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As global demand for energy continues to rise, major players like the United States, European Union (EU), and Japan are facing a new competitor in the race to secure long-term energy supplies: China. With its 2006 GDP growth hitting 10.7 percent, China is intent on getting the resources needed to sustain its soaring economy, and is taking its quest to lock down sources of oil and other necessary raw materials across the globe. With the Middle East mired in long-term instability, China has turned toward another major oil producing region whose risks and challenges have caused it to be overlooked by much of the rest of the world: Africa.

China's voracious demand for energy to feed its booming economy has led it to seek oil supplies from African countries including Sudan, Chad, Nigeria, Angola, Algeria, Gabon, Equatorial Guinea, and the Republic of Congo. The U.S. Energy Information Administration says China accounted for 40 percent of total growth in global demand for oil in the last four years; in 2003, it surpassed Japan as the world's second-largest oil consumer, after the United States. In the first ten months of 2005, Chinese official sources say, Chinese companies invested a total of $175 million in African countries, primarily on oil exploration projects and infrastructure. On January 9, state-owned Chinese energy company CNOOC Ltd. announced it would buy a 45 percent stake in an offshore oil field in Nigeria for $2.27 billion. China already has a significant presence in many African countries, notably Sudan: China takes 64 percent of Sudan's oil exports. "China is very deeply engaged in exploiting Africa's oil resources," says Elizabeth Economy, C.V. Starr Senior Fellow and Director for Asia Studies at the Council on Foreign Relations.

They include:

• Nigeria. A member of OPEC, Nigeria is the largest oil producer in Africa and the eleventh-largest producer in the world. The country is a major oil supplier to both Western Europe and the United States. The country produces roughly 2.5 million barrels per day. Nigeria's proven oil reserves are some 35.2 billion barrels, with plans by the Nigerian government to expand to 40 billion barrels by 2010. Nigeria's economy is heavily dependent on oil revenues, which account for nearly 80 percent of government revenues. Despite its resource wealth, more than 70 percent of the population lives in poverty.

• Angola. Angola is the second-largest oil producer in sub-Saharan Africa after Nigeria, with oil production expected to reach 2 million barrels per day by 2008. Angola also has major offshore sources of gas. The oil and gas industries, both considered highly promising, have attracted over $20 billion in foreign direct investment since 2003. The Angolan economy is highly dependent on its oil sector, which accounts for over 40 percent of gross domestic product (GDP) and almost 90 percent of the government's revenues. Angola accounted for half of China’s oil imports from Africa in 2005, according to the World Bank.

• Sudan. Sudanese production and export of light, sweet crude—the most easily refined, and therefore most desirable, oil—have risen rapidly in the last few years, with Sudan's Energy Ministry reporting production of some 500,000 barrels per day in 2005 despite internal upheaval, including the unrest in the northern region of Darfur. Sudan has proven reserves of some 563 million barrels of oil, with the potential for far more in regions of the country made inaccessible by conflict. Sudan is one of the world's poorest countries.

• Equatorial Guinea. This tiny West African country's total proven oil reserves are estimated at 1.28 billion barrels. Oil production averaged 371,700 barrels per day in 2004, with oil accounting for nearly 90 percent of the country's total exports in 2003. In October 2004, Equatorial Guinea told oil companies operating in the country to cap production at 350,000 barrels per day, for fear that ever-increasing oil revenues could destabilize the economy.

• Gabon. Gabon has proven oil reserves of roughly 2.5 billion barrels and produces about 230,000 barrels per day. This represents a decline of 37 percent since its peak production levels in 1997. Exports of crude oil account for approximately 60 percent of the government's budget and more than 40 percent of GDP.

• Republic of Congo. As Sub-Saharan Africa’s fifth largest oil producer, the Republic of Congo has 1.5 billion barrels in proven reserves and averaged 235,000 barrels of crude oil production per day in 2004. In 2005, the oil industry accounted for about 80 percent of the country’s revenues, and nearly 90 percent of its total export earnings.

China's booming economy, which has averaged 9 percent growth per year for the last two decades, requires massive levels of natural resources to sustain its growth. Once the largest oil exporter in Asia, China became a net importer of oil in 1993. By 2045, China is projected to depend on imported oil for 45 percent of its energy needs. The country needs to lock in supplies from relatively low-cost African or Middle Eastern sources, experts say. But after the terrorist attacks of September 11, 2001, and the subsequent upheaval throughout the Middle East, China is actively trying to diversify its supply lines away from Middle Eastern crude. Experts say China has adopted an aid-for-oil strategy that has resulted in increasing supplies of oil from African countries.
 

The need to find resources is now the driving component in Chinese foreign policy, David Zweig and Bi Jianhai write in an article, "China's Global Hunt for Energy," in the September/October 2005 issue of Foreign Affairs. China's manufacturing sector has created enormous demand for aluminum, copper, nickel, iron ore, and oil. Zweig and Bi write that China "has been able to adapt its foreign policy to its domestic development strategy" to an unprecedented level by encouraging state-controlled companies to seek out exploration and supply contracts with countries that produce oil, gas, and other resources. At the same time, Beijing aggressively courts the governments of those countries with diplomacy, trade deals, debt forgiveness, and aid packages. The strategy is working: China has gained access to key resources around the world, from gold in Bolivia and coal in the Philippines to copper in Chile and natural gas in Australia. And, of course, oil from Africa. "The interesting thing to me is that China's foreign policy has gotten sophisticated enough to accomplish these goals," says David Kang, a visiting professor of East Asia Studies at Stanford University.
 

Trade and economic activity. Sino-African trade grew by 700 percent during the 1990s, and the 2000 China-Africa Forum in Beijing set off a new era of trade cooperation and investment that is producing notable results. From 2002 to 2003, trade between China and Africa doubled to $18.5 billion, and then nearly doubled again in the first ten months of 2005, jumping 39 percent to $32.17 billion. Most of the growth was due to increased Chinese imports of oil from Sudan and other African nations. China's foreign direct investment in Africa represented $900 million of the continent's $15 billion total in 2004. China is now the continent's third most-important trading partner, behind the United States and France, and ahead of Britain.

Experts say Chinese companies see Africa as both an excellent market for their low-cost consumer goods, and a burgeoning economic opportunity as more countries privatize their industries and open their economies to foreign investment. Some textile manufacturers, for example, are reportedly investing in African factories as a way to get around U.S. and European quotas on Chinese textiles. "China is very pragmatic about this," Kang says. "It's cutting deals with governments all over the world."