China Seeks Global Sources of Raw Materials
Industry executives and analysts say the Chinese government is continuing to
block shipments of crucial strategic minerals to Japan following the detainment
of a Chinese fishing boat captain earlier this year. Rare earth shipments to the
United States and Europe did resume after a brief suspension in October. The
dispute has brought increased attention to China's massive industrial need for
raw materials and rare earths used in electronic and high-tech products. China
is searching not only for the most needed minerals at home, but in many other
parts of the world.
China's modernization and new industrial revolution has led to a growing quest
for energy and raw materials in Africa, Latin America and Australia, which has
intensified over the last decade.
Derek Scissors is with the Asian Studies center at the Heritage Foundation in
Washington. "They are looking to, not lose money, because there is a big
political problem at home with big investments that fail, store reserves, and
improve supply access for natural resources," he said. "The real goal of Chinese
outward investment on the material side is to lock up long-term supply. The
return, the price, it's not the material."
China has been continuously expanding foreign expenditures, including
investments in Venezuela and trade agreements with Chile. Francisco E. Gonzalez,
an associate professor at Johns Hopkins University, said China's approach in
Latin America is very long-term.
"China's charming offensive in Latin America includes not only the loans, not
only the promise to be together in international forums to forge south-south
solidarity to confront the rich north," he said. "But it also has a very
sophisticated policy that is trying to forge cultural links in order to think
about this relationship in the next 40 or 50 years."
A natural trading partner much closer to China is Australia. Patrick Fazzone is
the chairman of the Trade and Government Committee of the American Chamber of
Commerce in Australia. "Traditionally Australia has been very dependent on
foreign investment for growth and development because of its relatively small
population and large land mass," he said. "On the other hand of course, China
has enormous demand for resources, notably resources that are available in large
supply in Australia. China has a tremendous amount of available capital these
days. And importantly a concern to secure sources of supply of a lot of the
resources that exist in Australia."
But Derek Scissors said China is not always able to secure raw materials for a
number of reasons. "The Chinese firms make major mistakes in their outward
investment bids because they are inexperienced. That is one source of failed
deals. Another source is absolutely host country rejection. A third major source
of rejection is Chinese regulators saying no." he said.
He said while China has become the world's leading exporter of capital with
about $175 billion in deals completed over the past few years, it also has
recorded about $130 billion in deals failed. Some of China's largest deals
include oil in Nigeria, the Congo, Saudi Arabia, Brazil and Kazakhstan, natural
gas in Iran, and iron ore in Australia.
... Payvand News - 11/17/10 ... --