FNI Report 16/2012. Lysaker, FNI, 2012, 20 p.
How China will satisfy its rising energy demand will have impact on the availability and market price of energy resources such as oil and gas, but also on foreign policy. Of special interest is the role of rising neighboring countries and region – Russia and Central Asia countries – who can supply China by way of pipelines. In this paper important factors influencing Chinese energy decision-making are discussed, with a particular focus on energy investments abroad. The state capitalism framework is used to explain the long-term policies of Chinese energy investments as well as discuss the importance of State-Owned Enterprises and National Oil Companies to the Chinese economy. On this background the energy relations between Russia, China and other Central Asia states is discussed. The main focus is on the influence Chinese Energy Based Loan (EBL) agreements have on the Chinese presence both economically and politically in the region. The objective is to present the current situation and outlook for Sino-Russian-Central Asian energy relations as well as the economic implications a closer Chinese presence could have for the region. China’s EBLs with Central Asian countries illustrate the preferred Chinese approach in expanding trade relations and should be considered as important examples for future bilateral agreements.