Since the implementation of the “Reform and Opening-up” policy, over the past three decades, China has maintained a rapid pace of economic growth with an average annual GDP increase of 9.8%. This strong economic performance has very much been underlined by the necessary build-up of accompanying energy infrastructure and the rationalising of energy markets.
The Central Asian and Caspian Regions are buttressed by considerable wealth in energy resources, especially in hydrocarbons. In recent years, rapid growth in energy cooperation between China and the Central Asian countries has been achieved in terms of volume and importance, ranging from the extraction of petroleum and uranium resources to more downstream areas such as refining, pipeline operations and electricity grid transmission. In terms of resource bases, many productive partnerships have also been achieved in renewable energy sources such as solar, wind and hydropower.
While pipelines and accompanying projects gather momentum in recent years, potential risks such as emergency response mechanisms and divergence of the allocation of new transit capacity from different counterparts along pipeline routes have become the main issues that China needs to tackle in terms of securing its national energy supply. However, the legal protections stipulated in existing bilateral intergovernmental agreements or multilateral cooperative mechanisms under the frameworks of the Shanghai Cooperation Organisation seem bleak and insufficient to ensure a stable energy flow through established and planned pipelines. Moreover, some of China’s investments are protected by first generation bilateral investment treaties, some provisions of which now seem rather conservative and less investor-oriented. A more efficient and comprehensive international legal framework, like the Energy Charter Treaty, is needed to ensure the security of energy flows to China.