Posted on 06/13/2006 6:27:23 AM PDT by thackney
The Chinese oil market should be opened to foreign companies to give China better access to international supplies and improve the operations of Chinese firms, according to a new report.
The time has come for the government to clarify the roles it expects private and state-owned foreign oil firms to play in the Chinese market, says the report by the Development Research Center (DRC) of the State Council.
In particular, the conditions for market entry and exit and for partnership with Chinese national oil companies and other local operators need to be clearly defined, says the report.
All policy and regulatory conditions should be transparent and applied without discrimination, stresses the report, which was presented to a seminar with the theme "An Energy-Saving Society" held by the DRC.
An open market enabling foreign companies and investors to play a greater role in oil supply and domestic resource development could be a positive signal to the international community, making it easier for Chinese oil companies to engage in similar activities abroad.
Meanwhile, Chinese firms should plan to interact profitably with and learn from foreign companies for better integration in global and regional oil markets, the report continues.
All major players seem to welcome China's growing role in world oil and, to a lesser extent, gas markets. The investment of Chinese companies in the development and marketing of new reserves are perceived as a stabilizing factor in future markets.
However, more transparency would improve the business orientation of Chinese national oil companies and ease their entry in the global market where they could be world class players, says the report.
Energy is the world's biggest business dominated by its largest corporations. Exxon-Mobil is the world's largest private oil corporation while Saudi Aramco is the world's largest state-owned oil company with reserves 20 times greater than Exxon, the report observes.
Close relations with such companies can improve an importing country's access to international oil supplies, and many industrialized countries have relied successfully on the international oil companies to secure their import needs.
The report offers no recommendation on whether the Chinese government should emulate this strategy, but it points out that international companies have a useful importing role, which they could play along with Chinese national oil companies.
The international oil companies could also provide access to state of the art technology and management practices across the whole range of oil and gas industry activities, the report stresses.
If China has oil to drill, but not the technology, then they would be better off to let foreign companies drill and show them how and lessen their dependence on imports. Hmmm...., maybe WE should try that!.......
My suspicion is that this report will be either categorically rejected, or accepted with caveats so numerous and onerous [the fine print] as to preserve their basic mercantilist economic war strategy against the U.S., their "main enemy". A strategy designed to lock up resources out of the reach and access of the U.S. market mechanisms. Hence squeezing us for our very life-blood of oil...very deliberately....while they horde it.
They may let the U.S. companies in primarily to continue to give them technology and infrastructure capital transfusions, offering only the carrot of Chinese market "future profits"...but not any real supplies.
As I say, this should prove interesting.
If they are using their own oil and not taking their capital and spending it on imported oil, then they are better off. Competing for oil on world markets makes everybody pay more, and therefore have less to spend on your goods which now cost even more. If increased profits are their sole motive, then opening their oil markets is the best way to obtain them. I fail to see how destroying one of your biggest customer's economies can be good for either the buyer or the seller.......
And that is why you fail...that a constitutionally-mandated Communist regime has really changed...and you further mistakenly assume that they have fundamentally changed to your way of thinking...you must unlearn what you have learned.
One of the true experts on China, Arthur Waldron concluded the wishful thinking mindset on China was historical failure of major proportions:
Yet it is becoming clear that the Communists have no intention of giving up power, allowing free speech, elections, freedom of religion, or other serious change. It is also becoming clear that economically China is mercantilist in her behavior, not a true free trader. And finally, she is using the money and access to foreign technology obtained in these decades to engage in a major military build-up.This is the phase in which we find ourselves now. I think we can call it dawning disappointment and concern. Without intending to, we have helped create a formidable geopolitical competitor, that threatens our friends and allies in Asia militarily, and whose economic behavior is undermining our interests. That competitor now feels strong enough not to pay much attention to what we say, one way or the other. Beijing feels it can make its own way.
And that way is a path of covert war.
Now why can't we get a few more Senators to think like that...
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