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How Trump can bring China to its knees

5 3 0
03.06.2019

China's leaders are tormented by the "Malacca Dilemma". Their country is the world's largest importer of oil and natural gas. It is acutely vulnerable to an energy squeeze on seaborne supplies.

China knows Trump has a card up his sleeve.Credit:AP

More than 82 per cent of China's total crude shipments and much of its liquefied natural gas passes through the Malacca Strait between Sumatra and the Malay Peninsular. The US navy has supremacy over this maritime choke-point, though not necessarily for long. Energy security has long been a nagging worry among China's defence strategists. They have studied the Royal Navy's "limited blockade" of the Falkland Islands in 1982 as the modern textbook case of how maritime powers can tighten their grip.

The issue became all too real last week when Fu Chengyu, ex-head of the state oil giant Sinopec, said the country must prepare for the awful possibility of a US oil blockade. "It is not to be alarmist. It is an urgent reality," he told a forum in Shanghai.

China's strategic petroleum reserve will not be complete before the early 2020s. State media says stocks are barely enough for 40 days useage - Platts analysts think Japan can last 222.

The Malacca Dilemma is a metaphorical term. The US would first try to achieve its objectives through control over the world's dollarised payment and lending system. Even so, a commodity squeeze would entail a worldwide recessionary shock and an economic crunch in the US oil patch.

"It would cause the price of West Texas crude to crater. The Trump administration has absolutely no interest in doing that," said Ian Bremmer from Eurasia Group, the political risk firm.

"Trump has already rattled the cage with Huawei. This is all about technology, not resources - and the one place where China really is vulnerable is on semiconductors.

"There........

© The Age