China flexes energy leverage as the Philippines, US start annual war games
by Joe Cash
BEIJING, April 21 (Reuters) – China hinted on Tuesday that energy aid to the Philippines could be linked to Manila holding military exercises with the United States and other allies, while China’s leading newspaper showed Beijing was ready to use its reserves in diplomatic disputes.
In an editorial titled “Philippines must create conditions to deepen cooperation,” the ruling Communist Party’s official People’s Daily accused the Philippines of hypocrisy in “searching for emergency supplies” days before hosting annual drills involving more than 17,000 troops on a remote Philippine island near Taiwan.
China has the world’s largest strategic oil stocks.
The commentary, published under the pseudonym “Zhong Sheng”, meaning “Voice of China”, and generally used to convey the views of senior officials on foreign policy, said: “These clearly contradictory words and actions reveal the opportunistic nature of Filipino politicians.”
“How can (the Philippines) act with complete disregard for the interests of its neighbors and yet expect them to come to its aid at a critical moment?” he said in the comment, which called on Manila to “create the right conditions” for improved two-way relations. he continued.
Linking energy aid to diplomatic disputes suggests Beijing may begin to use supply aid as leverage against countries disgruntled with it, as with critical mineral exports to Japan, analysts say.
Relations between China and the Philippines have deteriorated over the two countries’ rival claims in the South China Sea, particularly the Second Thomas Shoal, where Manila beached a warship in 1999 and conducted regular supply missions to sailors on board. The shoal is within the Philippines’ 200-nautical-mile-long exclusive economic zone and about 1,300 km (808 miles) off the Chinese mainland.
China, the world’s second-largest fertilizer exporter and Asia’s largest fuel supplier, has reduced refined fuel exports to neighboring countries in March following reports that it had ordered a ban on fuel exports to prioritize domestic supplies.
“I saw hints of tacit reciprocity, but not a direct conditionality of energy aid for political preconditions. What I saw more was criticism that the Philippines was ungrateful,” said Eric Olander, co-founder of the China-Global South Project. “He wants to rely on China for economic ’emergency aid’ and create trouble at the same time.”
Chinese officials last month offered Taiwan what they described as energy stability in exchange for accepting Beijing’s rule.
CHINA’S COMPARATIVE ENERGY ADVANTAGE
The People’s Daily noted China’s decision to honor fertilizer contracts with the Philippines despite an export ban in March and noted Manila’s parallel interest in opening negotiations on oil and gas supplies. But he went on to list a number of complaints, including war gaming.
The “Balikatan” or “shoulder to shoulder” exercises, which will last until May 8, also include Australia, Canada, France and New Zealand. The naval strike drills will be held on Itbayat island, the northernmost point of the Philippines and about 155 kilometers from democratically governed Taiwan, which China considers its territory. The counter-landing live-fire exercises will be held in Zambales province in the South China Sea, about 230 km from the Chinese-controlled and disputed Scarborough Shoal.
Ruby Osman, senior policy adviser at the Tony Blair Institute, said energy shocks vindicated China’s stockpiling strategy in the early 2000s and strengthened its ability to resist US pressure and encouraged Beijing to act more confidently in situations involving its geopolitical rival.
But he cautioned that China’s comparative energy advantage should not be confused with the overall health of the country’s energy security. “China is still depleting strategic reserves that they would rather not have to have a limited say over the length and scale of the disruption.”
Chinese President Xi Jinping publicly called for the reopening of the Strait of Hormuz for the first time during his meeting with Saudi Arabian Crown Prince Mohammed bin Salman on Monday, underlining the discomfort felt by the $19 trillion economy with the closure of the Strait of Hormuz, as export-led growth relies on open sea lanes.
(Reporting by Joe Cash; Editing by Kate Mayberry)
