenges and all that it still must do to consolidate its economic gains, Beijing knows that it “is not in a position to be arrogant or boastful” (the words are those of Deputy Foreign Minister Dai Bingguo). And yet, China still sees its interests as separate from those of the rest of the world, and its hunger for resources and markets could end up in military conflict.
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