Oil Hungry China Needs to Rethink Energy Security

China's economy is more oil intensive than either America or Europe, as half of its imported oil comes from the Middle East and North Africa, compared with one-quarter for the United States. If crude stays at current prices, China will spend more on oil this year than it earns selling goods to the United States. What really worries China's leadership, however, is the risk that oil prices will add to already elevated inflation. Inflation pressures helped to fuel 1989's Tiananmen Square protests. The state has the option of stepping in to stop costs reaching China's drivers, but even price controls have their limits. Over the long term, China's best bet is to reduce the oil required to fuel its growth. But planned investments in energy efficiency, electric vehicles, and high-speed rail will take time. A strategy for stabilizing international supply by coordinating with other oil-consuming nations is thus the only near-term option.

Read this full op-ed by Trevor Houser in the Financial Times as reproduced on the Peterson Institute for International Economics website at: http://www.piie.com/publications/opeds/oped.cfm?ResearchID=1787