A US-Iraqi War Will Affect China, China Has Had All-round Counter-measures

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Last updated at: (Beijing Time) Wednesday, November 06, 2002

A US-Iraqi War Will Affect China, China Has Had All-round Counter-measures

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As things show, it is quite possible that a war will break out between the United States and Iraq. For this the world feels deeply uneasy, the Chinese are also closely following the development of the situation.

Experts point out that once war breaks out between the United States and Iraq, China will unavoidably be affected. From their news covering, the correspondents have learned the Ministry of Foreign Trade and Economic Cooperation is conscientiously prepared for countermeasures to cope with the situation after a US-Iraqi war breaks out. In the various departments covered by the correspondents, the Ministry of Foreign Affairs is one of the departments that have more studies on the Iraq issue.

According to an official with the ministry's West Asian and North African Affairs Department in charge of Iraqi affairs, ordinary Chinese are very concerned about the influence US-Iraq war would exert on China. The Foreign Ministry receives many letters and phone calls every day, giving advice and suggestions on coping with US-Iraqi war. Regarding this, the Foreign Ministry official said that China has made detailed studies on each-step development and change of the Iraq issue as well as the influence that might be produced on China once a US-Iraqi war breaks out.

In an interview by a Global Times correspondent, Chen Weixiong, counselor with the International Department of the Foreign Ministry, said, "China has all along been working with various sides, appealing the United States and Iraq to avoid a war." And China has all along been conducting frequent contacts with the international community over the Iraq issue. Chinese leaders have repeatedly indicated China's stand and views on the Iraq question; Foreign Minister Tang Jiaxuan has maintained regular contacts with his counterparts of related countries including those of the other four permanent member states of the Security Council over the Iraq issue. Countries around the world pay more and more attentions to China's attitude. China has consistently advocated that "peace is valuable", which means China hopes that the Iraq issue would be settled politically, and this is also the universal wishes of the international community.

It Would Affect the Growth of China's Foreign Exchange Reserves

This correspondent has made a simple survey through the Internet. Among the netizens surveyed, nearly 70 percent convey such a piece of information: Once US-Iraq war breaks out, though far apart, it would produce many faceted influence on China.

Prof. Hou Ruoshi with the Research Institute on International Studies of Tsinghua University, and others said that the interest sphere of China as a large country is enlarging, a major event that happens in whichever corner of the world would produce economic and political influence on China. The influence of the last Gulf War on China was not so big, but things are different now. China's economic ties with the Middle East region are becoming increasingly close. China not only imports oil from the Middle East, but also exports labor to the region. It is reported that currently China is exporting labor to many Middle East countries, if US-Iraqi war erupted and laborers were called back, it would bring China economic losses. In addition, China is currently importing nearly 2 million barrels of oil each day, if US-Iraqi war broke out and oil price rose US$5 per barrel, China would lose US$10 million of foreign exchange per day.

A carefully calculated account shows: After a war broke out, China's marine transportation through the Gulf would possibly be compelled to suspend, some contracted projects undertaken in the Middle East would have to be stopped, foreign exchange income would decrease, plus increase in expenditure on oil import, the final result would be the decline in favorable balance international payment and thus would affect the growth of China's foreign exchange reserves.

Unfavorable to Oil Supply to China

The oil issue is the question on which experts focused in their talks about the influence US-Iraqi war would have on China. Prof. Hou Ruoshi repeatedly touched upon oil in his talks with this correspondent. He held that the crisis between the United States and Iraq exposed China's problems in the aspect of oil strategy: One is China has not as yet established a perfect oil reserve system; second China has not yet realized a diversity of oil import; third how to solve the energy-saving question after an oil price hike is likewise a long-term task. For this reason, we can say that the adverse effect of a future US-Iraqi war on oil supply to China can hardly be digested within a short period of time.

Mr. Su Jingxiang with the Research Institute on China's Modern International Relations held that although the world's dependence on oil from Iraq was not so big in recent years, once the United States launched attacks on Iraq, those affected would not be only a few countries, but would be the entire Middle East region. Under such circumstances, if the United States succeeded in "overthrowing Saddam", and established a pro-American regime in Iraq, and then indirectly controlled the source of oil and the world's oil price, then Europe and some East Asian countries, including China, would be pinned down by the United States.

Speaking from another angle, even if the United States had not achieved its aim of controlling Iraq, the Middle East would possibly be thrown in chaos and oil price would face a greater fluctuation. These two tendencies should arouse our attention.

Experts noted that the outbreak of US-Iraqi war would prompt China to speed up the establishment of an oil reserve system. This correspondent has learned from the departments concerned that China will allocate US$1.57 billion in order to cope with contingencies that might appear in the Middle East for the purchase of 50 million barrels of oil (equivalent to China's present 25 days of oil import volume), which are to be taken as strategic oil reserves. Relevant officials indicate that because oil price remains high, now is not a good opportunity to store oil as reserves. It is estimated that by 2005, China would have oil reserves equivalent to 30 days of import volume. The international energy agency also predicts in a recent report that by 2030, China's net oil import volume will increase from the present less than 2 million barrels per day to 9.8 million barrels per day.

Up to now, the situation in Iraq remains grim. Since we are living in a period of rapid change in which we have no choice, guarding against risk and appropriately grasping opportunities have become a long-term task for China.

This correspondent learned during his news covering that officials of government departments concerned and experts had one identical viewpoint, that is, China has grasped some ways and means to avoid international contingencies, and it is entirely possible to reduce losses to the minimum.

When US Is Plagued by the Mid-east Situation, China Can Get a Relatively Relaxed World Environment

In the opinion of the majority, although it is not quite possible for US troops to be bogged down in the quagmire, whether or not the US government can form a stable Iraqi government after the war still remains unknown. If US troops follow the practice as they did in Germany and Japan after World War II to station in Iraq for a long time, that would cause a rise in the national sentiments of Arab countries, and the Middle East would fall into a long-term turbulence.

US attacks on and re-establishment of Iraq would encounter many difficulties, Palestine-Israeli conflicts would be the first to bear the brunt. Saddem Hussein would possibly attack Israel in moment of desperation, and Israel would definitely respond tit for tat. As a result, the Iraq War would possibly evolve into an Arab-Israeli conflict. In addition, US troops would have to defend the boundary adjoining Iran for Iraq. When the stationing of US troops for a long time simultaneously in Afghanistan and Iraq--the two neighbors of Iran, Tehran would definitely heighten vigilance and strengthen war preparation.

Under such circumstances, plagued by the chaotic situation in the Middle East, the United States would have no time to attend to the east, and so its foreign strategy would have to devote energy to this hot spot. Against such a background, China could win a number of years of a relatively relaxed international environment.

If US Troops Take Prompt Military Actions, the Hawks Are Likely to Quickly Pressure China

What influence would be brought on Sino-US relations if US-Iraqi war broke out? In the opinions of experts, if the United States could smoothly establish a stable, pro-US Iraqi government as it wished, although it would further its cooperation with China on international issues within a short period time, from the mid- and long-term points of view, the pressure sustained by China would possibly increase step by step.

According to the estimate of the London International Strategy Research Institute, the strength of current Iraqi troops is far inferior to what they were during the period of the Gulf War. It is impossible for the Iraqi troops to have a trial of strength with US troops. If US-Iraqi war broke out, two possible situations may occur in this "one-sided" war process.

The first situation is that US troops may fight and win battles of quick decision, followed by the downfall of the Iraqi government. If such a situation should appear, the Iraqi government formed after the war would basically submit to the United States, oil output would increase, oil price on the world market would therefore witness a steep fall. With an oil price fall and a stock price rise, the US government would get more tax revenues. Most projects in Iraq's national reconstruction would possibly fall into the hands of the United States which, in turn, would make huge amounts of foreign exchange. Such a result would, on the one hand, further augment America's strength, on the other hand, would make it possible for the United States to further implement its "pre-emptive strike" strategy and bring pressure to bear upon its non-allied countries, including China. Many US right-wing politicians have pointed out the need to "weaken China, a potential opponent, with iron hands", while it is still in the process of restructuring.

Another situation regarding the war process is that the war would last over one year, or even a longer time. If US troops encountered street fighting, even if it could finally win and foster a pro-US regime, it would suffer huge depletion. If the war dragged on without end, the US economy would suffer one disaster after another. According to the estimate made by the budget office of US Congress, US monthly expenditures on its troops sent to Iraq would range between US$6 billion to US$9 billion. If calculated on the basis of two years, the US State treasury had to take out at least US$150 billion, and US government's 2003 fiscal budget deficits would reach at least US$300 billion. Huge deficits could limit the US government's ability to cope with the crisis, making it hard for the government to give full play to the budgetary role and exercise macroeconomic control.

To avoid taking the same disastrous road followed by the old Bush that led him to win the war but lose his election, George W. Bush would likely continue to light the fire diplomatically, so as to dodge difficult domestic economic problems, thereby maintaining existing popular support. In that case, Sino-US relationship is a subject matter that can be given the fullest reign, conflict between the two countries would help him realize his wishes for re-election. Condoleeza Rice, assistant secretary of state in charge of national security affairs, once said: We know full well that China is a large country facing unresolved, vital interests, particularly when involved in questions concerning Taiwan and the South China Sea. China is dissatisfied with US work style in the Asia-Pacific region, this implies that China is not a country 'maintaining the status quo', but rather it hopes to change the balance of force in Asia so as to benefit itself. This point alone is enough to make China become a strategic competitor, and not a 'strategic partner' as called by the Clinton administration. This makes clear the intention of US hawks who hope that China would stay where it stands.

The above article is by quest correspondent Wu Junfei and correspondent Zhang Mian of Global Times, People's Daily.

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