One of the most critical regional rivalries is
happening across the Pacific Ocean and it is between China
and Japan. The two are in a heated argument over drilling
rights in the East China Sea, which is thought to contain
7 trillion cubic feet of natural gas and as much as 100
billion barrels of oil.
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Ken Silverstein
EnergyBiz Insider
Editor-in-Chief |
Certainly, the potential resources in the sea would be
salivating for both nations that are desperate for oil and
gas. But analysts who know a lot about China and Japan say
that this current dispute must be seen in light of a
long-troubled relationship -- one that has resulted in a
number of wars throughout the centuries. The fear, of
course, is that the harsh rhetoric would intensify and
that lines would be drawn -- bringing the rest of the
world into the fray.
China has already begun drilling, in areas that are
clearly on its side of the disputed border. But, Japan
says that those wells straddle its territory and want such
operations to be developed jointly. Undisputed fields on
one side or the other would be individually harnessed by
each country. The two countries don't seem to have an
issue with joint development. They do have a bone to pick
with where to draw the boundary.
The problem is getting more intense. Japanese lawmakers
are writing legislation that would "protect" Teikoku Oil,
which has plans to look for oil and gas. At the same time,
China has sent warships into the disputed areas as a show
of force. The United Nations will issue a decision on
global off-shore territorial claims by 2009.
China and Japan have agreed to talk about it. In fact,
both have had diplomatic relations since 1972. But, that's
as far as any progress has gotten. In late October, China
pulled out of pending discussions. It said Japan's Prime
Minister Junichiro Koizumi visited a war memorial where
2.5 million Japanese are buried and including those said
to have committed mayhem against the Chinese.
Indeed, China's strong feelings over what it considers
a lack of remorse by Japan for war atrocities committed
during World War II have dominated the discussion in
recent weeks. Some Chinese are even calling for an
economic embargo of all Japanese-made goods and services.
And, according to China's state-owned media, more than 30
million citizens there have signed forms demanding that
Japan be excluded as a permanent member of the U.N.
Security Council.
At the same time, both countries seek closer ties to
Russia. Specifically, both want a trans-Siberian pipeline
to be routed through the Pacific to work to the advantage
of their countries. Meanwhile, both are trying to get a
one-up on the other in terms of the other Asian nations.
Fight Continues
Japan wants China to stop drilling, for now. Any
disputed territories could be jointly developed. China
agrees, but says that any properties clearly on its side
are its own. But China wants the dividing line to be much
further east of what Japan has proposed. It also says that
it has spent millions over 10 years, calling Japan's
boundary a "territorial trap."
For its part, Japan says it won't be ready to drill
until the summer of 2006. Others say that Japan won't
actually be able to consume any of the oil or gas it
produces, noting that the lack of pipelines there mean it
would have to sell all of its findings to China. Japan
says it is ready to find a diplomatic solution but fires
this shot:
"We need to remind China that we are ready and willing
to defend our territory and interests," says Katsuei
Hirasawa, a Japanese legislator who was quoted in the
Washington Post.
So far, the spat continues. But, relations between the
two have endured such disagreements before. In reality,
each side depends on the other. Japan's economy is second
only to the United States and provides a plethora of
markets for Chinese goods. At the same time, China's gross
domestic product has risen by 9 percent over the last
generation and provides a fountainhead of opportunity for
Japanese businesses.
In fact, the trade volume between China and Japan
amounted to nearly $207 billion, up from $115 billion in
2000, says Japan's Ministry of Finance. Japan's economy
has rebounded in part because of increased exports to
China that consist mainly of electronic components and
machinery. Meantime, China exports finished electronic
products and clothing to Japan. At the same time, the two
have mutual concerns about North Korea and its involvement
with nuclear weapons.
China is the second biggest oil consumer in the world.
If the country is to feed its rapidly growing gross
domestic product, it must gain access to new energy
sources. And energy shortfalls there -- already
responsible for rolling blackouts across certain provinces
-- are not expected to abate for a few years when new
electricity sources come on line. To help it get there, it
has reached out to foreign investment.
As China has evolved from a strict totalitarian state
to a freer economic system that has become a hotbed of
economic opportunity, the world has opened to it. The 1989
Tiananmen Square tragedy did isolate the country. But,
China's continued economic strength has meant that it
cannot be ignored. And while Japan's economy has suffered
the pangs of recession, it is still one to be reconciled
with and provides a host of prospects for not just China
but other nations as well.
The tensions in that part of the world are therefore
felt all around the globe. It's in the interest of not
just the world community but also the region if China and
Japan cooperate with each other and perhaps form an
alliance to negotiate prices with the Middle Eastern
nations that supply them with oil. In any event, a
resolution for how the gas reserves that lie under the
East China Sea are to be split might serve as a
springboard to larger discussions over how to remedy more
intransigent issues.
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