Beyond Energy Dependence

By+Chen+Mo

Over the past two years， China has promoted the building of the Silk Road Economic Belt and the 21st-Century Maritime Silk Road （Belt and Road Initiative） for developing international trade and enhancing the connectivity of infrastructure in countries along the routes. Energy cooperation is one of the fundamental aspects of the initiative.

The worlds energy supply has become increasingly diversified in recent years. The United States revolutionary breakthrough in exploiting shale gas and oil has had a huge impact on the world energy market by cutting oil imports from Saudi Arabia and other gulf oil-producing countries. Europe is also seeking additional energy supply sources ranging from Central Asia to North Africa.

The Middle East has been a long-time oil supplier to China and this relationship is unlikely to change in the long term. Moreover， Chinas demand for oil will increase along with its economic growth， so China and the Middle East will continue to be interdependently linked in the energy market.

But China and the Middle East should cooperate on more than just energy， such as transferring industrial capacity and building free trade areas. The China-proposed Belt and Road Initiative offers both sides clear benefits.

First of all， the initiative will help maintain stable bilateral relations between China and participating countries in the region. In building the belt and the road， these countries will enhance people-to-people exchanges， and state leaders will maintain close contact， solidifying their bilateral friendship.

More importantly， different countries can have their varied needs satisfied through cooperation with China.

Due to its fast-growing population， Saudi Arabia has a large demand for building houses， modernizing its cities and constructing a new transport system， among other infrastructure projects. Many Chinese companies have already been operating in Saudi Arabia in sectors ranging from building railways， ports， telecommunications infrastructure， housing， bridges and roads to petrochemical production.

With their rapid technological progress and performance improvement， Chinese enterprises have become more competitive in the international market. These companies are now able to undertake most foreign projects， regardless of scale.

Iran has historically taken longer to develop its industries. But industrial development in the country remains slow not from its lack of capabilities but because of longterm international sanctions. However， the sanction cap on Iran is expected to be lifted in the near future after the country reached a deal with major world powers in July 2015 to impose limits on its nuclear program. As a result， investment from foreign countries， including China， will likely surge in Iran. Chinese companies would not only offer job opportunities to Iranians but would also bring new technologies and experiences to the country.

For example， Irans oilfields are mostly onshore and operated with out-of-date equipment； many of these oilfields need to be technologically upgraded to improve their productivity. Chinas oil companies have rich experience in reconstructing and upgrading land-based oilfields， so both sides can enhance their cooperation and revamp Irans oilfields and natural gas development.

Furthermore， China could offer Iran assistance on constructing new infrastructure， such as the planned high-speed railway route linking Tehran and the countrys second largest city of Mashhad， a transportation network and oil pipelines. The implementation of these projects will boost local economic growth and increase job opportunities. Additionally， Iran could dock its development strategy with the Belt and Road Initiative.

China is negotiating with the Gulf Cooperation Council on a free trade agreement. If the deal is reached， China and Gulf states will have the opportunity to deepen their cooperation in oil production and other sectors. With concerted efforts， China and the Middle East can achieve more progress in expanding their economic partnership in the future.