What Is China's Role in Globalization Why Is it Significant  Research Paper

  • Length: 25 pages
  • Subject: Energy
  • Type: Research Paper
  • Paper: #75280432

Excerpt from Research Paper :


How Africa's Petroleum Supply Is Important to China's Economic Growth and Development

While China continues to grow, its oil demand is poised to grow rapidly. For China to ensure its oil security, it must obtain oil from the global world because it lacks adequate domestic resources to quench the thirsty appetite of the country's rapid economic development. Any approach for growth that the country takes in its demand for oil is likely to affect the global oil market and influence existing system and order of international oil. As one of its oil strategy, China's firms are reaching every corner of the world to purchase oil or invest in oil fields showing to have opportunities disregarding the possible enormous risks. Some of China's national oil enterprises have made outstanding investment activities in African countries (Ma, 2010). Today, China's largest imports from Africa continue to attract global eyes. Therefore, Africa-China oil ties founded on oil investments in and oil purchases from Africa are increasingly becoming of concern to various experts and policy makers. This is especially in China, Europe, United States, and African oil producing nations.

Africa-China ties have been drastically expanding and deepening since 1995. This growing association has become the topic of international attention and debates, particularly, in popular journals and the press. Most people have argued that the involvement of China in Africa will erode the interests and influence of the developed Western countries on the continent. This is because the West has always been perceived as instruments for implementing the concerted energy strategy of China (Lensey, 2007). Similarly, the Chinese government has always supported the cause of promoting human rights and good governance. A few experts stress that the globally exploitative activities of China have increased the total supply of oil and contributed to the mitigation of the intense global oil market condition. All these have led to an improved world energy security. Additionally, some individuals contend that the engagement of China in Africa will facilitate Africa's increased abilities and economic growth (Cichon, 2007).

Africa is viewed as a vast continent with diverse geographic trends and limited population. Africa has an enormous resource base, with world leading concentration of strategic minerals, with powerful rivers, uranium deposits, and key petroleum deposits. However, it is mainly composed of developing nations with limited infrastructure and capacity. Western strategies of development have miserably failed in Africa, falling victim to cultural differences, Cold War politics, and Africa's colonial heritage. For a long time, China, self-declared a role model and friend of the developing world, continues to be in the midst of a resurgence African initiative grounded in a politics-free model of development (Venier, 2004). This strategy aims at securing access to resource supplies within the African content. This research examines China's African strategy and the significance of China in globalization. The paper provides an analysis of its implications for the U.S. national security and recommends proactive strategies to deal with this phenomenon (Kupchan, 2012).

China in Africa

The interests of China in the African continent are not new; for long, China has considered itself as the leader of the developing world. As such, it has been involved in Africa from 1960s, supporting the insurgency of anti-colonial and offering development support to the socialist regimes of Africa. Tanzania-Zambia railway (TAZARA) is one of the crowns of this development assistance. The railway line ran from Dar es Salaam across to Tanzania through to Zambia. China deployed its workers to Africa to build the railway and gave financial support through interest free loans. The new rail line was intended to transport resources such as copper from Zaire and Zambia. It also provided an option to the reliance on the white governed airports in South Africa. China's support of African leaders such as Robert Mugabe of Zimbabwe spans decades. During the declaration of independence in some African countries, China provided training, logistical, funding and arms support to the African liberation front. For instance, when Mugabe was elected, he dismantled the rival political party and through China's support, the ruling party has remained in power for more than twenty-five years. Although China has retained most of its relationships with African countries, in the early 1980s, China adopted a focused and renewed presence on the African continent (Ozdemir, 2008). This presence has been driven by the need to access resources.

The fundamental reason for China's renewed engagement in Africa is the desire for access to the natural resources in Africa primarily minerals and energy. After the implementation of the free market reforms in 1978, China's GDP has been growing at an average of ten percent annually (Griffin, 2011). The country continues to tap into various resource markets, to satisfy its ever-growing economy. China's intention is not to compete on the open market in terms of natural resources; it seeks to own the resources, as well as their infrastructures to create a safe source of supply. This push has been accompanied by varying levels of financial aid. State-owned Chinese construction firms in Africa receive incentives in terms of government guarantees and export credits from bank loans (Wang, et al. 2012). Similarly, state-controlled financial institutions and banks have ensured expensive loans are available to private Chinese enterprises investing abroad. Some Chinese think-tank experts like Lucy Corkin explain that this trend has trickled down to Africa's micro-entrepreneurs. It has a gigantic fragmentation and diversification of Chinese commercial actors coming from China. Strategies of national security of the U.S. government have often been characterized as having had three factors like defense, development, and diplomacy. China's efforts to grip the diverse physical and human geography of Africa will be best examined throughout the paper (Ma, 2010).

Facts about Africa-China Oil Ties and the Global Oil Market

Some facts must be attached to Africa-China oil relations and the world energy ties. Oil meant for transportation is extremely challenging to substitute for a different energy for various reasons namely its high-energy transportability and density. The global transportation framework is fueled entirely by liquids. The transportation industry accounts for approximately 80% of the U.S. oil consumption and is driven by petroleum (Resende & Cote, 2008). More oil is being used in China's transportation industry as the number of commercial trucks or passenger cars increase rapidly. Nevertheless, the remaining percentage of China's oil consumption goes to industry and different sectors. The global oil market is internationally integrated, and various energy markets like coal and natural gas are increasingly interacting with it. This implies that no single country can become an isolated land with immunity from the implications of oil markets.

The spatial distribution across the production, reserves, and consumption of oil all over the world is unbalanced. Over sixty percent of the world has proved oil reserves are concentrated within the Middle East. In addition, approximately eighty percent is concentrated in OPEC while the regions share of the global oil consumption and production is estimated at thirty-three percent and nine percent respectively in 2012. Africa accounts for ten percent, eight percent, and five percent of the global oil reserves, production, and consumption in 2012 respectively. On the other hand, countries such as China and U.S. hold fewer oil reserves than they consume and produce. In 2012, China's and U.S.'s oil production accounted for roughly five percent and nine percent total global production respectively. These two nations own less than 1% and two percent (China and U.S.) respectively, of the global proved oil reserves in 2012. The United States consumed twenty percent of the global oil in 2012 while China consumed roughly twelve percent. The two countries are among the biggest producers of oil in the world, and the United States is the largest oil consumer followed by China. Therefore, both nations have a significant influence on the global oil market.

National oil firms dominate global oil production and control the largest part of the world's oil reserves. National oil firms are controlling about eighty percent of the world's oil reserves with no equity involvement by international oil firms. Western international oil firms now control less than ten percent of the world's gas and oil resource base. In addition, out of the top twenty oil-producing firms across the world, fourteen are national oil producing companies (Wang, et al. 2012). Most oil-producing firms across Africa are open to foreign investment for production and exploration because they lack capital, skills, technology, and expertise in these fields. On the contrary, the leading reserve holders in other regions of the world do not permit foreign oil firms to access their oil resources or limit the incentives and opportunities for foreign investors. Therefore, almost all of the leading international oil companies are penetrating, into the African continent to compete for its oil resources. China has quickly overtaken the United States to become the largest trading partner of Africa. Just in 2012, volumes of trade between Africa and China totaled up to almost $250 billion (Peterson, 2005). Most of Africa's exports to the U.S. And China are…

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