China's Global Shopping Spree
Is the World's Future Resource Map Tilting East?
| China's global shopping spree reveals how the world's balance of power is shifting from West to East. Should we worry? Or should we adopt economic justice? This 2010 article was on TruthOut April 1; they got it from TomDispatch. The writer is at Hampshire College and the author of Rising Powers, Shrinking Planet. A documentary version of his previous book, Blood and Oil, is available from the Media Education Foundation. |
by Michael T. Klare
When it comes to procuring the resources that make industrial societies run, China is now the shopaholic of planet Earth, while the United States is staying at home. Hard-hit by the global recession, the United States has experienced a marked decline in the consumption of oil and other key industrial materials. Not so China.The Chinese are experiencing a sharp increase in the use of oil and other commodities. Giant Chinese energy and manufacturing firms -- many of them state-owned -- have acquired oil fields, natural gas reserves, mines, pipelines, refineries, and other resource assets in a global buying spree of almost unprecedented proportions.
As part of the recession of 2008, China’s exports declined and previously explosive economic growth slowed from record levels -- briefly. Since the beginning of 2009, China has experienced significant jumps in car ownership and home construction -- along with worries about the creation of a housing bubble. This has generated a rising demand for oil, steel, copper, and other primary materials.
Take oil. In the United States, oil consumption declined by 9% over the past two years, from 20.7 million barrels per day in 2007 to 18.8 million in 2009. In contrast, China's oil consumption has risen in this same period, from 7.6 to 8.5 million barrels per day.
In 2007, the country produced 3.9 million barrels per day and imported 3.7 million barrels. Chinese energy companies started buying foreign energy assets in Angola, Iran, Kazakhstan, Nigeria, Sudan, and Venezuela. These acquisitions were still dwarfed by those being made by Western giants like ExxonMobil, Chevron, Royal Dutch Shell, and BP.
Since 2008, Chinese companies accelerated their buying efforts. Zhang Guobao, head of the National Energy Administration: "The slowdown … has reduced the price of international energy resources and assets." Giant Chinese firms have gone on a global binge, acquiring resource assets of every imaginable type in staggering profusion in Central Asia, Africa, the Middle East, and Latin America.
Chinese mining and metals firms have been scouring the world for reserves of iron, copper, bauxite, and other key industrial minerals. Aluminum Corp. of China, acquired a 44.65% stake in an iron-ore project in Guinea. Chinalco owns a 9.3% stake in Anglo-Australian mining giant Rio Tinto and has been prevented from acquiring a larger share mainly thanks to Australian fears that China is absorbing too much of the country's energy and minerals industries.
Chinese companies are hardly alone in seeking control of valuable foreign resource assets. Major Western firms as well as state-owned companies in India, Russia, Brazil, and other countries have also been shopping for such properties. Few, however, have taken advantage of the relatively low prices and few have the deep pockets endowed by Chinese government agencies.
When the West recovers, they will discover that resource-rich nations that once directed their output -- and often their political allegiance -- to them now view China as a major customer and patron. Saudi Arabia sold more oil to China last year than to the United States, previously its largest and most pampered customer. "We believe this is a long-term transition," said Khalid A. al-Falih, president and chief executive of Saudi Aramco, the state-owned oil giant.
For now, Chinese leaders are avoiding any hint that could produce friction with the West. There is, however, no escaping the fact that growing Chinese resource ties with countries like Angola, Australia, Brazil, Iran, Kazakhstan, Saudi Arabia, Sudan, and Venezuela have geopolitical implications that are unlikely to be ignored in Washington, London, Paris, and Tokyo. Perhaps more than any other recent developments, China's global shopping spree reveals how the world's balance of power is shifting from West to East.
JJS: Should we worry? One result left out is that as China adopts more of the ways of the West and enshrines speculation in land and resources, they will foment a topsy-turvy business cycle and won’t be able to avoid their own recession. The only way they could avoid that -- and still spread prosperity -- is to adopt economic justice.
If they don’t and keep consuming, should we worry about our own consumption falling into second place? Or should we be taking the lead in stewarding the planet? A good way to do that is to implement geonomics, and charge users of land and resources while reward producers by removing taxes from their efforts. And whatever country goes first down this green path, the sooner the better.
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Jeffery J. Smith runs the Forum on Geonomics.
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China Can't Buy Enough Bonds as Dollar No Deterrent
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