China is using its 'one belt, one road' infrastructure plan to shore up its energy security

We have written recently about the boom in infrastructure projects in Australia, but China with its “one belt, one road” project is also undertaking a major infrastructure investment.

China’s Belt and Road Initiative (also known as One Belt, One Road) is one of President Xi Jinping’s most ambitious foreign and economic policies. It aims to strengthen Beijing’s economic leadership through a vast program of infrastructure building throughout China’s neighbouring regions.

The Belt and Road Initiative aims to connect Asia, Europe and Africa along five routes. The Silk Road Economic Belt focusses on:

      1. Linking China to Europe through Central Asia and Russia;
      2. Connecting China with the Middle East through Central Asia; and
      3. Bringing together China and Southeast Asia, South Asia and the Indian Ocean.

The 21st Century Maritime Silk Road, meanwhile, focusses on using Chinese coastal ports to:

      4. Link China with Europe through the South China Sea and Indian Ocean; and
      5. Connect China with the South Pacific Ocean through the South China Sea.
Source HKTDC

As noted by S&P Global, energy security is a key focus of the belt and road initiative. They point out that “BRI projects to date have focused on transport and energy infrastructure and help bypass the Straits of Malacca”.

The importance for China to develop alternative routes to the Middle East is highlighted by this satellite photo supplied by S&P Global. It shows the location of all the world’s oil tankers at a point in time. The concentration of “red dots” shows the vulnerability of current energy supply routes to China and the rest of Asia.

Source: S&P Global

Australia offers another opportunity for China (and other East Asian countries) to diversify their energy sources. While we are unable to replace the oil sourced from the Middle East, we do offer an alternative source of LNG which is being used more and more in gas powered electricity generation.

For more on the benefits of infrastructure see our Smart Infrastructure Report.

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