As the one-year anniversary of the failed Darfur Peace Agreement approaches, a key question is whether China will continue to offer strong support to the government of Sudan, despite its role in the four-year old conflict. Or, will China increase pressure on Khartoum to accept an international peacekeeping force out of concern about damage to its international reputation.

A partial answer is that China's policy toward Sudan is driven by more than its growing appetite for oil and natural gas. Beijing also has a stake in positioning itself in Africa and globally as an alternative to western "meddling" on issues of human rights and governance.

Beijing is weighing these issues against against concerns about damage to its international position, reputational and otherwise, especially as it prepares to host the Summer Olympics next year, as I outline in the research note, below.

China, Sudan, and Darfur

The economic, political, and military relationship between China and Sudan is extensive, but not without limits. China is Sudan’s number one consumer of oil and its largest foreign investor. China is an important supplier of arms and equipment to Sudan. China has also been Sudan’s main defender at the United Nations and elsewhere against efforts to apply sanctions against Khartoum for its role in the Darfur conflict. China has also shown that it will apply pressure on Sudan out of concern about damage to its own international standing, particularly as Beijing prepares to host the Summer Olympics in 2008.

China’s close relationship with the government of Sudan is part and parcel of Beijing’s overall policy toward Africa, where China has recently emerged as one of the world’s most influential players. China’s involvement in Sudan dates to the early period of its independence in the late 1950s. But China’s fast growing energy needs have since the mid-1990s significantly elevated the importance Beijing attaches to its relations with Khartoum. Africa today supplies more than a quarter of Beijing’s imported oil needs, and Beijing is, along with the United States and France, among Africa’s most important trading partners. The political ties between China and much of Africa have also intensified in recent years, reflecting common interests as developing nations as well as common interest, in certain instances, in opposing interference by the west on human rights and related issues.

China explicitly offers diplomatic support, investment, and assistance to Sudan on a principle of “noninterference.” That principle provides a counterweight to international pressure in support of human rights, good governance, and democracy. And, it is the principle on which Beijing bases its relations with Khartoum, despite the Sudanese government’s role in the mass killings and genocide in Darfur.

THE ECONOMIC RELATIONSHIP. The basis of China’s interest in Sudan, and Africa more broadly, is principally oil. China became a net importer of oil in 1993, and its consumption has grown exponentially since then. China surpassed Japan as the world’s second largest consumer of oil, after the United States, in 2004. Its oil imports continue to grow. By 2025, it is estimated that China will import as much oil as the United States currently does.

Africa holds nine percent of the world’s proven oil reserves, modest compared to reserves in Saudi Arabia and Russia, but important as an alternative source of reserves, nonetheless. Sudan, in particular, provides unique opportunities and advantages for China and others because many western governments and firms have withdrawn from the country for political or security reasons.

Sudan is a relatively minor but new and growing source of oil. Sudan now accounts for 0.4 percent of the world’s total oil supply, producing roughly 360,000 barrels per day. It has proven reserves of roughly 560 million barrels.

American and Canadian firms withdrew from Sudan in the mid-1990s due to a combination of security and human rights concerns. U.S. regulations, first imposed during the Clinton administration, bar investment in Sudan’s oil sector. China stepped in to fill the vacuum. In 1999, less than 1 percent of Beijing’s total oil imports were from Sudan. Today, China gets 7 percent of its oil imports from Sudan. Roughly two-thirds of Sudan’s oil exports go to China. Oil revenue is a principle source of funding for Sudan’s military operations. As much as 70 percent of Khartoum’s oil revenues goes to military spending, according to a former Sudanese finance minister.

Specifically, the state-owned China National Petroleum Corporation is the largest stakeholder in Sudan’s main oil producing consortium, the Greater Nile Petroleum Operating Company. Since 1996, China has held a forty percent stake in the Nile project, which produces the majority of Sudan’s oil. Malaysia’s Petronas Nasional Berhad and ONGC Videsh Ltd., a unit of India’s Oil & Natural Gas Corporation, are the other major investors.

Chinese firms have also participated in numerous other energy related enterprises, including construction of hydropower and electric power. On the strength of its energy investments, Sudan is China’s third largest trading partner in Africa, after Angola and South Africa. It accounts for 13 percent of China’s total trade with Africa. China, in turn, is Sudan's largest trading partner, purchasing roughly two-thirds of Sudan's exports and providing some 20 percent of its imports.

China also offers substantial aid and assistance to Sudan. In February 2007, for example, Chinese President Hu Jintao traveled to Sudan to meet with Sudanese President Omar al-Bashir, as part of a eight-nation trip through Africa. The advance billing for this trip suggested the possibility that the Chinese government would use the visit to press Khartoum strongly to improve the situation in Darfur. The main results, however, appeared to be a new package of economic and other aid. Hu announced new economic agreements, including to write off $80 million of Sudanese debt and to provide an interest-free loan of $13 million for infrastructure projects, including a new presidential palace. China also pledged $5.2 million in humanitarian assistance for Darfur.

THE POLITICAL RELATIONSHIP. Although oil and other natural resources are the main attraction for China, Beijing’s political relationship with Sudan is also important.

Beijing’s sensitivity about interference in its domestic affairs is well known, and on this point there is some overlapping interest with some African countries. Many African states rallied to Beijing’s defense after western nations criticized and imposed sanctions on China in the wake of the Tiananmen Square crackdown in 1989. More recently, China has been concerned about efforts to redefine the UN Charter’s principle of noninterference into the “domestic jurisdiction” of states. In September 2005, the General Assembly endorsed the “responsibility to protect,” a principle which establishes an international responsibility to take action to prevent or stop “genocide, war crimes, ethnic cleansing, and crimes against humanity.” While China and Sudan joined the General Assembly consensus to endorse this principle, China is concerned about the precedent it sets, and its potential use as a political weapon.

Some African states share China’s historical mistrust of western motivations in pursuing a human rights agenda, although the sub-Saharan democracies are strong backers of the responsibility to protect. Beijing sees Sudan and other African states as natural allies in the effort to push back against efforts to condition state sovereignty on the behavior of states. China’s continued support of Sudan also enhances its position in Africa as an alternative source of support for governments that have chafed under western pressure to reform.

China is the world’s second largest economy, but is also the world’s largest developing nation. For the purposes of its relations with Africa, China self-identifies as the leader of the developing world, and there is evidence that this resonates with some Africans, who view Beijing as the developing world’s only permanent representative on the UN Security Council.

China has also provided much needed economic assistance and peacekeeping support for Africa. At the November 2006 Beijing Summit of the Forum on China-Africa Cooperation, for example, China announced it would cancel the debt of 31 African countries. In recent years, China has abandoned its traditional aversion to participation in UN peacekeeping operations, becoming the largest contributor of troops among the permanent five members of the Security Council. As of today, China has 1,200 troops in three missions in Africa, the world’s thirteenth largest contributor overall. China supported the Comprehensive Peace Agreement in Sudan that ended the 20-year-old civil war between the North and South, and contributes 565 peacekeepers to UNMIS, the UN mission that monitors implementation of the agreement.

China pursues its comparative advantage by emphasizing its policy of investment and assistance in Africa with no strings attached, in contrast to the IMF and other international donors, which have conditioned assistance to African governments on economic reforms and transparency. In the extreme cases of Sudan and Zimbabwe, Beijing has been willing not only to deepen economic and diplomatic relations, but also to protect the regimes against international criticism and sanction.

THE MILITARY RELATIONSHIP. China maintains a defense relationship with Sudan, despite the UN arms embargo that has been in place for Darfur since 2005. The Security Council imposed an embargo on all nongovernmental forces operating in Darfur in July 2004, and expanded it to include government forces as well in 2005. Sales to Khartoum are still permitted, although a UN panel, which visited Sudan in August 2005 to investigate violations of the embargo, recommended in April 2006 that the Security Council expand the embargo to the entire country.

Information about recent Chinese arms sales to Sudan is difficult to discern both because of China’s secrecy and because of the inherent difficulty of tracking the flow of small arms, which are below most international reporting thresholds. The UN Panel of Experts reported spotting Chinese-made military trucks in the Port of Sudan that appeared similar to those used on Sudanese Army bases in Darfur. Non-governmental organizations have reported that small arms used by rebels, janjaweed, and government forces in Darfur are of Chinese origin. There are also reports that Khartoum supplied Chinese-made automatic grenade launchers to the United Front for Democratic Change, a Chadian rebel group that also operates out of bases in Darfur. Russia and France are also suppliers of arms and military equipment to Sudan. In the last six years, Russia reported to the United Nations deliveries of 33 attack helicopters to Khartoum, eight combat aircraft, and 30 armored combat vehicles. (Between 2001 and 2004, France exported over $1 million of mostly small arms, spare parts, and ammunition.)

Beijing defends its sales to Khartoum as legal, and says that it requires all of its buyers not to transfer arms to other parties, including guerilla groups, a claim which is difficult to confirm independently. Zhai Jun, China’s Assistant Minister of Foreign Affairs, said in March 2007, “With Sudan, we have cooperation in many aspects, including military cooperation. In this, we have nothing to hide.”

In early April, China received Sudan’s Joint Chief of Staff. The Chinese Minister of Defense told his Sudanese counterpart that China was “willing to further develop cooperation between the two militaries in every sphere.”

CHINA AND DARFUR. China has been the chief impediment to strong Security Council action against the government of Sudan for its role in the mass killings and genocide in Darfur, although it has calibrated its position as international criticism has grown. The Security Council has passed six resolutions on Darfur in the four years since the present conflict began, but has yet to impose economic sanctions or other penalties on the government, although travel and financial sanctions have been imposed on four individuals implicated in war crimes. The Chinese Ambassador to Sudan, Zhang Dong, explained his government’s position in 2007, saying, “China never interferes in Sudan’s internal affairs.”

For example, China succeeded in watering down Security Council resolution 1556 (July 30, 2004). That resolution imposed an arms embargo on nongovernmental combatants in Darfur, required Khartoum to allow humanitarian assistance into Darfur, and also required the government of Sudan to disarm the janjaweed. The original draft would have established a committee to monitor Khartoum’s compliance; due to the threat of a Chinese veto, however, the final resolution included no enforcement mechanism. Two months later, China succeeded in weakening an effort to credibly threaten sanctions on Sudan’s petroleum sector and delayed by six months imposition of a ban on offensive military flights, which was imposed by UNSCR 1591 (March 29, 2005). China abstained on a resolution (UNSCR 1593, March 31, 2005) that referred indicted war criminals to the International Criminal Court (as did the United States). The following year, China resisted efforts to sanction Sudanese government officials charged with war crimes, whittling down from seventeen to four the list of those individuals subject to Security Council travel bans and financial sanctions (UNSCR 1672, April 25, 2006). China, backed by Russia, publicly threatened to veto an initial draft of that resolution.

In August 2006, China insisted that the Security Council’s resolution authorizing a peacekeeping force for Darfur include the condition that it deploy “with the consent” of the government of Sudan. In a compromise between China and the United States and Britain, the final resolution “invites” but does not require the consent of Khartoum. China and Russia abstained rather than veto the resolution.

The impact of China’s successful efforts to block strong action have been significant as they are seen by Khartoum and others as an indication of continuing Security Council division on whether and if so how to pressure the Sudanese government to take action to end the conflict.

China has calibrated its position as international opposition has grown. Beijing played a helpful role in gaining Sudanese acceptance on November 16, 2006 of a three-phase plan for deployment of a hybrid African Union/UN peacekeeping force of 22,000 troops. Since then, as Sudan has equivocated on the meaning of a “hybrid” force, China has begun to register its displeasure with Khartoum. During his February trip to Sudan, Hu reportedly spoke privately to Bashir about upholding his commitment to accept a peacekeeping force. In a public statement following the meeting, Hu added to China’s list of guiding principles for resolving the conflict the imperative to “improve the situation in Darfur and living conditions of local people.” After the visit, in February, China’s National Development and Reform Commission announced that Sudan no longer had preferred trade country status, removing certain financial incentives provided to Chinese companies that invest in Sudan. China’s ambassador to the United Nation also publicly expressed disappointment with Khartoum following President Bashir’s March 2007 letter to Secretary-General Ban Ki-moon rejecting several aspects of the UN’s hybrid force plan.

The degree to which China will push Sudan on Darfur remains an open question. There are strong reasons why China may not pressure Khartoum in a meaningful way. For Beijing, a decision to pressure Sudan would have consequences beyond the bilateral relationship, which is important in its own right. China’s quest for control of and access to natural resources is presently predicated on its ability to negotiate arrangements with governments who promise it exclusivity or preferential treatment. China’s comparative advantage is that it is willing to do business with governments that others spurn, and with no strings attached. A decision to pressure Sudan would erode China’s reputation as a genuine alternative, which could have broader economic consequences in Africa. It would also weaken China’s claim to be a standard bearer against unwanted western meddling, including international criticism of its own human rights practices.

On the other hand, China’s relationship with Sudan is worrisome to officials in Beijing, especially as Beijing prepares to host the Summer Olympics in 2008. Beijing’s interest in improving its international standing may shift its position towards more strongly pressuring Khartoum.