IEEJ: November 2012 All Right Reserved
Special Bulletin
A Japanese Perspective on the International Energy Landscape (109)November 1, 2012

U.S. and China Electing Next Leaders
Ken Koyama, PhD
Chief Economist, Managing Director
The Institute of Energy Economics, Japan
November is scheduled to see very important events that would influence futureinternational politics, the global economy and the international energy situation and attract globalattention. Following a U.S. presidential election on November 6, the Communist Party of China will
start its National Congress on November 8 to elect the next party leadership. The United States andChina, which exert dominant global influences on political, economic, military and energy situations,are electing their next respective leaders.
In the U.S. presidential election campaigns, incumbent Democrat President Barack Obama
and Republican Mitt Romney are waging a close race. Obama had reportedly been leading Romney
before the Republican candidate took advantage of the October 3 presidential debate to roll backObama. Since then, their race has remained very close. A Reuters/Ipsos poll, released on October 31,
put the popularity rating at 47% for Obama and 46% for Romney, indicating a neck-and-neck race.
The two candidates are reportedly tied in financial resources and support from media organizations.
In states where support is dominant for Obama or Romney, Obama is expected to win more electors
than Romney. But the final result depends on which will win in swing states such as Florida, Ohioand Virginia. It still remains in the balance. On October 29, Hurricane Sandy landed in southern New
Jersey and wreaked havoc on New York City and other regions, forcing both candidates to canceltheir campaigns planned mainly in battleground states. This has complicated the presidential race.
How and whether damage from Hurricane Sandy would affect the presidential election result is still
uncertain. The voting day is coming as Obama and Romney race neck and neck.
Clearly, the United States is an important country that has the world’s greatest influenceson politics, economy and other key fields. Who will lead such country and what policy the leader
will adopt are naturally attracting global attention. During presidential election campaigns, thecandidates presented their respective policies and battled a war of words. As a result, they sharepolicies in some areas and differ over others. But they have clear ideological differences – “biggovernment versus small government” and “equal results versus equal opportunities.” Therevitalization of the U.S. economy is a top priority challenge for both. Over how to revitalize the U.S.
economy, however, they have different policies based on their ideological differences.
Regarding energy policy, both candidates give priority to U.S. domestic oil and gas
development. They apparently believe that it is important for the ongoing expansion ofunconventional oil and gas production to bring about the United States' self-sufficiency in energy
and cuts in domestic energy prices and costs that would help promote U.S. industry including
manufacturers, to expand relevant employment and to enhance the U.S. economy's international
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IEEJ: November 2012 All Right Reserved
competiveness. In this sense, we can expect U.S. oil and gas production to expand whichevercandidate is elected president. As for the promotion of energy self-sufficiency, Romney gives
priority to supply expansion, while Obama emphasizes both supply expansion and energy efficiency
improvements (tougher fuel efficiency standards). Obama has promoted and implemented theEnvironment Protection Agency's regulations on carbon and other air pollutants under the Clean Air
Act in regard to global warming, while Romney has criticized any excessively tough regulations.
Regarding oil prices and financial problems, Obama has tried to toughen market rules, whileRomney has raised opposition to excessive market regulations. These differences are interesting.
External energy strategies are a matter of concern regarding energy problems. Attracting
global attention is how the United States will change its Middle East policy while promoting energy
self-sufficiency. Particularly on the Middle East policy, a matter of concern to energy experts may be
how the next president will address the Iran problem. The United States' policy on Asia including
China is also important in regard to its external energy policy. There are many attention-attracting
points linked to the U.S. energy policy for Japan, including whether Washington will approveliquefied natural gas exports to Japan.
On November 8, the Communist Party of China will launch its 18th National Congress toelect its new leadership. The National Congress has been convened every five years since 1977 as
the party's highest decision-making body to elect the new party leadership and basic policies. The
coming congress is set to elect the new party leadership including the CPC Central Committee's
Politburo Standing Committee members. Among the present Politburo Standing Committee
members, Chinese Vice President Xi Jinping is expected to become the new CPC general secretaryand Vice Premier Li Keqiang is likely to take up the premiership. Some analysts expect that thenumber of the Politburo Standing Committee members could be reduced to seven from the present
nine at the National Congress. The expected election of Vice President Xi as general secretary, Vice
Premier Li as premier and new Politburo Standing Committee members is attracting global attention.
Everything China does has become a global matter of concern as China has rapidly
expanded its power and its presence in and influences on the international community over recentyears, is now reputed to be forming the Group of Two along with the United States and is growingly
viewed as pursuing an "assertive diplomacy" and "reforming the status quo." It is natural for theworld to pay attention to such country's election of its leadership. At the same time, China hears
domestic rumors saying that a power struggle involving the leadership has emerged since Bo Xilai
was dismissed as secretary of the CPC Chongqing Committee last April. How the new Chinese
leadership to be elected at the National Congress will take power and stabilize its regime will exert
various impacts on China itself and other countries. Particularly, the new leadership's helm ofdomestic and external affairs will be a very important challenge at a time when an economic growth
slowdown has emerged with social discontent and worries growing. The lineup of the new Chinese
leadership and the transition of power to the new leadership are thus attracting attention.
Regarding energy, China has replaced the United States as the world's largest energy
consumer. China's economic trend, energy supply/demand conditions, energy policy and externalenergy strategy including efforts to secure overseas resources have great influences on theinternational energy situation. Japan, which seeks to achieve the so-called three Es – energy security,
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environmental conservation and economic efficiency– based on the energy situation after the March2011 earthquake and tsunami, must closely watch the Chinese situation in consideration of thesevere bilateral tensions.

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