China’s Energy Diplomacy FES Briefing Paper 13| August 2007 Page 3 24%, and that of consumption of hydroelectric and nuclear power jumped from 5.1% to 7.3%. 3 Since the 1990s, consumption of oil/gas has been increasing in step with the increase of the level of industrialization, urbanization and mar­ket orientation in China. In 1993, China turned from an exporter of crude oil into a pure impor­ter. Since then the annual volume of imports has been increasing considerably. In 2005, net imports reached 136 million tons. China’s de­pendence on imported crude oil was up to 44%. It is anticipated that demand for oil/gas in the Chinese market will continue to increase for a long time. Generally speaking, the increase of China’s demand for oil and natural gas is gro­wing much faster than that of domestic supply, and the gap between supply and demand is wi­dening year for year. China’s Oil Demand, Net Imports and Degree of Dependence on Imports 4 Year Demand volume （ Mt ） Energy Research Institute of NDRC IEA EIA Import volume （ Mt ） Energy Research Institute NDRC IEA EIA Degree of dependence on imports （ % ） Energy Research Institute NDRC IEA EIA 2000 224 69.6 31.0 2010 335~357 377 340 155~187 230 185 46~52 61 54 There are mainly four approaches that could be applied to tackle these problems: First, to keep making efficiency of oil/gas use the top priority 3 Ibid. 4 The data comes from IEA, China Energy Outlook 2002, and DOE/EIA, International Energy Outlook 2002. and to control and lower the increase of de­mand. Second, to make use of the vast potential offered by domestic resources, to increase pros­pecting and development efforts, and to explore energy potentials. Third, to use policy to boost energy development in a variety of aspects, by engaging actively in technology development, and taking major steps to develop and use new energies and renewable energy. Fourth, to make efficient use of international oil/gas resources. In order to make efficient use of international energy resources, China must further enhance its understanding of the importance, necessity and urgency of international energy cooperation; accurately grasp the possibility of embarking on international energy cooperation; manage the important opportunity for strategic development given in the coming fifteen years(to 2020). Chi­na needs to firmly establish and adopt the new concept of energy security, which is characteri­zed by mutually beneficial cooperation, diverse development and coordinated guaran­2020 tees. The country needs to improve its ability to seize opportunities in the international energy market and avoid 430~475 risks in the market; set up multiple, stable and reliable systems designed to ensure China’s energy supply; and maintain the security of international 552 energy with an open-markets approach. 525 This is the key strategic choice for Chi­na at present, and it will continue to be for a long time in the future. 240~295 425 380 The will and practice of joining in bila­teral and multilateral energy cooperati­on has induced the Chinese govern­ment to set up its own strategy of energy diplomacy. 59~62 3 Analysis of China’s Energy Diplomacy: Policy and Practice Policy 77 In earlier years, energy diplomacy was 72 not given much emphasis in the coun­try’s overall diplomacy. With the Chine­se economy booming and demand for imported energy rising rapidly, the objective of greatly expanding the channels for supply of im­ported energy has become an important task for China’s energy strategy. According to the latest statistics of international energy organizations, in 2003 China’s consumption of oil exceeded that of Japan for the first time, ranking just below that of the United States as second in the world.