The Sino-Japanese dispute over energy resources in the East China Sea

Map of the East China Sea (Credits: Serg!o, Public domain, via Wikimedia Commons)

Geopolitical Report ISSN 2785-2598 Volume 21 Issue 4
Author: Riccardo Rossi

The Xi Jinping presidency in recent years has increased its focus on specific areas of the East-China Sea (ECS) rich in fossil resources (gas and oil)[1] to reduce energy dependence on the Gulf States and the Russian Federation and more effectively support the industrial development based on the Fourteenth Five-Year Plan and the Made in China 2025 project.[2]

Japan, supported by the United States, considers the increase of Chinese assertiveness towards the Senkaku archipelago and the attempt to monopolise the fossil resources of the ECS as potential dangers to its national security.[3]

In the course of the analysis, from these assessments, an attempt will be made to understand the strategic value attributed by the People’s Republic of China (PRC) to the resources in the ECS to evaluate the Japanese-US response.

Fossil resources in the East-China Sea

For the People’s Republic of China and Japan, the East China Sea represents an area of great geopolitical importance due to the high presence of island territories (Taiwan and the Senkaku archipelago), straits (Taiwan, Korea and Miyako),[4] and large deposits of fossil reserves:

«EIA estimates that the East China Sea has about 200 million barrels of oil (MMbbl) in proved and probable reserves. Chinese sources claim that undiscovered resources can be as high as 70 to 160 billion barrels of oil for the entire East China Sea, mostly in the Okinawa trough. Other sources have not corroborated these reports. Moreover, undiscovered resources do not take into account economic factors relevant to bring them into production, unlike proved and probable reserves. […] EIA estimates that the East China Sea has between 1 and 2 trillion cubic feet (Tcf) of proved and probable natural gas reserves. The region may also have significant upside potential in terms of natural gas. Chinese sources point to as much as 250 Tcf in undiscovered natural gas resources, mostly in the Okinawa trough, although these have not been independently verified».[5]

In its National Security Strategy (NSS), the People’s Republic of China considers it essential to exploit the fossil reserves of the ECS to reduce energy dependence on the Gulf countries and the Russian Federation in the immediate term and achieve energy self-sufficiency in the medium to long term.[6] To pursue this goal in recent years, Beijing has developed a complex strategy that can be summarised in two main steps.

  1. The Xi Jinping presidency has requested the principal national oil companies (Sinopec, China National Petroleum Corporation and China National Offshore Oil Corporation) to increase the exploitation of known oil wells (Pinghu, Chunxiao and Tianwaitian) in the East China Sea and to adopt an investment plan in new technologies for the construction of offshore platforms and the exploration of new fields.[7]
  2. In 2013, the People’s Republic of China, to protect the operations of domestic oil companies, introduced an Air Defence Identification Zone (ADIZ) in the East China Sea geo-maritime area between its coastline and the Senkaku Archipelago, which can be defined as:

«An […] area extending beyond national territory in which unidentified aircraft are liable to be interrogated and, if necessary, intercepted for identification before they cross into sovereign airspace».[8]

On the one hand, by implementing the ADIZ, Beijing requires commercial aircraft crossing this space to provide advance notice to the People Liberation Army Navy (PLA) if the final destination is other than a Chinese airport. On the other hand, China has speeded up the militarisation operation of the PLA[9] in the vicinity of Taiwan Island,[10] the Senkaku archipelago and oil platforms.[11]

By combining these two strategies, the People’s Republic of China managed to reduce crude oil imports from the Gulf countries (from 73.6% in 2020 to 72% the following year, quantified at 513 million tonnes),[12] necessary to support the industrial sector in the implementation of the Made in China 2025 project.[13] Unveiled in 2015 by President Xi Jinping, this strategy aims to:

«Made in China 2025 “aims to leverage the power of the state to alter competitive dynamics in global markets in industries core to economic competitiveness.” For example, since 2014, the central government has announced at least $250.7 billion (RMB 1.7 trillion) in state funding to support these strategic sectors’ development and acquisition of foreign technology and expertise. […] Made in China 2025 targets ten key sectors for additional government support:(1) new energy vehicles, (2) next-generation information technology (I.T.), (3) biotechnology, (4) new materials, (5) aerospace, (6) ocean engineering and high-tech ships, (7) railway, (8) robotics, (9) power equipment, and (10) agricultural machinery».[14]

The People’s Republic of China, implementing Made in China 2025, will develop new technologies in the coming years, which will be applied to the production of new products to be placed in the European, North American and African markets, using the most important maritime trade routes that cross the East China Sea, such as the North Sea Route (NSR) and the Malacca Route.[15]

Japan’s governments of Shinzō Abe (2012-2020) and his successor Fumio Kishida (2021-in-office), have identified Beijing’s growing economic-military assertiveness in the East China Sea (with a focus on the island of Taiwan, the Senkaku archipelago, and fossil resources)[16] as a danger to the geopolitical stability of this geo-maritime space. [17]

In recent years, Tokyo has recognised the oil fields of petroleum as playing an essential role in meeting part of the country’s energy needs, most of which are met by crude oil imports. Japan, according to OEC data in 2020:

«[…] imported $38.4B in Crude Petroleum, becoming the 5th largest importer of Crude Petroleum in the world. At the same year, Crude Petroleum was the 1st most imported product in Japan. Japan imports Crude Petroleum primarily from: Saudi Arabia ($15.1B), United Arab Emirates ($12.1B), Kuwait ($3.41B), Qatar ($3.23B), and Russia ($2.06B). The fastest growing import markets in Crude Petroleum for Japan between 2019 and 2020 were Malaysia ($216M), Libya ($57.7M), and China ($29M)».[18]

In recent years, the Abe and Kishida governments, given the importance of fossil deposits, have initiated a specific policy line for the ECS, combining the construction of new oil platforms (near Okinawa province) with opposition against Beijing’s decision to impose the ADIZ.[19] Tokyo, to implement this geopolitical line, has strengthened the bilateral dialogue with the United States according to the Treaty of Mutual Cooperation and Security, ratified by the two countries in 1960, which defined that:

«The U.S.-Japan alliance remains the cornerstone of Japan’s foreign and security policies, building on the 1960 Treaty of Mutual Cooperation and Security that codified a core strategic bargain committing the United States to Japan’s defence in exchange for access to bases in Japan that would allow for the maintenance of peace and security in the Far East». [20]

With the support of Washington, the Shinzō Abe and successor Fumio Kishida administrations have increased investment in the Japan Self-Defense Forces (JSDF), joint training activities with the U.S. armed forces, and enhanced the bases located on their territory.[21]

Tokyo redefined the command and control system of the Japanese Air Self-Defense Force (JASDF) to cope with the increasing military presence of the Russian Pacific Fleet in the Kuril Islands and the growing militarisation of the People’s Liberation Army in the vicinity of Taiwan Island, the Senkaku archipelago and the fossil deposits of the East China Sea. [22]

Conclusions

For Japan and the People’s Republic of China, the fossil resources in the seabed of the East China Sea represent an indispensable asset to meet part of the energy needs of their respective industrial systems. From this joint assessment, a competition between Beijing and Tokyo for control of the East China Sea oil fields might intensify tensions and militarisation processes in this geo-maritime space.[23]

From this observation, it is possible to speculate that the increase in Sino-Japanese disagreements may destabilise the respective, highly interconnected economies. In fact, according to data from the Japanese Ministry of Foreign Affairs in 2021, the Rising Sun exported $206.2 billion of goods to China and imported $165.9 billion of products from the PRC. In addition to trade relations, Beijing and Tokyo share the presence of corresponding national communities in their territories. About 107,715,000 Japanese live in the PRC, while 745,441,000 Chinese reside in the Rising Sun.[24]

Source

[1] Tsai C. (2016), Sino-Japanese relations over the East China Sea: The Case of Oil and Gas Field, Journal of Territorial and Maritime Studies ISSN 2288-6834, Vol 3 (2), McFarland & Company, pp. 71-87 Retrieved from: https://www.researchgate.net/publication/330512061.

[2]  Sciorati. G, Casanova. G, (2020), China: a Plenum for the New World, ISPI, Retrieved from: https://www.ispionline.it/it/pubblicazione/cina-un-plenum-il-nuovo-mondo-28029.

[3] Wiegand. K, China’s Strategy in the Senkaku/Diaoyu Islands Dispute: Issue Linkage and Coercive Diplomacy, ISSN 1479-9855, Asian Security, vol. 5, no. 2, 2009, pp. 170-193

[4] Riccardo Rossi (2021) Japan in the U.S. Pivot to Asia Policy, Geopolitical Report ISSN 2785-2598 Volume 17 Issue 1, SpecialEurasia. Retrieved from: https://www.specialeurasia.com/it/2022/03/01/japan-united-states-asia/.

[5] U.S. Energy Information Administration, (2014), East China Sea,

[6] Xin. Z, (2022) China’s oil dependence on imports sees drop, The State Council The People’s Republic of China. Retrieved from:http://english.www.gov.cn/news/topnews/202202/24/content_WS6216e221c6d09c94e48a569e.html.

[7] Rongxing. G (2010) Territorial Disputes And Seabed Petroleum Exploitation: Some Options For The East China Sea, The Brookings Institution, Massachusetts Avenue, NW.

[8] Bendini. R (2014) In-Depth Analysis The Struggle For Control Of The East China Sea, Directorate-General For External Policy Department. Retrieved from: https://www.europarl.europa.eu/RegData/etudes/IDAN/2014/536398/EXPO_IDA(2014)536398_EN.pdf.

[9]This essay defines “militarisation” as a state actor’s calculated move to deploy and leverage on certain military assets, actions and arrangements in a contested area as a means to pursue wider strategic and political ends. Cf.  Kuik C. (2016) China’s ‘Militarisation’ in the South China Sea: Three Target Audiences, East Asian Policy. Retrieved from: https://www.researchgate.net/publication/304669570.

[10] Riccardo Rossi, (2021) The Sino-US military confrontation for control of the island of Taiwan, Geopolitical Report 2785-2598 Vol 13 (1), SpecialEurasia. Retrieved from: https://www.specialeurasia.com/it/2021/11/02/il-confronto-militare-sino-statunitense-per-il-controllo-dellisola-di-taiwan/.

[11] Riccardo Rossi (2021) The centrality of the Senkaku Archipelago for geostrategic balances in the East China Sea, Geopolitical Report 2785-2598, Vol 14 (6), SpecialEurasia. Retrieved from: https://www.specialeurasia.com/it/2021/12/21/senkaku-archipelag-geostratgy/.

[12] Xin Z. (2022) China’s oil dependence on imports sees drop, The State Council The People’s Republic of China. Retrieved from:http://english.www.gov.cn/news/topnews/202202/24/content_WS6216e221c6d09c94e48a569e.html.

[13] U.S.-China Economic and Security Review Commission (2017) Report to Congress, Washington. Retrieved from: https://www.uscc.gov/annual-report/2017-annual-report-congress.

[14] Ibid, pp. 513-514

[15] In the 21st-century maritime silk road (MSR) project, Beijing considers the Malacca and North Sea Route (NSR) trade routes indispensable. Cf. Riccardo Rossi (2022) The US Valiant Shield 22 exercise: a warning to Beijing, Geopolitical Report ISSN 2785-2598 Vol 20 (16), SpecialEurasia. Retrieved from: https://www.specialeurasia.com/it/2022/06/21/us-valiant-shield-beijing/.

[16] Riccardo Rossi (2021) The centrality of the Senkaku Archipelago for geostrategic balances in the East China Sea, Geopolitical Report 2785-2598 Vol 14 (6), SpecialEurasia. Retrieved from: https://www.specialeurasia.com/it/2021/12/21/senkaku-archipelag-geostratgy/.

[17] Ibid.

[18] Crude Petroleum in Japan (n.d.) OEC. Retrieved from: https://oec.world/en/profile/bilateral-product/crude-petroleum/reporter/jpn.

[19] Rongxing G. (2010) Territorial Disputes And Seabed Petroleum Exploitation: Some Options For The East China Sea, The Brookings Institution, Massachusetts Avenue, NW.

[20] Kiley G., Szechenyi N. (2012) U.S. Force Posture Strategy in the Asia Pacific Region: An Independent Assessment, Center for Strategic and International Studies, Washington, p.23.

[21] Riccardo Rossi (2021) Russian-Japanese relations and the Sea of Japan, Geopolitical Report ISSN 2785-2598 Vol 17 (5), SpecialEurasia. Retrieved from: https://www.specialeurasia.com/it/2022/03/21/russia-japan-geopolitics/.

[22] Riccardo Rossi (2021) The centrality of the Senkaku Archipelago for geostrategic balances in the East China Sea, Geopolitical Report 2785-2598 Vol 14 (6), SpecialEurasia. Retrieved from: https://www.specialeurasia.com/it/2021/12/21/senkaku-archipelag-geostratgy.

[23] Ibid.

[24] Ministry of Foreign Affairs of Japan (2022) Japan-China Relations. Retrieved from: https://www.mofa.go.jp/region/asia-paci/china/data.html.