China imports around 70% of oil and around 50% of gas from the World. For an economic powerhouse, the fact that she is so dependent on the International market for her energy needs shows that China must be drawing some big and important lessons from what’s going around in the International energy markets because of the War in Ukraine.

The West has used sanctions and is thinking of using ‘price capping’ to directly attack the Russian energy industry. Russia is heavily dependent on energy exports to meet her annual budgetary needs. By not providing insurance & financial security to Russian shipments in International waters, West can literally choke Russia’s economy. The West, by far, is the only bloc capable of protecting global maritime shipments & projecting power on International waters.

If Russia’s exports can be curbed by using the dominance of “$” on International markets – shipping, finance, insurance etc., one can easily conclude that China’s imports too are vulnerable if China grows hostilities with the West over Taiwan. To overcome this crisis, China will focus on various aspects at the same time.

First of all, China will accelerate her ambitions of building a ‘blue water navy’ which is capable of protecting her shipping routes. If her own shipping routes are protected, she can encourage other countries to move away from “$” to “Yuan” while making energy deals. This way she can not only ensure that her own energy imports are safe but also ensure this for all the anti-western oil exporters like Russia, Venezuela & Iran.

Secondly, China will accelerate her strategy of buying oil & gas fields oversees. Once she can ensure security to her maritime route, she will purchase / explore oil & gas in open seas and protect them.

Thirdly, China will focus on quickening up the process of re-building her economy using renewable forms of energy. Although this is very tricky for China because of lack of industrial will & innovation in technology, but the Chinese are smart enough to pursue this sooner or later.