China surpassed the United States to become the world’s largest net oil importer in September, according to the U.S. Energy Information Administration. So far, China’s growing oil imports have not hampered China’s economic development — in fact, the country has effectively managed potential disruptions to its oil supply. As Øystein Tunsjø explains in his book Security and Profit in China’s Energy Policy: Hedging Against Risk, China has successfully developed the capacity to manage risks in the international petroleum market by insuring against potential oil supply disruptions through a number of hedging strategies.
China’s approaches have included successfully maintaining a favorable energy mix, pursuing overseas equity oil production, building a state-owned tanker fleet and strategic petroleum reserve, establishing cross-border pipelines, and diversifying its energy resources and routes. These hedging strategies reveal that the Chinese government is clearly concerned about securing oil supplies as China’s national oil companies continue their search for profit.
On December 3, the John L. Thornton China Center at the Brookings Institution hosted a panel discussion featuring Tunsjø and other China energy experts who examined the effectiveness of these strategies and offer insights into the future trajectory of China’s energy policy.