The New Map: Energy, Climate, and the Clash of Nations

by Daniel Yergin

President Ma added a plea—that the interested nations solve their differences peacefully. For otherwise, he warned, two trains were on track to crash into each other. Or, to use a more appropriate metaphor, two navies were on a collision course.

“core interest.”

Imports” for China means everything from iron ore from Brazil to soybeans from Iowa to components from Vietnam that will be assembled into products in China and sold into the world. But inevitably, imports mean energy. For energy has been the foundation of the country’s extraordinary economic growth. Energy fuels the global manufacturing platform that is the “workshop of the world.” Rising incomes in China mean more building, more infrastructure, more cars, more air travel, and ever-more energy use. In 2009, China overtook the United States to become the world’s largest energy consumer; today it alone represents almost 25 percent of world energy consumption. Chinese demand will continue to grow, but the rate will slow as services and domestic consumption become a larger share of the economy.

85 percent of China’s energy today comes from fossil fuels.

almost 60 percent of its total energy, compared to just 11 percent in the United States. Oil is the leading source of energy today in the United States—37 percent. In China, it is half that—20 percent. Natural gas is just 6 percent of total demand, though growing fast, compared to 32 percent in the United States. China’s coal imports may fluctuate, but basically coal is a secure, domestic source. Not so for oil, and not so for natural gas; and that makes the geopolitics of energy a priority for Beijing.

The modern Chinese oil industry is less than sixty years old. For Mao’s communist government, the cutoff of oil supplies during the Korean War in the early 1950s and then the later rift with its “big brother,” the Soviet Union, made “self-reliance” in oil an absolute priority. That became a possibility in 1959, with the discovery in Manchuria of a giant oil field named Daqing—which means “Great Celebration.” By the 1980s, the domestic petroleum industry was meeting the nation’s needs and also producing a surplus of oil that was exported, principally to Japan.

But economic growth sparked domestic demand for oil that eventually grew faster than domestic production. In 1993, China crossed an historic line—one that would shape its perspectives to the present day. It became a net importer of oil. Since then it has become increasingly dependent on imports.

In the 2000s, alarms went off in Beijing about fear of peak oil supply, the world’s running out of oil, and the economic growth machine faltering. Apprehension grew about the possibility of bruising competition for constricted supplies, especially with the United States. Similar fears were also current in Washington in those years.

In the decade and a half following its entry into the World Trade Organization in 2001, China’s oil consumption increased two and a half times over. It is currently the eighth-largest oil producer in the world, at 3.8 million barrels per day. But its demand has surged far ahead of domestic supply. It has become the wo...

The concern was not only the volumes of oil, but also whence they came. China is the biggest customer for oil flowing out of the Persian Gulf and through the Strait of Hormuz. The South China Sea is the superhighway for petroleum imports. Most of them, whether from the Middle East or Africa, ...

That is what led then-president Hu Jintao to warn in late 2003 about what he called the “Malacca Dilemma”—the risks that come from dependence on that strait. “Certain powers,” he warned, could disrupt China’s oil supply line...

Iraq. Beijing had trouble believing that the invasion could be about something so abstract as “democracy.” It had to be about something concrete, and that had to mean oil. If the United States was worried enough about access to oil to invade Iraq, then China certainly should worry as well. Thus control over the South China Sea took on a new priority, both becaus...

About half of the world’s oil tanker shipments pass through the South China Sea, not only to China, but also to Japan and South Korea. For Japan and South Korea, the possible risk of disruption would come from actions by China. For China, however, there is only one “certain power”—the United States and, in particular, the U.S. Navy. Chinese strategists focus on a potential crisis scenario: Taiwan threatens independence, and China responds with force. The United States, in turn, responds by cutting the South China Sea oil line to China.

What would happen next—escalation in unpredictable ways? Here, then, is part of Beijing’s strategic rationale for the 9-Dash Map and its assertion of sovereignty over those waters.

And now that sea lane is not only the highway for oil, but also for natural gas. Traditionally natural gas has been a small player in the Chinese energ...

Air pollution is a health problem and a drag on China’s GDP. It is also a potent social and political issue, and the government has promised to meet the public’s demand for clean air. What that meant was the physical demolition of old coal-burning equipment in northeast China, from which the winter winds would carry pollution down to Beijing. But the winter was colder than expected, leaving the region short of energy, and hospitals and facilities without heat. This became a national crisis.

The only quick recourse was to import more natural gas, and as that happened, global prices

for LNG spiked. The result that winter was not only a lack of heat in the shivering cold, but also a s...

Beijing has moved to ensure that that does not happen again. China has domestic gas production and is developing shale gas. It imports pipeline natural gas from Central Asia and now, of course, from Russia through the Power of Siberia pipeline.

Currently, half of China’s gas imports are in the form of LNG. China will soon be the largest importer of LNG. But the LNG still has to get there, and that means a good part of it passes through the South China Sea.

Current production from the South China Sea itself is about 900,000 barrels per day, which is less than 1 percent of world consumption in 2019. But what about the future? The highest estimate comes from a Chinese source that estimated 125 billion barrels of reserves still to be discovered—roughly on the same scale as Iraq’s and Kuwait’s. Other projections are much lower. The U.S. Energy Information Administration estimates about twelve billion barrels of undiscovered oil, which corresponds with estimates from international oil companies. It is also thought that the most likely discoveries will be closer to the shores, and only one-fifth would fall into contested waters. The more central and controversial area of the South China Sea is estimated to be less prospective, owing to the thinness of the sediments and insufficient pressure. Moreover, the considerable sea depths and lack of infrastructure would make the development of any resources expensive. In any event, it is thought that the bulk of any discoveries is likely to be natural gas, not oil.

What really counts for China’s energy security is not the unproven resources that may lie deep under the seabed, far beneath the sea lanes, but rather the sea lanes themselves and what traverses them.

by driving down transport costs to a fraction of what they had been, by speeding loading and unloading of ships, and by facilitating the easy movement of containers among ships and trucks and trains.

turned manufacturing into a global rather than a local or regional business.

Without “this humdrum innovation,” the business theorist Peter Drucker wrote, “the tremendous expansion of world trade—the fastest growth in any major economic activity ever...

McLean had never been on a ship. He just wanted to lower costs and save a few dollars moving his trucks from the East Coast down to Texas. The idea came to him when he had to wait in his truck while longshoremen “laboriously moved cargo one piece at a time.” As his frustration grew, he wondered, Why not just lift the whole truck body in one go and move it over longer distances by ship?

On April 26, 1956, cranes at the port of Newark, New Jersey, lifted up fifty-eight truck bodies, minus their wheels and cabins, and put them on a surplus World War II tanker bound for Texas. “We are convinced that we have found a way to combine the economy of water transportation with the speed and flexibility of overland shipment,” McLean announced. This was the beginning. By the early 1960s, containers were becoming a real business, with McLean and his company in the lead. No longer did shipments have to be broken down into boxes and crates and sacks and hoisted around by hordes of longshoremen, taking up many days in port and adding substantially to costs. Instead, packed into containers, they could be lifted by cranes, with the operator high above in a cabin, and moved between shore and ship. The world of longshoremen that had been depicted just a couple of years earlier in the 1954 film On the Waterfront was on its way out.

In 1965, the first regularly scheduled container ships began to operate between the United States and Europe. But McLean had his eye on Asia, beginning with supplying U.S. troops in Vietnam. That launched containerization into the Pacific Ocean.

His next step was to detour ships on their way back from Vietnam, now empty of cargo, to Japan to pick up containers filled with inexpensive goods destined for U.S. customers. Manufacturers in the Asian “tigers”—South Korea, Taiwan, Hong Kong, and Singapore—followed suit. It was the spread of this innovation, and the networks and system that implemented it, that integrated East Asia into the world economy.

In 1980, the year Deng began his reforms, McLean initiated the first container service to China. Two years later, the state-owned China Ocean Shipping Company launched container service to the West Coast of the United States. China’s rapid economic growth would not have been possible without the container fleets to carry its goods to global markets with very little additional cost. This applied both to goods manufactured in China and the supply chains for which it was the hub.

Seven of the world’s top ten container ports too are Chinese—Shanghai the largest—and China normally accounts for over 40 percent of the world’s container shipments. Trade in turn is almost 40 percent of China’s GDP, making that flow of exports outward, and the flow of oil and other commodities inward, essential for economic growth and indeed the foundations of political and social stability. Containerization became the backbone of global commerce. Yet the full extent of both China’s and the world’s dependence on containerization—and the supply chains that rely on it—really only became apparent when the coronavirus temporarily shut down much of the world trade in 2020.

For China, these container ships are China’s twenty-first-century “treasure ships,” the true descendants of Zheng He’s fifteenth-century great fleet. They are the vessels that have carried China’s economy into its current position in the global economy and world trade.

The South China Sea may be about oil and natural gas and flows of trade. Yet, as the International Institute for Strategic Studies puts it, “maritime disputes in the South China Sea are at their heart about power politics.” From a strategic point of view, it is one of the most contentious issues between China and the United States. Chinese spokesmen frequently describe America as seeking to “contain” and “encircle” a “rising” China. For the United States, it is about freedom of seas and relations with the countries of Southeast Asia. Since World War II, the United States has been the guarantor of the open sea lanes that underpin global stability and the $90 trillion world economy. And it is on those open sea lanes that China has flourished.

Backing this up, the 2019 U.S. defense budget identified what it called China’s “military and coercive activities” in the South China Sea as one of the Pentagon’s top priorities and reasons for increased military spending.

The ASEAN counties are increasingly integrated with China in terms of trade. In 2005, U.S. trade with ASEAN was 50 percent higher than was China’s. Today it is reversed: ASEAN’s trade with China is 50 percent higher than with the United States. Yet at the same time, the ASEAN countries are also seeking to bolster security relations with the United States as “the only

realistic counterweight” in order to assure their own independence of action in the region.10 China’s arms buildup has led other countries in the region—ASEAN, as well as Japan and Australia—to spend increasing sums of money on weapons. As former Australian prime minister Kevin Rudd once observed, “It’s as plain as daylight that there is a significant military and naval buildup across the Asia-Pacific region, that’s a reality.”

China has been a great beneficiary of the open world economy and the free flow of commerce on the world’s oceans that the United States has championed, and its growth objectives are far more likely to be achieved in a stable, peaceful world than in one riven by confrontation and disrupted by conflict.

Some measures could reduce the risks in the South China Sea. The ASEAN countries and China are negotiating a code of conduct to reduce tensions in the region. But one of the sticking points is the Chinese proposal that would give it a veto over other countries conducting military exercises with the United States.

A much stronger military-to-military dialogue and greater transparency about programs could help to mitigate the growing “strategic mistrust” and the uncertainty about the critical but often murky question of intentions. A step was taken in that direction with two confidence-building measures. In 2014, the United States and China agreed to alert each other to major military exercises in the region and adopted “rules of behavior” for managing naval and air force encounters. Tempering the passions of populist nationalism in the countries bordering the sea would give governments mo...

would be important. Another issue, one of the most vexing, is an understanding of the legal status of the exclusive economic zones. Or perhaps the best that can be hoped for—as a play on the “MAD” (mutually assured destruction) of the U.S.-Soviet nuclear standoff in the Cold War years—may be “MAA,” “mutually assured ambiguity.” But seeking to address issues in a multilateral framework, with a critical role for ASEAN, would help m...

In terms of energy, the clash of nations can be eased with the recognition that the offshore waters of the South China Sea are unlikely to be another Persian Gulf in terms of supply and that the most important contribution to energy security is the secure passage of tankers through its waters.

For Japan and South Korea, which also depend mightily on the South China Sea as the highway for much of their exports and imports, its control by China would be regarded as a potentially major threat. As former Japanese foreign minister Yoriko Kawaguchi put it with great simplicity, “Sea lanes are important to Japan.”

Those two nations would become increasingly alarmed, in the words of a retired Japanese admiral, by “China’s unilateral ambition to monopolize the whole South China Sea” and achieve “control of most of the sea lanes of communications” and “the lifelines” of Japan and Korea. Yet both Japan and South Korea are increasingly interconnected with China. Japan’s exports to China are about the same as those to the United States—about 20 percent in each case of tota...

Between the G2, the interdependence is extensive: General Motors sells more cars in China than in the United States. Before the Trump trade war, up to 60 percent of U.S. soybean exports went to China, and Apple sold $40 billion a year of iPhones. China was also expected to become the biggest market for U.S. LNG.

intellectual property rights and theft; the requirement

that U.S. firms had to do joint ventures in China; hidden subsidies; cyber intrusion. And, yes, trade wars.

When Donald Trump became president, he changed the setting on the table. No longer, in the view of his administration, is China an economic partner, albeit a challenging one. Now it is an economic adversary as well as a strategic rival. The WTO consensus is out the window. Trump denounced the 2001 WTO agreement as “the greatest job theft in history.” Once in the White House, he declared, “Trade wars are good, and easy to win,” although not indicating which ones he had in mind. Those of the 1930s had proved neither good nor easy to win, and ended badly for all concerned.14 The trade war is part of a striking shift in the overall approach of the United States. The Trump administration’s National Security Strategy represented a sharp break from the position of five previous presidents. Those presidents and their administrations had not hesitated to criticize China over a range of major issues. But they all sought to emphasize “engagement” and the positive potential: “cooperative relationship” (Reagan); working together to contribute to “regional stability and the global balance” (George H. W. Bush); “broader engagement” (Clinton); “constructive relationship with a changing China” and “responsible stakeholder” (George W. Bush); “deepen our cooperation” (Obama).

Trump’s National Security Strategy throws “engagement” and the WTO consensus out the window. It casts China as a deeply menacing geopolitical rival and at the top among America’s “adversaries.” It is a “revisionist” power (along with Russia) that is seeking “to shape a world antithetical to our interests and values.”16 The Department of Defense followed up with its National Defense Strategy, which declared that “China is a strategic competitor using predatory economics to intimidate its neighbors while militarizing features in the South China Sea.”

The language highlights a fundamental shift away from two decades of a “war on terror” to a new strategic era—rivalry with Russia, and much more so with China.

For two decades, in this view, the United States had been both oblivious and distracted and lulled into denial by China’s entry into the World Trade Organization in 2001. “If I was a Chinese strategist,” said a senior Pentagon official, “the only thing I would regret is that I did not keep the United States asleep for longer.”