Chinese leaders discussed the project with Myanmar Prime Minister Khin Nyunt when he visited Beijing recently. China estimates that by 2020 its annual demand will reach 440 million, while domestic production will yield just 190 million tons. The shortfall of 250 million tons will have to be met by imports, largely from the Middle East, resulting in a high dependency ratio of 60%. Given the facts that around 80% of the country’s oil imports now pass through the Malacca Strait, and that China does not have a navy to protect the route, Beijing is reportedly distinctly uneasy about the risk of blockage should conflict break out in the region. This issue was first raised by Chinese President Hu Jintao at a Central Economic Meeting on 29 November last year, at which he asked officials to suggest possible solutions. Four alternatives were understood to have been suggested, with the first three involving pipelines from the SW province of Yunnan to Myanmar, from NW Xinjiang province to Pakistan, or from Tibet to Bangladesh. The fourth solution entailed helping Thailand to build its Kra Canal. The Bangladesh option was ruled out almost immediately, however, because it meant a pipeline passing through India. The Pakistani option is being considered in tandem with a railway line that China intends to build, linking up Kashi (Kashgar) in southern Xinjiang with the Pakistani port of Karachi in the Indian Ocean. But this route has to pass through rugged terrain with harsh climatic conditions, thus posing formidable technical difficulties. By comparison, the Myanmar option is more appealing, both politically and technically. The Myanmar option was proposed by Yunnan University’s Institute of SE Asia: according to its director, Dr Li Cheng Yang, the proposed pipeline could run from Kunming, Yunnan’s capital, to the Indian Ocean port of Sittwe (Akyab), a straight-line distance of about 1,250km. Compared to the current oil route via the Malacca Strait, this means a saving of about 2,000km. The cost of construction is put at about $2 billion. According to Dr Li, this pipeline is the preferred option because it also parallels another strategic railway that China wants to build, the Kunming-Yangon line, which would open-up an Indian Ocean outlet for its otherwise landlocked SW provinces. Meanwhile, Thailand is also canvassing for Chinese support for its Kra Canal project, estimated to cost about $28 billion. As an interim solution, Thai representatives at the Fifth Conference on Petroleum Trade in April proposed building a pipeline connecting both ends of the isthmus. Although this pipeline is estimated to cost only $ 600 million, using it means double-handling of oil  once at each end  and is therefore not economical in the long run. Sources added that Beijing was also rather hesitant about involving itself in the canal project, as that would affect Singapore.