Minqi Li: “China’s growth in oil consumption accounts for about one-third of the world’s incremental oil consumption that’s happened since 2000, and now China’s oil consumption already accounts for about 10% of the world’s total oil consumption. And the US accounts for 25%, but China’s is growing very rapidly. And that is taking place, moreover, at the moment when we’re probably at the peak, overall peak, of the global oil production or very near to that. And so you have this growing demand from China and some other emerging economies against a background of stagnating or possible declining supply of global oil production in the future. And so that definitely is a major factor behind the current global energy crisis.”
Story Transcript
PAUL JAY, SENIOR EDITOR: Welcome back to the next segment of our interview with Professor Minqi Li. And today we talk about the global energy crisis in China. Welcome, Professor Minqi.
MINQI LI, PROFESSOR OF POLITICAL ECONOMY: Thank you.
JAY: We’re told we’re reaching peak oil. Some people debate that concept; they say there’s still lots of oil. But one way or the other, the issue of the energy-consumption/climate-change crisis and the geopolitics of oil is determining most of what’s happening in the world right now. What is China’s role in this?
LI: Well, we’re a big role. China’s oil consumption grows very, very rapidly, accounting for about one-third of the incremental oil consumption that has happened since about 2000. And so China’s oil consumption right now is probably already 10 percent of the world’s total oil consumption. The US accounts for about 20 to 25 percent, I guess, 25 percent. China’s is growing very rapidly. And moreover, that’s the sticking place at the moment, when there’s growing evidence that probably—that the world oil production has reached its historical peak. China’s growth in oil consumption accounts for about one-third of the world’s incremental oil consumption that has happened since 2000, and now China’s oil consumption already accounts for about 10 percent of the world’s total oil consumption. And the US accounts for 25 percent, but China’s is growing very rapidly. And that is taking place, moreover, at the moment when we’re probably at the peak, overall peak, of the global oil production or very near to that. And so you have this growing demand from China and some other emerging economies against a background of stagnating or possible declining supply of global oil production in the future. And so that definitely a major factor behind the current global energy crisis.
JAY: Is China putting much resources into alternative energy development?
LI: China is making lots of effort, and China currently has a goal to increase its wind-power generating capacity to about 200 gigawatt. To give you some idea, that’s about 20 to 30 percent of China’s current electricity-generating capacity. So China has a goal to increase the wind capacity to 200 gigawatts by 2020. However, this is just one of many aspects of China’s gradual growth. China’s coal consumption is also growing very rapidly, and in the first half of 2008, China’s coal production increased by an annual rate of 15 percent. That’s a very, very rapid rate. And, moreover, the wind starts from a very small base. And so any revenue growth of renewable energy basically is canceled out by the gradual growth of fossil fuels.
JAY: There’s a group in Washington and a circle of thinking that in the long term sees the fundamental strategic enemy, rival, of the United States is China. And many people there, including in the Democrats and in the Republican party, they say that foreign policy issues should all be worked back from the question of someday in a more real, contentious relationship with China. And in that respect, there’s a conversation that takes place about the strategic control of oil. Most of China’s oil, as I understand it, comes from the Middle East, increasingly from Africa, even from Latin America, all regions where the Americans have usually had a dominant position. And in many of these areas now China is already a serious rival—economic rival, not military. To what extent is China concerned about a kind of encirclement of China when it comes to oil?
LI: Well, obviously, China is a potential big power. And so there is some—you know, you can have some understanding about these concerns of uncertain circles of US ruling elites with respect to this. But, you know, on the other hand, it’s very interesting. The relationship between American capitalism and the Chinese capitalism now is very interesting. And China is probably the major support behind the US dollar right now. And China holds about $2 trillion, near $2 trillion, of the foreign exchange reserves, mostly in the US dollar. And if not because of China buying the US dollar, the US dollar would be in free fall, the US economy would collapse. But on the other hand, for China to provide this kind of support to the US capitalism, China has to consume—of course, it has to consume energy, it has to consume oil; and that, in turn, result in conflict with the US’ own demand for oil. So I don’t know how these two different ruling elites are going to get out of this development.
JAY: Well, in the next segment of our interview, let’s discuss the growing entanglement of China and the US deficit. Please join us for the next segment of our interview with Professor Minqi Li.
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