China and raw materials
October 26th, 2005
The economic success of China is often perceived as a miracle fallen from the sky. Idea is the following one, the Chinese are the happy winners in a tombola which their attributed an exponential economic growth, nevertheless this success is not result of the fate. China planned, organized, structured this growth. Certainly, if we looks of very near this growth is of muddled appearance nevertheless if we takes more distance, we notices the coherence of this economic boom. Current growth is strategic for several years, it is not the fruit of the fate, but the result of a politics with very long term as any other countries has never made it. This long-term approach is totally foreign to our contemporary political customs, indeed our reflections are rather the following ones: why to foresee for 20 years while I steer for some months? However, in the game of chess, the one that sees farthest wins part.
Some years ago the responsibles for companies left in China with the rather « condescending » idea to teach the Chinese communists Capitalism. Nevertheless, we does not teach Kasparov chess, we observes, we sets and owe pulls lessons, some decades of collectivism did not remove traditions millenniums of the Chinese business. Indeed, the Chinese civilization is from the Middle Age, is already very early in the cultural, technical, scientific and especially commercial domain. Let us not forget that Marco Polo, Venetian, that is the City of the Business at the time, stemming from a family of traders, takes notes and teaches a great deal of his stays in imperial China.
These companies try to invest with difficulty how in China, but nothing is conceived for them. Only Chinese objective is the development of China, its autosufficiency, its independence (economic, energy.) and it is not to help the foreign companies, here no fair of the era « post soviétique ».
To feed this growth, China needs energy, of metals, its monetary political supports its growth and its supply in raw material.
In a first part, it is question to speak of the energy political, then the industrial metals and to end of the currency, the gold and silver.
I. The energy strategy of China.
One of the rare countries has resources a coherent and effective politics toward raw materials is China (India too), as the good player of chess, China places these pawns for a long time in advance and it is going to make " check and checkmate " in three knocks.
1. The strategy:
Petroleum, gas, coal, uranium, nothing is forgotten by China to assure its energy, present necessities and especially future (over 10 , 20 , 30 years even more).
This politics is coherent only with a long-term optics, with the aim of the day when price will matter little and where only the availability of the energy will be important.
Apparently China overtook economic paradigm of the inexhaustible natural resources, and administers its development as a consequence.
China pauses its pawns on all the available compartments of the chessboard. She exceeds all the obstacles, the countries with political risks (Sudan, Angola, Nigeria, Gabun), purchases in the full price (deposit of Sudan, investigation in Brazil), the wrestling of political iron, the Occidental oil private grounds of the chief warrant officers (as for example Nigeria), or challenges the USA (contracts with Iran, Iraq, and Venezuela), in brief China buys all which is available and uses its political, military force (sale of weapons), economic and commercial to arrive at its objectives.
2. Some examples:
Economic current event is filled with information which indicate a very coherent politics of the « Empire of the Middle » toward sources of energy, here is some examples (important it’s a number limited of its):
-SINOPEC (China Petroleum and chemical corporation) buys for 100 billion dollars of gas in Iran for 30 years and she develops Yadavaran's Iranian petroleum.
-Agreements are signed with Hugo Chavez's Venezuela for three billions concerning the delivery of oil productions in China (petroleum, heavy raw product, Orimulsion). Venezuela gives the license to the CNPC (Mocked National Offshore Oil Coproration) the right to exploit new deposits of gas of Caracales and Intercampo Norte.
-Sino - Japanese battle for the purchase of the petroleum in Siberia, the construction of an oil pipeline and the offshore sea exploitation of China.
-Signature of agreements with Brazil for oil drillings and the construction of a pipeline, the agreements are, seems it, signed for three times the market price.
-The reserves of natural gas and petroleum of Algeria interest also China, SINOPEC AND CNPC signed contracts with Sonatrach (The Algerian company of search for oil exploitation), Sino - Algerian oil cooperation is every day more important.
-In 1997, the CNPC managed to obtain the exploitation of the two oil fields of Kazakhstan, in spite of Russian and American pressures, these oil fields are of a size of 1 and 1.5 billion Barrels. National Petroleum Corporation has in project to build an oil pipeline jioned Kazakhstan to Xinjiang (province of the Chinese western North).
The energy politics of China does not limit itself to the gas and to the petroleum:
-China signs agreements with Australia for the investigation and the exploitation of its deposits of uranium to allow the supply of its future park of nuclear power stations in construction.
-Even the coal is not forgotten by Beijing which signed long-term agreements with BHP (BHP, it is 30 % of the world exchanges of coal with Coke).
While Europe and North America discover with bewilderment which the petroleum can climb over 70 dollars, China, it, continues, noiselessly , to develop its energy strategy with very long term to assure its future supply. While the Occidental countries look for some fiscal craftiness to calm the rumbling discontent of the motorists about the increase of the essence, China, it, buys underground all which is still accessible in petroleum, gas, uranium and even in coal. Strategy is simple, to buy all which available in big or small quantity about is price, for bitumen’s sands of Alberta by way of the Australian coal until the Sudanese petroleum.
To accept that oilfields run out and an unacceptable idea for the group of the Occidental economic circles. Speak to an academic or to a fund’s administrator of the peak of production of the petroleum and you are supposed to be at once a madman, hardly good to lock with a camisole. Nevertheless, the production of petroleum stagnates, demand increases, prices burn and the Chinese place their « lady » in the center of the chessboard.
Second part of this article on China and industrial metals as well on the monetary aspect, the gold and silver will be available next week with conclusions.
Dr Thomas Chaize
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