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by Antoaneta Bezlova

China Making Oil Deals With Blacklisted Nations (2005)

(IPS) BEIJING -- Even as it expands economic cooperation with its wary Southeast Asian neighbors, China's thirst for energy is compelling it to resurrect territorial claims to resources-rich spots in the region that have lain dormant for years.

China's decision in late 2007 to create a new city administration responsible for the archipelagos of the Paracels and Spratlys islands in the South China Sea may not have made waves at home, but it sparked tensions in the region and focused neighboring countries' attention on the disputed territories.

Vietnam's two main cities of Hanoi and Ho Chi Minh saw unprecedented street demonstrations in December with several hundred young people marching round the Chinese embassy and consulate with banners proclaiming "Down with China!" and "Long live Vietnam!."

In early January a reported conflict between Chinese and Vietnamese fishing vessels in the international waters of the Gulf of Tonkin drew protests from the Chinese side. Chinese state media accused Vietnamese boats of firing and attacking the Chinese fishermen.

And even before the waters of the South China Sea calmed down, Taiwan announced that President Chen Shui-bian is planning to visit the Spratlys islands, reinforcing Taiwan's claim to these disputed territories.

The island chains of Spratlys and Paracels have long been flashpoints. While the oil-rich Spratlys are claimed in full or part by China, Vietnam, the Philippines, Malaysia, Brunei and Taiwan, the Paracels are claimed by China, Vietnam and Taiwan.

The 1980s and early 1990s marked a period of intense rivalry among Southeast Asian countries as they began building airstrips, fishing ports, lighthouses and sightseeing spots on the clusters of islands and reefs. They also began developing petroleum and gas resources in cooperation with foreign oil companies.

China prides itself for taking the lead in stabilizing this regional corner by engaging in a policy of "befriending and benefiting" its neighbors. In an effort to strengthen ties with ASEAN members, Beijing has refrained from emphasizing territorial claims, insisting instead that the region should be developed together.

A 2002 breakthrough agreement between China and ASEAN committed all sides to resolving disputes in the South China Sea peacefully. Two years later China and the Philippines agreed to exploit the oil and gas riches of the region together and in 2005 the two countries were joined by Vietnam in conducting a survey of the South China Sea to probe its reserves.

"China has always seen the resolution of disputes in the South China Sea as a process," says He Sheng, researcher with the China Institute for International Relations. "We need to start with objectives that are achievable and work gradually towards resolving the more difficult points. To achieve the goal of joint exploration and joint development of the sea resources we need more perseverance and trust."

The period of relative calm came to an abrupt end though in December when nationalistic street demonstrations, said to have been green-lighted by the government, erupted in Vietnam's main cities. Vietnam has been historically wary of its big neighbor and in 1979 the two countries fought a brief border war.

The protests followed reports of China's legislature ratifying plans for a huge new city administration called Sansha with headquarters in Hainan island to manage the three archipelagos of Paracel, Spratly and Macclessfield Bank.

China chided Vietnam over the protests but refused to confirm reports of the planned upgrade of the islands administration from Woody Island in the Paracels to the new "county-level city" of Sansha (an abbreviation of Xisha, Nansha and Zhongsha, China's names for the archipelagos), part of Hainan province.

An official Internet site for Sansha city ( however, states its inception date as of November 2007. It traces China's historical claims to the archipelagos back to their discovery by the Chinese in the Qin Dynasty (around AD 200) and claims China stationed imperial troops on the Paracel Islands as early as 1045.

This week Chinese State Councillor Tang Jiaxuan and Vietnamese Deputy Prime Minister Pham Gia Khiem held a round of talks in Beijing in an effort to put recent tensions behind. China did not waste time reiterating its claims over the disputed South China Sea islands.

"China has indisputable sovereignty over the South China Sea islands and the surrounding waters," Chinese foreign ministry spokeswoman Jiang Yu said at a regular press briefing Thursday. "Leaders from both sides have agreed to settle the maritime dispute through dialogue and consultation."

"In recent years China has been more assertive in all unresolved territorial disputes with neighboring countries but I believe the reason behind the decision for the creation of Sansha is oil," says a foreign diplomat in Beijing.

Since overtaking Japan as the world's second largest oil consumer in 2003, China has been closely scrutinized for its role in global energy markets. The country's voracious appetite for energy and commodities has been blamed for pushing up prices around the world.

Last year China relied on imports for 50 percent of its oil needs. While its oil imports amount to just nine percent of the total amount of oil traded globally, the country's oil consumption is projected to rise precipitously in coming years.

Chinese experts speak of the need for Beijing to deploy "energy diplomacy' in order to secure the country's continuing supplies of oil and gas.

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Albion Monitor   January 25, 2008   (

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