The crude oil steam-cracking facility of Sinopec Photo: Courtesy of Sinopec
China might help the US curb soaring oil prices and fears of inflation by releasing its own crude oil reserves as a favor, but the US must return the favor with sincerity in pushing for a better environment for China-US cooperation, particularly by refraining from heaping ungrounded pressure and cracking down on China in areas where they have no need for China’s help, experts said.
US President Joe Biden announced on Tuesday that the US Department of Energy will make available releases of 50 million barrels of oil from the Strategic Petroleum Reserve to lower prices for Americans and address the mismatch between demand exiting the pandemic and supply, according to a White House press release.
The statement also noted that the release will be taken in parallel with other major energy consuming nations including China, India, Japan, South Korea and the UK.
Foreign Ministry spokesperson Zhao Lijian said on Wednesday during a press conference that China is keeping in close communication with relevant sides, including both oil consumption and production countries. He also said that China wants to make sure that the oil market operates stably over the long term via communication and cooperation.
Perplexed by the issue of rising oil prices, which some overseas media have described as one of Biden’s steepest political challenges on top of other plagues, Biden asked China to release crude oil reserves during a virtual meeting he had with Chinese President Xi Jinping recently, according to the South China Morning Post (SCMP).
China has not made a clear announcement yet as to whether it will respond to the US call, but Reuters recently cited certain sources from the National Food and Strategic Reserves Administration – China’s state reserve bureau – as saying it is working to release crude oil reserves.
The appeal for China’s support reflects Biden’s “anxiety” as he struggles to fend off political pressure over rising pump prices and other consumer costs ahead of the 2022 midterm elections, in order to fulfill his promise of helping the country restore economic vigor, experts said.
“Rising oil prices is something that the US considers more serious and the US can’t solve the problem on its own. It is now a dilemma that the US has no choice but to cooperate with China,” Li Haidong, a professor at the Institute of International Relations of the China Foreign Affairs University, told the Global Times on Tuesday.
US gasoline prices averaged about $3.41 per gallon recently, market data showed, more than 60 percent higher than a year earlier, as the country’s economic rebound pushed up commodity prices. However, oil prices had corrected following news of the joint crude reserve release, according to media reports.
China’s response
Experts anticipated that China might move to offer help this time, taking into consideration that a drop in global crude prices would benefit China’s businesses as well, but they stressed that China would release oil reserves based on its own economic needs, instead of just blindly following the “US requirements.”
“This is one aspect where China and the US can cooperate, as a drop in global crude prices would also benefit China as a major crude importer. China does not have to help the US, considering the two countries’ friction, but we can consider what China should prioritize: its own economic interests or the two countries’ disputes?” Huo Jianguo, a vice chairman of the China Society for World Trade Organization Studies in Beijing, told the Global Times on Tuesday.
He Weiwen, a former senior trade official and a member of the Executive Council of the China Society for World Trade Organization Studies, also told the Global Times that since China’s inflation is not very serious, China does not face such a protruding problem in oil prices like the US.
“It should be a symbolic response for China to release oil reserves. However, it’s not a bad thing to do it as it can help balance global crude prices and stabilize the world economy,” he said.
Experts also stressed that China will offer help only at its own pace and within its own capabilities, instead of simply doing what the US has asked.
China should take a cautious attitude toward releasing its crude oil reserves in response to the US request, Lin Boqiang, director of the China Center for Energy Economics Research at Xiamen University, told the Global Times on Tuesday.
“We should prioritize our own interests,” Lin said. He noted that China is not a big country in terms of state crude oil reserves vis-à-vis the US, and it’s hard to conclude whether the major oil consuming countries including the US, Japan, India and China could reach consensus on the joint release, which has never happened before.
As China recently suffered a shortage of coal which resulted in power usage restrictions, it has to implement measures to fill the energy gap. The Chinese government also released the first batch of national crude oil reserves in September of 7.38 million barrels, the state reserve bureau noted.
Lin also said the possibility of a global coordinated release of strategic oil reserves is low, as different countries have different thoughts on the future of oil prices. With the gradual abolition of production restrictions by OPEC in the future, oil prices may also gradually fall from the $80 mark.
“The willingness of countries to release their strategic oil reserves to solve the immediate emergency will not be strong,” Lin noted.
Indian news outlet PTI reported on Tuesday that India plans to release about 5 million barrels of crude oil from its emergency stockpile in tandem with the US, Japan and other major economies to cool prices, even though India, as the world’s third-largest oil consumer and importer, has been severely impacted by the relentless rise in international oil prices.
Lü Xiang, an expert on US studies and a research fellow at the Chinese Academy of Social Sciences, told the Global Times on Tuesday that China could offer help by releasing its own oil reserves, but the scale will be very limited as China is not a major oil exporter and it has only several months of crude reserves.
“I think it will be a small deal, instead of a big one, between China and the US on the oil issue,” he said.
The US has a strategic petroleum reserve of about 727 million barrels, making it the world’s largest strategic crude reserves, the SCMP report noted.
China has ramped up efforts to build its crude oil reserves in recent years. By mid-2017, China had built nine national petroleum reserve bases across the country with a storage capacity of 37.73 million tons of crude oil. China is also by far the world’s largest crude importer. It bought 542 million tons of crude last year, up 7.3 percent on a yearly basis, according to data released by the Chinese Customs.
More sincerity
Experts also stressed that the US should change its “contradictory” attitude toward China or other countries as it has sought those countries’ help but also cracks down on them at the same time.
“China has its own responsibilities on global issues like reducing carbon and stabilizing bulk commodity prices, but the US needs to face its own responsibilities by not trampling on other countries’ interests and taking a double-faced approach on them,” Dong Shaopeng, a senior research fellow at the Chongyang Institute for Financial Studies at Renmin University of China, told the Global Times on Tuesday.
He also urged the US to increase its understanding of other countries and take a pragmatic attitude toward cooperating with them.
At the recent COP26 United Nations summit in Glasgow, UK, Biden criticized China for not showing leadership, france24.com reported.
Both China and India were also under fire by overseas media for opposing a commitment to “phase out” coal in an agreement during the event, according to the BBC.
“Geopolitical relations are not always the same, and the US will pursue different strategies in line with its own interests,” Pan Jiahua, director of the institute of eco-civilization studies of the Beijing University of Technology, told the Global Times.
Deeper cooperation between China and the US is in line with the interests of both side, Pan said, noting that because the US has advantages in natural gas and oil reserves, more cooperation on energy could help tackle the trade deficit between the two countries.
“There’s no need to amplify the disputes at COP26 targeting China or India as countries need to work together on the energy shortage to benefit the world,” Pan said.
Global Times
