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China’s bid to break free from oil

China’s bid to break free from oil
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Image: China electric cars – Courtesy of www.fleetcarma.com

By Charles F. Moreira, Editor

Faced with a threat to her national sovereignty from the energy geopolitics by the big powers, especially the United States and the United Kingdom, China is pushing her development of New Energy Vehicles as part of her “Made in China 2025” technology project, initiated by President Xi Jinping and the Communist Party of China.

China’s government spent the equivalent of US$48 billion to subsidise electric car development between 2009 and 2017.

According to an article in New Eastern Outlook by New York-based political analyst Caleb Maupin, 746,000 New Energy passenger cars were sold in China between January and October 2018, whilst China’s manufacturers have created 358,000 non-fossil fuel buses between 2014 to 2017, and by the end of 2018, all buses and taxis in Shenzen will be electric and the central borough Dalian city is expected to follow suit by 2020.

Meanwhile, according to July 2017 edition of the McKinsey Quarterly report, China has emerged as a leader in both the supply of and demand for electric vehicles.

Approximately 375,000 electric vehicles (EVs) were manufactured by Chinese OEMs in 2016, or 43% of electric vehicles produced worldwide, up from 40% the previous year.

OEMs from around the world, including China’s own, also produced approximately 332,000 electric vehicles within China in 2016. The country now has the largest number of electric vehicles on the road, surpassing for the first time the number of EVs in the United States.

According to Maupin, in contrast on 3 December 2018, Lawrence Kudlow of the White House National Economic Council announced cuts in government subsidies to US automotive manufacturers to make electric cars introduced under the Obama administration. This announcement follows the agreement between Xi Jinping and US president Donald Trump to end China’s 40% tariff on US made cars.

Overcoming its weaknesses

China’s rapid modernisation and industrialisation has increased its demand for oil but with little domestic oil resources, China has to import oil from many different countries such as those in the Middle East. With the global oil market being dominated by bankers in Wall Street and London, and especially since China imports oil by sea, this puts her at risk. Increased tensions between US and China’s militaries in the South China Sea adds to the risk.

As a result, China is currently working with the government of Nicaragua on a US$40 billion project to construct an alternative route for trade vessels which bypass the US controlled Panama Canal.

At the same time, by her drive to develop electric vehicles and deploy electric buses, China hopes to lessen her dependence on oil.

Whilst an increase in the number of electric vehicles on the roads will correspondingly increase demand for electricity, hence increase energy demand by electricity generation stations, however according to figures from the International Energy Agency, oil comprised a mere 4% of primary energy sources used to generate the 25,570 terawatt hours of electricity worldwide in 2017.

The largest primary source was coal (38%), followed by renewables, including hydro power, (25%), gas 23% and nuclear power (10%). So a reduction in the use of petroleum to power vehicles will drastically reduce not any China’s but any country’s dependence on oil as a primary energy source for electricity generation to power electric vehicles.

Fossil fuels and world domination

Oil was discovered on the Arabian Peninsula in 1938 and since then, the global reliance on fossil fuels has enabled Wall Street and London to dominate the world economy, so these powers see any progress in the development of alternative energy sources as a threat to their continued dominance.

So, many countries worldwide, including Iran and Russia, which are dependent on fossil fuels have joined China in finding ways to break free of this dominance.

Meanwhile, besides leading the world in New Energy Vehicle development and deployment, China is also looking into the development of driverless vehicles.

Senior Blackberry executive Kaivan Karimi was quoted as saying, “When autonomous driving takes off, I believe China will be the leader, just by the fact that you will have the infrastructure in place, which means you will be producing and actually putting cars on the road versus everybody else, who will still be trying because the infrastructure is not in place”.

Dominance and the fall of Rome

Maupin attributed the fall of the Roman Empire to its refusal to embrace technological progress, where instead of developing new farming techniques and methods of producing tools and goods, the Romans resorted to conquest of other lands and to plundering other people’s crops and resources, resulting in the gradual decline in Rome’s own agricultural output.

“The Roman Empire fell because it stopped trying to advance productive forces. It entered an arrangement with the world, where its rule depended on holding back social progress and beating down other nations and peoples”, wrote Maupin.

“China, on the other hand, has rapidly transformed itself and restored its position as a global superpower with the opposite approach. The Chinese Communist Party is guided by Marxism and historical materialism and sees human progress as essential. Furthermore, in 1978 China launched its reform and opening up, and openly repudiated the ultra-leftist clique known as the Gang of Four, who distorted Marxism and worshipped poverty.

“History is marching forward, and China intends to march forward with it. The question remains, however, will the United States continue to try and hold back an outmoded economic setup?

“While Wall Street and London bankers are certainly making super-profits, the people of America, like the ancient Romans, are seeing their standard of living and productive capacity decreased.

“Will they (the American people) be able to force their government to change its priorities?

“Only time will tell”, Maupin concluded.

 

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