Beijing’s Billions Buy Up Resources
October 3rd, 2010Via: Independent:
While much of the developed world is baulking at its debts in the aftermath of the financial crisis, China has continued a global spending spree of unprecedented proportions, snapping up everything from oil and gas reserves to mining concessions to agricultural land, with vast reserves of US dollars.
This year alone, Chinese companies have laid out billions of dollars buying up stakes in Canada’s oil sands, a Guinean iron ore mine, oil fields in Angola and Uganda, an Argentinian oil company and a major Australian coal-bed methane gas company.
“China is rich in people but short of resources, and it wants to have stable supplies of its own rather than having to buy on the open market,” Jonathan Fenby, China expert and director of research group Trusted Resources, said.
But it is a strategy causing anxiety elsewhere in the world. Rumours in recent weeks that China’s Sinochem may make a bid for Canada’s Potash Corporation raised fears that the Middle Kingdom would corner the global market for fertiliser.
Similarly, when BP’s share price plummeted after Barack Obama’s criticisms in the wake of the Gulf of Mexico oil spill, there was concern that the company would be driven into the hands of the Chinese.
More explicitly still, when the aluminium giant Chinalco was trying to buy Anglo-Australian Rio Tinto last year, television ads protesting against the scheme from no less than the Senate opposition leader bellowed “Keep Australia Australian”.
“Chinese acquisitions are increasingly on the political radar,” said Robin Geffen, the chief executive of Neptune Investment Management, which runs a leading China investment fund. “The pinch points come when people feel that supplies affecting national security could be threatened by China buying them all up.”
Contrary to the conspiracy theories, China is not looking for world domination. It has seen economic growth averaging a massive 10 per cent for the best part of three decades, and although it is expected to drop into the high single-digits in the coming years – in response to a dip in export demand – the natural resources required to support even slightly moderated growth are an overwhelming priority.
