China and India

The Quest for Energy Resources in the 21st Century

Hong Zhao

• Publisher: Routledge
• Year: 2013
• eBook ISBN: 9781136447143
• Topic: Volkswirtschaftslehre
• Subtopic: Wirtschaftstheorie

The book sheds understanding on the relations between development and global energy security by looking at China and India. It addresses the following issues: what is the new definition of energy security, how does it affect global politics and international relations? What are the energy security concerns of China and India, and what policies and approaches have they taken to deal with energy security issues? Since China and India are searching for oil and gas in the Middle East, Africa, and Southeast Asia, will their acquisition efforts conflict with the interests of other energy giants such as the U.S., Japan, and will their growing overseas activities challenge U.S. policy in those energy-rich regions?

The book provides insight into what the new global energy order may be and how the growth models and energy structures may shape the economic growth and energy. It analyzes both the state-centered approach and market-oriented approach in the global quest for energy resources. It also examines how China and India can adopt a cooperative approach for beneficial relations.

The book will be of interest to anyone who is keen to learn how the World especially U.S.A. can accomodate and adapt to the new global energy dynamics; China and India as new players in global energy markets.

1 China, India, and the new global energy order

DOI: 10.4324/9780203124857-1

1.1 The Asian century?

This book has been motivated largely by the huge changes in the world economy that have occurred since the new millennium. The most important change has been the rise of China and India—the two biggest emerging economies in the world. Is the twenty-first century going to be the Asian century, as the twentieth century was the American century and the nineteenth century was Europe’s? Many agree that it might be thanks to the contribution of China and India to the world’s economic growth.

In the last two decades, Asia’s economic growth has diverged from that of other developing regions. Since the mid-1980s, economic growth in emerging Asia (including China and India) has been much stronger than elsewhere. Such growth has benefited from economic integration with the global economy. From the mid-1990s, China and India started to make their mark in the world economy. In 2009, according to World Bank, the Asia and Pacific region accounted for almost one-third of global GDP, while 54 percent of the region’s GDP comes from just China and India.¹

Thanks to policies of reform and openness, China has experienced rapid economic growth over past decades. In total economic size, China has quickly caught up with other large economies. In 2008, it overtook Germany to be the third largest economy in the world, and in 2010 it surpassed Japan to be the second largest economy (Table 1.1). Various projections have been made to estimate the timing of China becoming the world’s largest economy. As early as 1997, the World Bank published a report to prognosticate about China’s rise in the twenty-first century as a world economic power and predict that China will overtake the US to become the world largest economy in the 2020s.²

At market exchange rate, India’s GNI (Gross National Income) in 2009, at US$1,367.1 billion, was the eleventh largest in the world, accounting for 9.6 percent of that of the US. Emerging from decades of economic insulation, the country’s economy has been growing strongly with the result that vast amounts of wealth have been accumulated and the number of poor has been greatly reduced.

Another alternative way to measure the size of an economy is by purchasing power parity (PPP). A PPP GDP is computed by converting its value to international dollars using purchasing power parity rates. An international dollar has the same purchasing power over GNI or GDP as a US dollar has in the US.

Table 1.1 Gross national income (Alas method), China and India

	Rank in the world			As percentage of US GNI (%)
	India	China	India	China
1978	12	11	6.3	7.2
2000	13	6	4.7	11.9
2002	13	5	4.8	13.6
2005	12	4	6.2	17.4
2008	11	3	8.5	27.9
2009	11	3	9.6	34.1
Source: World Bank, World Development Indicators, http://data.worldbank.org/indicator (accessed August 1, 2011).

Since China’s and India’s domestic prices for most goods and services have been much lower than that in the US, their PPP GDP or PPP GNP (gross national product) has generally appeared much higher than their nominal GDP or GNI. As shown in Table 1.2, over the period of 2000–2009, China’s PPP GNI increased from US$2,975.6 billion to US$9,228.2 billion, leading to it becoming the world’s second largest economy; while India’s increased from US$1,543.9 billion to US$3,832.7 billion, making it the fourth largest economy after the US, China, and Japan.³ By PPP GNI, China surpassed Japan in 2002 when its economy reached the size equivalent to 35 percent of the US economy. Now the size of the China’s economy, measured by PPP GNI, is over 65 percent of the US economy.

1.1.1 The role of China and India in the world economy

Drivers for global trade expansion

Economic growth in China and India affects growth in the rest of the world largely through international transactions. The global impact of growing trade with the two countries—especially China—has already been huge and will increase further in the future. China is one the world’s most open economies: its exports as shared of GDP increased from 20.4 percent in 1999 to 38.1 percent in 2008; in India, the share also increased from 11.4 percent to 21.9 percent.⁴ China and, to a smaller degree, India have been major contributors to the massive expansion of global trade.

The expansion of China’s trade with the rest of the world has been one of the most striking global economic phenomena of the last decades. China accounts for 10 percent of world’s exports and 8 percent of world’s imports—well above the country’s contribution to world GDP (Table 1.3). China is the world’s largest exporter, having just overtaken Germany, and the second largest import behind the US.⁵ The importance of trade to China’s economy reflects the high degree of integration of China’s industry into international production chains, particularly within Asia. About one-third of the value of gross exports of China is estimated to come from imported inputs—mainly parts and components for assembly into finished products and capital equipments. Most exports are finished goods.

Table 1.2 PPP GNI growth, China, India, Japan, and the US

		2000	2001	2002	2003	2004	2005	2006	2007	2008	2009
GNI at PPP (US$, billion)	China	2,948.9	3,258.6	3,628.8	4,099.8	4,655.6	5,389.5	6,277.0	7,424.0	8,314.7	9,170.1
	India	1,582.1	1,705.9	1,802.5	1,995.9	2,221.7	2,509.0	2,835.3	3,224.5	3,464.5	3,758.3
	Japan	3,291.8	3,385.8	3,474.2	3,571.0	3,780.1	3,964.3	4,186.2	4,428.0	4,459.4	4,269.8
	US	10,070.5	10,389.1	10,661.4	11,141.3	11,911.3	12,756.5	13,629.2	14,097.1	14,334.9	14,011.0
GNI per capita at PPP	China	2,340	2,560	2,830	3,180	3,590	4,130	4,790	5,640	6,280	6,890
	India	1,560	1,650	1,720	1,880	2,063	2,290	2,550	2,870	3,040	3,250
	Japan	25,950	2...

Table of contents

• Cover Page
• Half Title Page
• Title Page
• Copyright Page
• Table of Contents
• List of figures, maps, and tables
• Acknowledgments
• List of abbreviations
• 1 China, India, and the new global energy order
• 2 Economic growth and energy demand
• 3 Geopolitics of energy security
• 4 Global quest for energy resources
• 5 Case study I: the Middle East
• 6 Case study II: Africa
• 7 Case study III: Southeast Asia
• 8 Conclusions: adapting to the new global energy dynamic
• Notes
• Index