It was no surprise when China abstained from voting on the U.N. Security Council resolution to impose a no-fly zone over Libya. It has a long-standing policy of not interfering in the internal affairs of other countries, and it has a keen interest in North African and Middle Eastern oil. With the civil unrest sweeping oil-producing countries, compounded by domestic inflationary pressures in China, Beijing is trying to hedge its bets with diplomacy.
On March 17, the U.N. Security Council authorized a no-fly zone over Libya, with 10 council members voting in favor of the resolution, none against and five abstaining. China, which currently holds the council’s rotating presidency and is a veto member, voted to abstain, saying it “has serious difficulty with part of the resolution,” though it did not publicly mention which part.
China’s stance on the resolution came as no surprise. It has a standing and often-stated policy of not interfering militarily in other countries’ internal affairs. However, its abstention came after some unusual moves that were more a reflection of China’s energy and economic interests in North Africa and the Middle East than its commitment to non-interference.
Relations between Beijing and Tripoli have never been close. Several years after establishing diplomatic ties, relations were strained by Libya’s recognition of Taiwan. Although relations have warmed in the 2000s, Beijing and Tripoli occasionally become embroiled in disputes, which have been sparked by such things as Libya’s discovery of Chinese nuclear assistance to Pakistan in 2004 and Libya’s granting permission to Taiwanese President Chen Shui-bian in 2006 to stop over in Libya on his way to South America. Libya also blocked the acquisition by state-owned China National Petroleum Corp. of Canada-based Verenex to enter Libya’s oil market. Meanwhile, Libya accounts for 3 percent of China’s oil imports. Though this is not a negligible percentage, it does not mean the Libyan civil war has had a significant impact on China’s overall energy security.
However, China’s growing investment in Libya’s infrastructure and energy sector has put it in an uncomfortable position. More than 70 Chinese companies are engaged in some 50 projects in Libya, mostly related to housing construction and oil exploration. Meanwhile, China views Libya’s abundant oil reserves as a potential source of energy to meet its increasing domestic demand. For Beijing, the battle between the Libyan regime and the rebels makes it necessary to recalculate its position in Libya, secure its assets there and find an opportunity to deepen its stake in Libya’s energy sector.
In late February, China voted in favor of a U.N. resolution imposing sanctions on Libya and calling for an investigation into whether Moammar Gadhafi had committed crimes against humanity. Beijing’s calculus for supporting sanctions may have come from increasing criticism of its foreign policies in support of authoritarian regimes such as North Korea, Zimbabwe and Myanmar and the fading power of Gadhafi. Supporting sanctions against a dictator could restore China’s image, even as it continues to have difficulties supporting sanctions against other authoritarian regimes. And as the outside world came to believe that Gadhafi’s hold on power was increasingly tenuous, Beijing may have wanted to prepare for a possible transfer of power to the eastern rebels.
However, with the situation in Libya still unpredictable, Beijing has likely perceived the prospect that Gadhafi could preserve his power and reunify Libya. China had earlier expressed some skepticism over this prospect and urged an end to the fighting and establishment of a dialogue between the two sides. But China’s options became limited when Russia did not veto the resolution. Not wanting to cast the only veto, China knew its only other option was to abstain.
But its abstention is consistent with China’s tendency to avoid choosing sides. Its earlier signal to oppose the no-fly zone and its diplomatic efforts may have led to Gadhafi’s March 14 invitation to Chinese, Russian and Indian firms to resume oil exploration and production operations in Libya, in a bid to punish Western countries for their criticism and moves to impose sanctions. The prospect of China’s resuming operations in Libya remains unclear, given ongoing uncertainty over Gadhafi’s military advances and the form that any foreign intervention might take.
While it is unclear to what end China’s diplomatic efforts in Libya will lead, there are good reasons for its interests in North Africa. Among them are its energy dependence on the Middle East, its fear that a contagion of civil unrest will spread to its shores, growing inflation and chronic corruption, which could lead to growing criticism of single-party rule.
China’s oil import dependence reached 56 percent in 2010, mostly from North Africa and the Middle East. Meanwhile, according to the International Energy Agency, 60 percent of China’s overseas investments are in countries that are considered politically unstable. Thus, Beijing is deeply concerned about energy security and rising oil prices caused by the sweeping unrest in oil-producing countries. As rising oil prices add to domestic inflationary pressures, it will face an ever-growing potential for social instability — Beijing’s worst fear.
And as a top priority, energy security will drive Beijing’s foreign policy strategy. Over the short term, China will place a greater emphasis on diplomacy in the Middle East and North Africa in hopes of establishing or deepening relations with rising players in the aftermath of the chaos. In recent weeks, China has sent Vice Foreign Minister Zhai Jun to Algeria, Tunisia, Egypt and Saudi Arabia, and Vice Premier Wang Qishan is on a visit to Kenya, Zimbabwe and Angola. Among these countries, Saudi Arabia and Algeria are two of China’s most important energy suppliers, countries that have yet to see massive unrest despite some emerging signs. Few details of these visits have been revealed, but the intensity of the diplomatic effort reflects Beijing’s intention to reach out to new leaders, strengthen existing relations and ensure its most critical energy supply lines.