China’s economic and energy security is inextricably tied to shipping routes across the Indian Ocean and through the Strait of Malacca, motivating a growing military and commercial footprint in the region, to the dismay of India, and concern of its competitors in the Western Pacific. But while China’s security incentives are understandable, the effects are fraught, as worried rivals begin to balance against it, and Beijing’s attempts to marginally diversify its energy routes increasingly expose it to partners’ internal instability.
China’s One Belt One Road initiative (OBOR) is an amorphous program to leverage trillions of dollars of government loans and state enterprise investments in infrastructure projects to link China with trading centers in south and central Asia, the Middle East, Africa and even into Europe. Along critical energy and trade routes through the Indian Ocean, China has or is building deep-water ports in Sri Lanka and Pakistan; a military logistics base in Djibouti (and is seeking control over its ports); and an oil and gas pipeline in Myanmar.
Unable to pay down Chinese loans, Sri Lanka was forced to grant China a 99-year lease for control of its port at Hambantota last year, suggesting that China was using its OBOR initiative for “debt trap diplomacy.” After loading struggling economies with debt they cannot repay, China leverages its role as creditor to coerce them into ceding control over strategically important ports, resources and commercial routes. In the Indian Ocean region, Djibouti, Pakistan (where it already took control of the port at Gwadar), and Maldives are the most exposed to OBOR-related debt.
Since the Chinese companies involved in the largest OBOR deals are almost always state-backed enterprises, there is concern that facilities that begin as commercial footholds could morph into military ones. Chinese naval deployments in the Indian Ocean have grown over the last several years and it appears to be building up capacity to conduct submarine operations in the region. India was deeply concerned earlier this year that China would use a domestic political crisis in Maldives to establish a military foothold, sparking a pseudo-naval standoff.
Overcoming China’s “Malacca Dilemma”
Driving China’s expanding naval footprint in the Indian Ocean and its emphasis on energy and shipping infrastructure is the vulnerability of its energy imports being dependent on a single chokepoint, the Strait of Malacca at the entrance to the South China Sea. Eighty percent of China’s oil imports come through this vital passage.
Major U.S. allies like Japan and South Korea also depend on the Malacca Strait and South China Sea routes for their energy imports. But a greater share of China’s energy imports travel these routes and, unlike Japan and South Korea, it cannot divert its energy shipments to alternate routes that bypass the region in the event the Strait of Malacca is disrupted.
The only way China can overcome this “Malacca Dilemma” is by building overland pipelines that it’s tankers can offload in the Indian Ocean and avoid going through the Strait altogether.
The first of these pipelines was a long-delayed project opened in Myanmar last year that allows tankers from Africa and the Middle East to offload oil at a terminal on Made Island in the Bay of Bengal, which is then piped across Myanmar to Kunming in China’s Yunnan province.
Another potential port and pipeline project in Bangladesh has thus far failed to make progress, but China has not given up on the venture.
In Pakistan, China had already been building a deep-water port and free-trade zone at the former fishing village of Gwadar, and just ahead of this year’s Boao Forum in Hainan, Pakistani and Chinese officials inked a memorandum of understanding to begin constructing a pipeline to join it with China’s Xinjiang Province.
Growing Strategic Exposure for Declining Advantage
China’s Indian Ocean pipelines may only ever have marginal effect on its Malacca Dilemma. Unless China can reverse the current trends and dramatically decrease its reliance on imported crude oil, the added pipelines will not have the capacity to decrease China’s dependence on the Strait of Malacca, only to slow the rate at which that dependence – and vulnerability – is expanding.
The Sino-Myanmar pipeline can transfer about 160 million barrels a year. According to the U.S. Energy Information Agency (EIA), China imports more than half of the crude oil it consumes, and eighty percent of that oil comes through the Strait of Malacca – almost two-and-a-half billion barrels a year. That means China’s Myanmar oil route can divert a little less than seven percent of the oil that normally arrives through the Strait. But the EIA also estimates that China’s annual oil consumption will continue to increase by around 2.6 percent for the next several decades. This year, that means an increase of over 110 million barrels. By 2030, the annual increase in demand will be greater than the static transmission capacity of the Myanmar pipeline.
This disparity suggests that additional pipelines cannot decrease China’s reliance on the Strait of Malacca as an energy route; a shipping disruption there would still be strategically and economically catastrophic. More problematic for China is buying this marginal energy security at the cost of new strategic exposure and risks by tying itself to the caprice and internal security of historically unstable countries like Pakistan and Myanmar, raising the question of whether China would intervene militarily inside the borders of its OBOR partners if its pipelines are threatened by internal strife.
China’s Geographic Challenge
Analysis of the aggregate military balance between India and China rests decisively in the latter’s favor, with China enjoying a three-to-one advantage in major warships and a nearly four-to-one advantage in attack submarines. But the presence of major U.S. and Japanese fleets in the Western Pacific means that the bulk of China’s navy will remain concentrated in its home waters. With few comparable extra-regional security obligations dividing its forces, it is much easier for India to maintain local superiority over Chinese ships deploying to the Indian Ocean which will lack easy logistical support, even with the proliferation of Chinese-controlled commercial ports.
Significant challenges to projecting power in the region would remain even if China is able to negotiate basing rights and access for its forces at some of the those commercial sites. While it might appear that a constellation of potential bases in Djibouti, Maldives, Sri Lanka, and Bangladesh would leave India surrounded, they are also geographically isolated with long lines of communication between them, making it easier for India to concentrate decisive forces to overwhelm sparsely distributed Chinese warships.
China’s expansion into the Indian Ocean is a logical attempt to mitigate its vulnerability to the shipping chokepoint at the Strait of Malacca, but it remains geographically disadvantaged against India, which views its spread with apprehension. This geographic challenge, in combination with the marginal additional energy security it stands to gain from its pipeline projects and the potential for new security obligations those projects could incur, may leave China with more serious problems than the one it set out to solve in the first place.
Steven Stashwick is a writer and analyst based in New York City. He spent 10 years on active duty as a U.S. naval officer with multiple deployments to the Western Pacific. He writes about maritime and security affairs in East Asia and serves in the U.S. Navy Reserve. This article has previously been published on the EastWest Institute Policy Innovation Blog.