The People’s Republic of China is very ambitious, making no bones about its intention to surpass the United States economically and militarily and one day become world dominant.
But it has big obstacles in the way, among them its limited domestic reserves of oil and natural gas that leave the nation of over 1.4 billion people dependent on energy imports.
China has the aging Daqing and Shengli oilfields in the northeast with only enough oil for five years without imports, although the government recently announced the discovery of a major field in the South China Sea.
Odessa oilman Kirk Edwards, State Rep. Brooks Landgraf and Waco economist Ray Perryman say China will remain a major global player, but its reliance on energy imports and its communist form of government will make its ambitions hard to achieve.
“China to me has dedicated itself to a mission of world dominance in every arena,” Edwards said. “It is scary to me that they chose the side of Russia and Iran over Ukraine, which shows they are not our friends at all when it comes to military alignment.
“Who can side with Russia and its all-out aggression to the world right now?” Edwards asked. “It makes no sense.
“And to support this agenda China must make alliances for energy, which apparently is what they are doing with Iran and Russia and other OPEC countries, promising them military protection in exchange for unfettered access to these country’s oil and gas reserves.”
Edwards said China is also a huge burner of coal and is on the cutting edge of new nuclear technologies.
“So they are not 100-percent reliant on oil and gas,” he said. “They love coal as there are no green agenda politicians in China, just hardline people striving for the same goal of world dominance.
“That is why it is critical for those of us in the United States to understand our oil and gas industry and what it means for our national security ahead.
“If only all our politicians were aligned on that topic. Hopefully someday soon they will be.”
Landgraf said China’s ambition to usurp the United States as the world’s leading economic and military power is widely recognized.
“While this idea might have seemed feasible a decade ago, China’s economic trajectory is now showing signs of decline,” the Odessa Republican said. “Growth rates have markedly slowed and the country is grappling with significant challenges including a declining population and inefficiencies in key sectors exacerbated by government intervention.”
Additionally, Landgraf said, China is contending with a major energy challenge.
“With limited domestic petroleum reserves it relies heavily on imports of oil and natural gas from Russia and the Middle East to support its vast industrial base,” he said. “This dependence on external energy sources makes China vulnerable to global market fluctuations and geopolitical instability.
“In contrast the United States, fueled by the innovation and hard work of the Permian Basin, has emerged as a net exporter of oil and gas. This energy independence positions our nation to continue growing its economy with our domestic resources.”
While China could theoretically increase its energy imports to sustain rapid growth, he said, that strategy would likely undermine its economic and geopolitical stability over time.
“Considering these factors I find it unlikely that China will surpass the United States in the foreseeable future,” Landgraf said.
Perryman reported studying the Chinese economy extensively for decades.
“China achieved remarkable growth with compounded annual expansion of 30 percent over a 30-year period,” Perryman said. “Having said that, it is extremely difficult for a communist or socialist regime to sustain strong performance indefinitely.
“A planned economy like China’s can direct resources into the sectors of business activity leading to expansion such as manufacturing and other export-oriented industries. It can also subsidize export industries to create a global market presence.
“Nonetheless, without a vibrant market structure it is impossible to maximize innovation or productivity on a sustained basis,” Perryman said. “There also isn’t as much room for consumer products and purchases, which generate a large proportion of the ongoing activity in western economies.”
He said China has had issues like real estate challenges and financial problems and part of the reason was that the investments were not market-driven.
“The capacity to deal with these issues is now being constrained by the rigors of having a world reserve currency and being a member of the World Trade Organization,” he said. “China also mandated demographic patterns which are resulting in population decline.
“In essence the lack of a functioning market to direct economic activity is the key factor which will hold China back. There will be countries such as Russia which are eager to supply China’s needs for oil and China is working to build relationships with others to ensure a supply.”
Perryman said that will certainly be more expensive and less efficient than if the country had internal reserves, but he expects that energy will be available.
“In short China is a large country with a huge economy and it will continue to be a force in global activity,” he said. “Its potential will be limited to some extent, however, by its lack of energy resources but even more so by the inability of its incentive and institutional structure to foster optimal performance.”
