Energy-jul-aug2010

INFOCUS | ENERGY

CHINA’S NATIONAL ENERGY COMMISSION

Harnessing Chi ei ing is elevating energy policy to the level of a national security concern.

Peter Yuan Cai

T

HE CHINESE STATE Council has announced the establishment of China’s National Energy Commission under the leadership of Premier Wen Jiabao and the vice-Premier and his heir-apparent, Li Keqiang. This announcement came as a much-anticipated move by Beijing to coordinate and devise a comprehensive national energy policy.

The members of this commission certainly reflect that grand ambition.

They are an all-star cast of the most important and influential ministers from the State Council such as that of the National Development and Reform Commission, Ministry of Finance, and Ministry of Foreign Affairs.

Most interestingly, the members of the commission also feature the head of China’s Ministry of State Security and the Deputy-Chief of General Staff of PLA. General Zhang Xinsheng is PLA’s leading strategist who is in charge of international affairs and intelligence activities.

The inclusion of senior intelligence, foreign affairs and military figures in the commission is perhaps the clearest indication that Beijing is elevating energy policy to the level of a national security concern. A more hawkish pursuit of China’s energy needs can be expected. With the benefit of hindsight, the arrest of Australian mining executive Stern Hu, initially on an espionage charge, could be attributed to the influ-

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ence of senior intelligence and military figures on the highest policy coordination body in Beijing.

Since becoming a net importer of petroleum after 1993, China is becoming increasingly dependent on foreign energy and natural sources to fuel its insatiable demand created by industrialisation and urbanisation. Its

overseas acquisition and expansion plans have been repeatedly thwarted by a mixture of political and national security concerns. The creation of this coordination body at the highest policy level could help China to craft a better and more disciplined ‘Go Abroad’ strategy. The fragmented nature of Chinese energy sector and blurred line

of supervisory authority is one of the key hurdles in the policy coordination.

Since the abolition of the Ministry of Energy and Industry in 1993, there has been no centralised authority on energy policy over the past 16 years. At the moment, the Chinese energy sector is being dominated by a host of state-owned energy giants such as PetroChina, Sinopec and others with a myriad of administrative and supervisory bodies jealously guarding their own turf.

In the words of the head of State Administration of Energy (a body that is to be merged with the new National Energy Commission), Zhang Guobao, during a nationwide energy work conference in 2009, his department lacks both the authority and resources to exercise any meaningful control over the industry. He cited the example of the

SINCE THE ABOLITION OF THE MINISTRY OF ENERGY AND INDUSTRY IN 1993, THERE HAS BEEN NO CENTRALISED AUTHORITY ON ENERGY OVER THE PAST 16 YEARS. coal industry, where none of the five certificates required to operate a coal mine were issued by his department.

The creation of this body might be able to help China to devise a more coordinated national energy policy and bring some order to this chaotic sector, though many commentators are sceptical of the prospect of the National Energy Commission’s ability to fight entrenched interests.

Internationally, the involvement of intelligence, diplomatic and military forces in the energy policy decision making process could lead to a more assertive and coordinated pursuit of China’s energy interests abroad.

(This article is courtesy the East Asia Forum) Russian Prime Minister Vladimir Putin (left), and Chinese Premier Wen Jiabao shake hands after exchanging documents at the Great Hall of the People in Beijing, China

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