An example of China’s reduced economic reliance: its increasing energy

import intensity, especially for oil While the data presented in Table II indicates
that China’s import dependency is not especially high by comparison with
other nations, disaggregation of the available data shows that it has a high and
increasing import dependency for its supply of some energy resources which
are vital for the continuing growth of its economy. This is particularly evident
for its supply of oil. It now imports more than half of its oils supplies and this
proportion is growing and expected to continue to do so because, unlike Russia
(Robinson, 2011), it has inadequate oil reserves to meet its demand for oil.
Since the mid-1990s China has become a net importer of energy resources
whereas from 1980 to 1995 it was a net exporter of energy resources (Zhou,
n.d., p. 7). According to an item in Xinhua (Tang, 2013), “China is increasingly
reliant on oil-gas imports and the country faces severe challenges in meeting
its energy demands”. This article reported that 56.6 per cent of China’s crude
oil was imported in 2012 and that this is expected to rise to 59.4 per cent in
2013. The US Energy Information Administration (2012, p. 7) “expects China to
import about 75 per cent of its crude oil by 2035 as demand is expected to
grow faster than domestic overall supply”. This increased import dependency
is of considerable concern to Chinese authorities because it increases the
vulnerability of China and its economy to external events. However, the
economic and social cost to China of relying only on its own oil production
would be tremendous in terms of foregone production. It is not a political
option for China to rely only on its own oil supplies given that extent of China’s
economic development. Therefore, the Chinese Government has developed
several strategies to influence the degree to which it is able to control its oil
supplies, particularly from external sources.

Conclusion China has departed drastically from the economic self-reliance (self-sufficiency) principle
of Mao Zedong both within China and in relation to its international affairs. This departure has been
a major contributor to China’s economic growth but has brought with it new economic risks for
China and the Chinese people. Its prosperity now depends to a considerable extent on imports,
including imports of natural resources, as well as exports. While its economy is open, it is only
moderately open by international comparisons. Despite these economic changes, the Chinese
basically remain their own masters. They have not relinquished their “capacity for autonomous goal
setting and decision-making”. Their determination to remain in charge of their own affairs is
illustrated by the strategies they have adopted to address their oil dependency. Furthermore, as a
result of China’s economic growth due to its economic reforms, it is now a powerful force in
international relations able to influence the decisions of many other countries. Had China continued
with the self-reliance policies of Mao Zedong, it would have been unable to achieve its current global
status. Nevertheless, achieving this status has been a complex process, influenced to some extent by
unexpected events, such as the visit of Richard Nixon to China in 1972. Although China has departed
from the goal of economic self-sufficiency, in my view, it still subscribes to the most important part
of zi li geng sheng which is to control one’s own destiny, that is to be in charge of one’s own affairs,
goals and decision-making. That is not to say that China has no economic self-sufficiency goals.
However, these goals no longer dominate Chinese policy.

Slide 3
China is slowly losing the tech war
China's factories assemble the world's smartphones and tablet computers
but need components from the United States, Europe, Japan, Taiwan and
South Korea. Chips are China's biggest import, ahead of crude oil, at more
than $300 billion last year.
when it comes to making semiconductor , foundries such as state-owned
SMIC in Shanghai are up to a decade behind industry leaders including
TSMC, or Taiwan Semiconductor Manufacturing Corp., which produces
chips for Apple Inc. and other global brands.

China’s aging population

 China’s growing number of elderly will need to be supported by a
dwindling working-age population. China’s workforce population
peaked in 2012 and has been in decline since, contributing to
increasing labor costs. China’s aging population also foretells
increasing long-term pressures on China’s savings rate and capital
formation, human capital formation, and its welfare and pension
systems as the country grows old before it grows rich. In addition,
capital investments have reached a saturation point.

No help from the external environment

The external environment will not help China much either. Some of
China’s main trading partners (the UK and Japan for example) were
dealing with coronavirus, which dampens demand for Chinese
products (expect for goods such as protective equipment). In addition,
tensions between China and Australia have anything but abated, with
China adding lobsters and timber to a growing list of Australian
products with import restrictions.

Meanwhile, the US presidential election seems too close to call at the

time of writing. However, for the medium to longer term, we don’t
expect a very different relationship between the US and China no
matter if Biden or Trump wins. The tone of the debate may change,
but the underlying problem will not. Tensions between the China and
the US are here to stay in both cases because the root cause of these
tensions are clashing ideologies, not economics.

Increasing energy import intensity, especially for oil

China’s reduced economic reliance: its increasing energy import intensity,

especially for oil

Slide 6

The following export product groups categorize the highest dollar value in Chinese
global shipments. Also shown is the percentage share each export category
represents in terms of overall exports from China.

1. Electrical machinery, equipment: US$804.5 billion (26.6% of total exports)

2. Machinery including computers: $492.3 billion (16.3%)
3. Furniture, bedding, lighting, signs, prefabricated buildings: $126.3 billion (4.2%)
4. Plastics, plastic articles: $118.1 billion (3.9%)
5. Vehicles: $108.9 billion (3.6%)
6. Toys, games: $94 billion (3.1%)
7. Optical, technical, medical apparatus: $88.8 billion (2.9%)
8. Articles of iron or steel: $85.4 billion (2.8%)
9. Knit or crochet clothing, accessories: $78.2 billion (2.6%)
10. Organic chemicals: $73 billion (2.4%)

China’s top 10 exports accounted for over two-thirds (68.4%) of the overall value of
its global shipments.
Vehicles represent the fastest grower among the top 10 export categories, up by
42.8% from 2020 to 2021.

In second place for improving export sales was toys and games via a 31.4% gain.

China’s shipments of organic chemicals posted the third-fastest gain in value up by

28.1%.

Year over year, the most modest increase among China’s top 10 export categories
was for optical, technical and medical apparatus thanks to a 10.7% expansion.