Crude 'Oil Mercantilism'? Chinese Oil Engagement in Kazakhstan

Abstract

In 1991, the state-owned China National Petroleum Corporation (CNPC) commenced the first Chinese national oil company equity oil investment overseas when it invested in a UN-sponsored oil sands project in Canada. Since then, the CNPC and the other Chinese national oil companies (Sinopec and the CNOOC) have steadily increased their equity oil investments in developing nations, sometimes with the assistance of various Chinese party and government organs. Viewed in the context of China’s burgeoning oil consumption and plateauing oil production, these investments have led to accusations by Western analysts and policy makers that China is engaging in “mercantilism” by “locking up” oil supplies from vulnerable developing nations to assuage their mounting energy-security woes. Through examining Chinese oil engagement in Kazakhstan, this paper will analyze whether accusations of “mercantilism” can adequately capture the complexities and dynamics that drive Chinese oil company investment in developing nations. This will be achieved by first surveying contemporary debates regarding Chinese oil engagement abroad and then linking these debates to historical and contemporary conceptualizations of mercantilism. This will allow for a new multi-faceted definition of “oil mercantilist” behaviour, which will shift the label from a statement of ethical value to a statement of empirical fact that can be tested. This definition will then be used to examine the institutional contexts in China that support and counter contemporary accusations of oil mercantilism, and then to explore Chinese oil engagement in Kazakhstan from 1996 to the present day. This paper will contribute to emerging literature that suggests Chinese oil investment and diplomacy cannot be simply understood through mercantilist perspectives. Analyses of Chinese oil engagement need to recognize the important influence that China’s institutional reforms have had on Chinese national oil companies’ increasingly commercial approach to foreign investment, in addition to the unique host-country contexts China encounters through its oil investments.