The country's foreign oil dependency ratio, the ratio of crude oil imports to overall oil consumption, stands at 55.2 percent. It has grown 2.8 percent annually over the last 10 years. At that rate, China is about to become more dependent on foreign oil than the US, which relies more on imported oil than any other country in the world. By some measures, China has already surpassed the US in this regard, according to a recent report by the Ministry of Industry and Information Technology.

China's growing addiction to foreign oil will only add to its problems as the world's largest oil consumer. The problems are both political and financial in nature.

China spends about 1 trillion yuan ($156.32 billion) each year on crude oil imports, leaving it vulnerable to volatility in the global oil market. Because China imports so much of its crude oil, even a price increase of a fraction of percentage point adds billions of yuan to its crude oil bill.

Furthermore, China's dependency on foreign oil leaves it vulnerable to political threats from oil producing countries, which have the ability to manipulate supplies for their own political ends.

Facing these threats, how can China rebalance its energy mix?

Firstly, it has to reduce its dependency on crude oil in general, not just crude oil supplied from abroad. Because of its limited crude oil reserves, China's annual oil production has already reached a peak of between 180 million and 200 million tons. This means any new growth in domestic crude oil demand will have to be met with supplies from abroad, so China needs to find an alternative energy source.

Natural gas is one possibility. China does import natural gas, but it relies far less on foreign sources for natural gas than it does for crude oil. China's foreign natural gas dependency ratio is about 12 percent, leaving the country with a lot of room to increase its imports without running into the same foreign dependency issues it has with crude oil. China ought to put more effort into natural gas development to make it a larger part of its energy mix.

Of course, natural gas can only act as a substitute for a limited amount of domestic crude oil consumption. Transportation accounts for more than 60 percent of the country's crude oil consumption. Drivers are the largest consumer of crude oil in China, and their numbers are growing rapidly. China puts about 18 million new vehicles on the road each year. Because it is difficult to curb automobile demand, China should consider promoting electric vehicles.

China's excessive reliance on imported crude oil poses such a large challenge to the country's economic development that the central government should work to further diversify the country's energy sources to reduce domestic crude oil demand. At the same time, it must encourage residents to embrace energy conservation and urge industries to improve energy efficiency.