CONTEMPORARY EURASIA VIII (2) ContEurVIII2 | Page 63

ARAM ABAJYAN
developed. With their huge oil reserves, the Middle Eastern countries
could provide China with an alternative source of investments and
foreign exchange, and at the very least serve to counterbalance some of
the consequences of the West’s potential sanctions. On the other hand,
the region has become one of the best markets for Chinese labor services
and goods, including the military industry (arms, ammunitions, and spare
parts). 1
China’s economic reforms and modernization programs during the
second half of the 20 th century caused a significant increase in its energy
demands. Meanwhile, it followed this by expanding its industrial base
and commercial enterprises in order to raise living standards. The
country’s energy production, particularly its domestic oil production, was
slow-moving, therefore Beijing initiated programs for seeking oil to
satisfy its significant energy needs. Since the petroleum reserves
discovered in Xinjiang province and in the East and South China Seas
failed to meet China’s expectations and the oil reserves of the Daqing
field started to decline, Beijing became a net importer of crude oil in
1993. The growth in China’s demand for imported oil has been
tremendous, impacting global energy markets since that time. From 1993
to 2002, China’s oil demand grew close to 90 percent, but domestic
production grew less than 15 percent. By 2004, China’s economy was
growing at 9.5 percent annually, while it became the third-largest
automobile market in the world, adding more than five million vehicles
yearly. Consequently, Beijing’s oil demand rose to six million barrels per
day, nearly 40 percent of which comes from imports. This phenomenon
illustrates the magnitude of China’s demands for oil. Taking into
consideration the lack of domestic oil production and inefficient energy
use, Beijing’s demand for oil continued to grow at impressive rates. On
the other hand, although coal remained the main fuel source for power
generation, the percentage of China’s electrical power generated by oil
and gas-fired plants started to increase. The problem here was Beijing’s
limited ability to expand its use of coal imposed by technical
shortcomings, in addition to transportation and infrastructure constraints.
China’s one foundational growth sector was its automobile market.
Therefore, besides the power sector, the fastest-growing use of energy in
China was needed for transportation. This trend sharply raised the

1 Yitzhak
Shichor, “China and the Middle East since Tiananmen,” The Annals of the
American Academy of Political and Social Science Vol. 519 (1), China’s Foreign
Relations, 1992, 88.
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