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Energy prices, competition add to strains between US and China

Not quite an ally, not quite an adversary, China with its exploding appetite for energy is helping drive up world oil prices, and putting still more strain on its relationship with the United States.

The importance stretches far beyond the gas pump, although that is where Americans are left wondering what’s behind the run-up, why it can’t be stopped and who is to blame. China is just one factor. Also at play are worries about future supplies and production disruptions in Africa or the Mideast. Still, the “China factor” is big. By some estimates, car ownership in China is growing so fast, with the expansion of its middle class, that by 2030 its traffic will be seven times or more what it is today.

China already is the world’s second largest energy consumer, after the United States. That explains why senior-level economic officials from Beijing and Washington are meeting in Annapolis, Maryland, this week to discuss a range of hot-button issues, including the $256.2 billion US trade deficit with China, an all-time high, and prospects for increasing cooperation on energy issues.

Looming in the background to these and other discussions about US competition with China is the prospect of armed conflict, if not over China’s demand for the return of Taiwan, then over energy resources. China has invested greatly in modernizing its military in recent years, although its budget, even by the Pentagon’s high-end estimate, is hardly one-quarter what the US spends on defense. “Really what it comes down to is not whether the last barrel of oil goes to them versus us because there is always another barrel of oil, it just gets more expensive, just like gold or copper or what-have-you,” said Drew Thompson, the director of China Studies at the Nixon Center, a think-tank. (The Economic Times)-