The Economist - without doubt the world's best weekly "newspaper" - has a great analysis of China's Energy challenge which is worth a read.  China Coal Watch readers will find much of the analysis familiar.

From the Economist and Economist Intelligence Unit ViewsWire:

China's energy challenges are monumental. The economy is in the midst of a highly energy-intensive stage of growth, but domestic reserves—especially of oil—are far from adequate to meet burgeoning demand. As a result, the government faces a series of policy challenges: to expand supply while increasing efficiency, to allow fuel prices to increase and risk more social unrest, and to acquire energy assets overseas while China's international conduct is under close scrutiny. If the government fails in any of these delicate tasks, in the medium to long term the resulting energy crunch could pose a serious threat to China's economic growth and political stability—and hence to the global economy as well.

... China's energy needs are also having geopolitical repercussions, as the country's relative paucity of domestic oil reserves prompts efforts to expand imports and secure supplies abroad. For example, energy competition is a factor in China's territorial disputes with its neighbours, particularly in the East China Sea (with Japan) and the South China Sea (with eight South-east Asian countries). L... Acute energy shortages in China would have serious economic and political consequences both at home and abroad. (This was illustrated clearly in 2004 when severe energy shortages at home resulted in a sharp increase in China's demand for imported oil, causing international energy prices to soar to 20-year highs.) 

... China's political stability, in turn, depends on sustained economic growth. The ruling Chinese Communist Party (CCP) has staked its legitimacy on its ability to deliver ever-wider prosperity. As a result, the government's focus on energy security is not merely an economic necessity—it is also a fight for political survival.

... To sustain rapid economic growth, the overarching priority of the government is to meet soaring demand for energy. Given China's limited domestic reserves of most fuels except coal, this will inevitably require a steady expansion of imports—imports of oil, in particular, are set to surge as industrial demand expands and sales of vehicles boom.

... according to the US Energy Information Administration, foreign supplies will account for a dizzying 77% of China's total oil consumption, compared to the current level of less than 50%.

... Meanwhile, China has embarked on a massive campaign to augment its domestic power-generation capacity. An estimated 81 gw of new capacity was added in 2006, and the government plans to invest a further Rmb600bn (around US$79bn) in new power plants during 2007-12, with the goal of reaching 1,000 gw of generating capacity. The vast bulk of this—around 600 gw—will still be coal-based, but the contributions of nuclear, gas and alternative energy are targeted to rise sharply.

1000 GW generating capacity is equal to that of the United States today.

... Ultimately the key to reducing energy intensity will be a move away from investment-led economic growth—a long-term transition that is unlikely to have made much headway by 2010.

... China's import-dependence will in turn continue to undermine its efforts to be seen as a responsible stakeholder in the international system. As a relative latecomer to the global scramble to secure energy supplies, China's overseas investment options are limited. Its involvement in pariah states such as Sudan (where oil reserves are still relatively untapped) will expand ...