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A tool to secure China’s energy supplies, Infra News, ET Infra


Belt and Road Initiative in West Asia: A tool to secure China’s energy supplies

China has stepped up its cooperation with West Asia, particularly with Iraq, since the unveiling of the Belt and Road Initiative (BRI). Iraq’s strategic location and its trade through the Persian Gulf make it a crucial point in China’s BRI.

China’s insatiable hunger for energy resources places a high priority on importing energy from West Asia. As the world’s largest oil importer, China sources more than 10 million barrels of crude oil daily, with half of this coming from West Asia. Given China’s dependence on imported energy and the significant role of oil- producing nations, the region has become an indispensable energy market for China.

Energy investments play a significant role in the BRI, and Iraq has become an essential part of these investments. Since the launch of the BRI in 2013, Iraq has been the third-largest partner for energy engagement, after Pakistan and Russia. In 2022, China imported a substantial amount of crude oil from Iraq, totaling 55.49 tonnes, which represented a significant increase of 47.49 percent in Iraq’s oil exports to China, resulting in $39.04 billion in revenue. In contrast, China only exported $22 billion of crude oil in 2018, but this number rose to $49 billion in 2022 due to its exports from Iraq.

China heavily relies on oil imports from Iraq that are transported through the Persian Gulf. However, interstate tensions, civil wars, and terrorist incidents in the Middle East pose a significant threat to the stability of China’s energy supply from the region. To mitigate this risk, China has set a goal to “provide security and stability” along the supply route.

Furthermore, the instability in the region also causes fluctuations in oil prices, which can have a serious impact on the Chinese economy. China has invested billions of dollars in bilateral agreements and infrastructure projects in West Asia. Between 2005 and 2018, China invested $114 billion in Saudi Arabia, the UAE, Iran, and Iraq, with 51 percent of this investment occurring between 2013 and 2018.

After the defeat of the Islamic State in Iraq, the Iraqi government began seeking new investments to reconstruct the cities that were devastated during the war. Given Iraq’s limited economic power, foreign capital flows and investments were necessary, particularly to rebuild the infrastructure and superstructure of provinces such as Mosul, Kirkuk, and Saladin. In 2018, the undersecretary of the Iraqi Ministry of Planning, Kuzey Abdülfettah, estimated that $88 billion would be required to rebuild the country.


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