Capital's War

[Essay first published by]

With the dismantlement of the Soviet Union the security environment confronting China deteriorated daily, Western hegemonic states daily tightened the ring of encirclement around China. Its causes do not lie in ideological differences, but in the fact that current conventional sources of raw materials no longer support the rise of an Eastern Great Power with consumption levels equal to that of the West.

-- Zhang Wenmu (2004)[i]

A glance at the map also suggests that a country dominant in Eurasia would almost automatically control the Middle East.

-- Zbigniew Brezinski. (1997) The Grand Chessboard. American primacy and It’s Geostrategic Imperatives[ii].

Later this month George Bush, stumbling into the last year of his presidency, with his allies deserting him in droves, will make a grand tour of the Middle East. Along the way, he will make his first visit to a country that has remained steadfastly loyal to the American government, muted criticisms of American actions in Iraq and Israeli actions in Lebanon aside: Saudi Arabia.

And while the kingdom has announced it will ask George Bush to “pressure Israel to halt settlements in east al-Quds”[iii], the Americans may want to talk to King Hussain about some more frequent visitors to Riyadh: the Chinese government.

For while George Bush prefers to keep his allies at arm’s length, the Chinese have been busy consolidating ties with Saudi Arabia.

It is not all one way traffic. Saudi Defence Minister Prince Sultan and Ali al-Naimi, the Saudi Oil Minister, have both made frequent visits to China – the latter making six trips in the past two years alone.

The Chinese presence in Saudi Arabia then, is not entirely unappreciated. Understandably so: China is the 4th largest economy in the world in terms of GDP, and presents a growing market for Saudi oil that is especially welcome at a time when the relationship between Saudi Arabia and America has become strained. China, on the other hand, sees in Saudi Arabia’s oil reserves a possible source for its ever growing energy demands. Given that both countries oil industries are run by state companies, we can see this shift as one reflecting official policy.

A 1999 agreement between the two countries formalised the arrangement. It was agreed that Saudi Arabia will open its domestic oil and gas markets to China[iv], and in return China agreed to open its downstream sector (refining petroleum products for the end market) to Saudi firms[v]. The pay off for China has been rapid: the annual rate of Saudi imports from China has risen by 600% in aggregate terms[vi] over the past decade, and the Saudi’s are upgrading the famously inefficient Chinese oil refineries, which might finally allow them to process the low quality heavy oil the Gulf produces.

China’s realism?

But while people are taking note of the new relationship between Saudi Arabia and China, there is less certainty about what precisely the Chinese want. Approaches that try to explain Chinese foreign policy tend to be solidly realist. Indeed, there is an interesting split between the thousands of anguished articles which analyse what it might mean to have an “ethical foreign policy”, or try to trace the route of a “realistic Wilsonianism” (Fukuyama’s latest formulation[vii]), and the absence of any consideration of Chinese foreign policy outside of a narrow framework that sees China interested simply in fulfilling its energy requirements. The idea that China’s foreign policy might have a history does not seem to be considered by the op-ed writers of the Global North. Put simply, while people still talk about Wilson, Lin Biao is swept under the carpet of history: part of the history of communism we no longer want to connect to China.

Despite their ahistorical approach, the way the realists interpret China’s foreign policy is not entirely without merit. The argument was summed up in a recent article by Perry Anderson, a man we could never accuse of being ahistorical, in the New Left Review[viii].

Far the largest, by any measure, must be the emergence of China as the new workshop of the world: not just the rapid expansion of one outsize national economy, but a structural alteration of the world market, with a global impact closer to Victorian England than the more parochial settings of Gilded Age—perhaps even Post-War—America. Three consequences of China’s high-speed growth have followed. Domestically, it has created, amid dramatically increasing inequality, a substantial middle class attached to the status quo, and a more widespread ideological conviction, extending well beyond the middle class, of the benefits of private enterprise. Internationally, it has locked the PRC [People’s Republic of China] into a close embrace with the United States, through a level of economic interdependence surpassing that of Japan. Globally, it has in the past four years helped sustain—or unleash—world growth rates not seen since the sixties.

In this depiction, China becomes the rising capitalist dragon. Its rapid economic expansion creates unprecedented demand for raw materials, and it is largely this demand – notably, in the case of Saudi Arabia, for oil and gas – that has led to a foreign policy that seeks to assure a stable supply of materials. The need for a stable supply and the inter-linking of the Chinese economy, globally and in particular with America, has engendered a foreign policy that is careful not to upset the balance of power in the Middle East, something that China has been emphatically insisting it does not do through its arms sales to Saudi Arabia and Iran.

This vision of capitalist China would see America as the hand-maiden, waiting to give the running of the ship to China. And quarrels in such an arrangement (say, over Taiwan) would be seen as small disruptions on the periphery of capitalist development.

There are a lot of reasons to be suspicious of such a view, in particular, because it underplays the differences between Chinese visions of the world order and America’s, and because it neglects to try and understand Chinese policy through the prism of its history.

However, it must be conceded that this explanation seems to superficially fit the facts.

In 1993, China became a net importer of oil, and the Communist Party’s long-held policy of self-sufficiency had to be abandoned.

Saudi Arabia, the world’s largest producer of crude oil, has been wooed ever since. This relationship first came to light in 1998, when China sold 36 CSS-2 missiles and nine launchers to Saudi Arabia. Since the 1999 agreement alluded to above, there has been a steady strengthening of times, with both countries co-operating on downstream projects in China[ix], and more projects in the pipeline. China has also been involved in Saudi Arabia: in 2004, Sinopec won a contract for a natural gas project in the north-western block of the Rub al-Khali gas fields, an area that has not been open to foreign firms for the last twenty five years.

Such developments seem to fit the type of realist model sketched out at the beginning of this section. Rather than being concerned about human rights abuses in Saudi Arabia, or attempting to stir up revolution, China has been noticeably silent about Saudi Arabia’s domestic policy, a situation echoed in China’s relationship with, among others, Sudan and Angola, both countries that are hardly models of Western behaviour, and both are countries that, conveniently enough, have oil reserves not yet dominated by the Global North. As the quote from Zhang Wenmu that started this essay makes clear, finding sources of oil and gas out of the reach of America is a priority of Chinese energy policy.

The formula seems simple. A country with burgeoning energy needs seeks countries with oil and gas supplies; in exchange for supplies we offer hard currency, arms sales, and the absence of any critique of your domestic policy. It is a nice ad, and seems to fit what a western political scientist would define as realism: a pragmatic foreign policy without any idealistic goals, such as bringing democracy to the Middle East.

Yet, while the facts may seem to fit the explanation, we must remember Baudrillard’s comment, that “My principal objection to reality is, moreover, its character of unconditional surrender to any hypothesis that one can make about it”[x]

Which is to say, while Chinese actions may seem to fit into the explanations given by American analysts, we should be wary at accepting that these explanations really reflect the strategy of the Chinese government: to understand this, we would have to place these developments against the history of Chinese foreign policy.

Encircling the encirclers

The quote from Zbigniew Brezinski that begins this essay indicates the degree of fear that the Americans have about one country getting the upper hand in the region that used to be called the great chess board, and the correlative control that country would exert over the Middle East. America has always taking corresponding steps to ensure that Central Asia does not come to be dominated by one country; initially this applied to the Soviet Union, and thus the American support for the Afghanistan mujahedeen (ably assisted by the Saudis) from 1979.

However what looks like self-protection to the Americans can seem like, to paraphrase Wang Zenmu, the gradually tightening encirclement of China by Western hegemonic states. This relates to much older memories: China’s experience in the 19th century was of gradual encroachment by expanding colonial powers on its western and eastern borders. This fear of encroachment has continued in the People’s Republic of China. When America embarked on its policy of containment (the Korean War, support for a separate Taiwan), China, inspired by the United Front strategies developed in the Marxist thought of the 1930’s, tried to develop buffer zones around itself.

We would be too quick to dismiss these ideas as part of ancient history. There is still a concerted effort to limit Chinese domination of the pacific, and America’s development of military bases in Central Asia after 9/11 cannot be understood solely in terms of terrorism, without reference to limiting Chinese ambitions in the region. Furthermore, in several areas of current Chinese policy in the Middle East, we can see echoes of United Front strategies, and even Lin Biao’s concept of the People’s war. Some Chinese writing[xi] has ascribed an absolutely central role to Iran in the battle against US hegemony, and current Chinese support for Iran can be seen as a means of ensuring China maintains a link to Eurasia and the Middle East against any possible encirclement.

Encirclement was a common term in the PRC until recently. But while it has now vanished from diplomatic language and official documents, the Chinese policy towards Saudi Arabia testifies to the fact that many aspects of the thinking remain intact. In particular, the Chinese tributary system, which privileged coalitions based on non-interference, can be seen in the lack of criticism China makes of strategically important countries with which it has relations.

The nature of the deals China makes with Saudi Arabia also provide a clue to the type of foreign policy the PRC want to adopt. In Saudi Arabia, like in many of the countries China has recently strengthened relations with, the deals are exclusive, with China paying over the odds, so as to ensure they are not held hostage – either by the international oil market or by a competitors. In a similar fashion, while the arms deals China has concluded with Saudi Arabia can be seen as a way of offsetting balance of payments deficits created by large-scale oil deals, it is also true to say that this deepening of dependence and obligation on China resembles a style of foreign policy that has larger historical echoes.

Containing younger brother

Despite these echoes of a Communist past, America has no real reason[xii] to be worried about the relationship between Saudi Arabia and China. Given the problems the Saudis face, China is not a credible alternative to America. Furthermore, both Saudi Arabia and China are US allies, in their different ways. China’s economic inter-dependence with America, and that fact that they require a stable oil price in a volatile region, means it is unlikely they will rock the boat. Speaking of boats, it is ironic that the shipping lines upon which oil travels from Saudi Arabia to China are guarded by American vessels, and given the commitments of the Chinese navy around Taiwan, this is unlikely to change anytime soon. Finally, while China is building up its commitments in the Middle East, most of China’s emphasis is on the places the West fears to tread: Angola, Sudan and Russia[xiii].

Equally, despite recent friction with the United States, Saudi Arabia is in no position to disturb their relationship. That said, despite the continued dependency on the United States, Saudi Arabia has been expanding its economic connections throughout South Asia. It is not just benefiting from oil revenues and arms either. The Saudi economy now supplies the Chinese textile industry with petrochemical products, and the Chinese economy is an increasingly popular place for Saudis to invest and recycle the enormous liquidity produced by the current record-high oil levels, especially since America has become a less attractive country to invest in.

Saudi Arabia is now reliant on both countries, despite the benefits it is reaping, for ultimately, as a recent report by a Chinese scholar states, Saudi Arabia “cannot stop pumping oil without shattering its fragile social contract with its own population.”[xiv]

Between two worlds

Given such inter-dependence within a globalised economy, the realist perspective on Chinese policy towards Saudi Arabia would largely seem to be justified: the diversification of Saudi’s oil policy poses America no real threats in the short term. However, just because this is correct, this does not imply that by ignoring the history of Chinese foreign policy, they are not misunderstanding the subjective intentions of the Chinese government. That said, reading an unproblematic continuity between the isolationism of the Cultural Revolution and the opening up of foreign policy that began under Deng Xiaoping is untenable. In reality, neither of these perspectives are satisfying, what we need to do instead is to understand the way the objective conditions of China’s energy needs are seen through the prism of Chinese history, and why the currently apparent capitalist Chinese state emerged out of, and could only have emerged out of, its communist past.

On this point, in conclusion, it is worth recalling a remark made in a different context by the Hungarian philosopher, George Lukàcs[xv]:

The pre-eminently practical nature of the Communist Party, the fact that it is a fighting force presupposes its possession of a correct theory, for otherwise the consequences of a false theory would soon destroy it.


[i] Zhang Wenmu is a professor at the Centre for Strategic Studies in Beijing and a prolific writer on Chinese foreign affairs. This quote is taken from Radtke K. W. (2007) China and the Greater Middle East: Globalization No Longer Equals Westernization. Perspectives on Global Development and Technology 6: 389-416.

[ii] Some choice quotes from this book are available at:


[iv] Excluding upstream oil exploration and production.

[v] I have analysed this agreement in more detail in an earlier article. See The end of the affair?

[vi] Leverett, F. And Bader, J. (2005-6) Managing China-United States Energy Competition in the Middle East. The Washington Quarterly. (29(1): 187-201.


[viii] Perry Anderson. (2007) JOTTINGS ON THE CONJUNCTURE. New Left Review 48, November-December 2007.

[ix] South China Morning Post, October 5 2004.

[x] Jean Baudrillard (1993) Paroxysm: The Perfect Crime. Paris:Association Française d'Action Artistique.

[xi] See Radtke (2007:394) for a review.

[xii] Perhaps the only caveat we should add here is that the Sino-Saudi collaboration could pave the way for OPEC to accept payments for oil in a variety of different currencies, rather than relying exclusively on the dollar – a move which would have serious implications for the dollar’s status as the world vehicular currency.

[xiii] Andé Mommen. (2007) China’s Hunger for Oil: The Russian Connection.Journal of Developing Societies. 23:435.


[xv] George Lukàcs. (1971) History and Class Consciousness. Cambridge: MIT Press, 327.