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China, US Energy Cooperation Promises Boost for Both Sides

An energy policy expert explains why China should expand its energy relationship with the US and how the two would benefit

By Xu Mouquan Updated Apr.13

China and the US will strengthen cooperation in the energy sector. Besides energy, China has much more to gain in terms of energy security, environmental protection and technological upgrades, Lin Boqiang, director of the China Institute for Studies in Energy Policy, wrote for blog.caixin.com.
Because of its expanding car market and switch from coal to natural gas, China’s demand for petroleum and gas will continue to grow. On the supply side, its oil production has gradually declined while demand outpaces domestic gas production. This has pushed up dependency on foreign oil and gas, which approached 70 percent in 2018, Lin wrote.  
China’s energy dependency on the Middle East amplifies its energy security problem. Despite a decade of efforts to diversify, Gulf countries remain China’s major source for crude oil, making up 58 percent of China’s total crude imports in 2017, up from 48 percent in 2016, Lin wrote. 
The US can also become an important source of China’s energy imports, Lin wrote. Greater cooperation would meet China’s increasing energy demand and benefit its energy security. The US has an abundance of shale gas resources, so when its prices reach the international average, China can improve its share of oil and gas resources from the US. 
To slash environmental pollution, China needs to transition to greener energy consumption, including increasing the proportion of natural gas as a primary energy source. While expanding natural gas imports, it must consider the development and exploitation of its domestic shale gas reserves. If it can learn from the US’s experience in shale gas through energy cooperation, the costs for making a green transition would drop significantly, he said.
The US also needs Chinese cooperation to improve the competitiveness of its oil and gas exports. Underdeveloped infrastructure is holding back the large-scale exports of American oil and gas, something a relationship with China would help with, Lin said.