Is China “Locking Up” the
World’s Natural Resources?
Theodore H. Moran
Georgetown University
Peterson Institute for International
Economics
On the demand side,
Chinese appetite for vast
amounts of energy and
minerals puts tremendous
strain on the international
supply system.
On the supply side, Chinese efforts
to procure raw materials can
exacerbate the problems of high
demand, or help solve the problems
of high demand.
Do Chinese procurement
arrangements solidify a
concentrated global supplier system
(and enhance Chinese
ownership/control within that
concentrated supplier system)?
Or do Chinese procurement
arrangements expand, diversify, and
make more competitive the global
supplier system (and use Chinese
ownership/control as a lever for such
expansion, diversification, and
enhanced competition)?
I. Take an Equity Stake to Create a
“Special Relationship” with a Major
Producer.
Buyers and/or their home governments
take an equity stake in a “major”
producer so as to procure an equityshare of production on terms
comparable to other co-owners.
II. Take an Equity Stake to Create a
“Special Relationship” with the
Competitive Fringe.
Buyers and their home governments
take an equity stake in an
“independent” producer so as to
procure an equity-share of production
on terms comparable to other coowners
III. Loan Capital to be Repaid in
Output to a Major Producer.
Buyers (and/or their home
government) make a loan to a “price
maker” producer in return for a
purchase agreement to service the loan.
IV. Loan Capital to be Repaid in
Output to the Competitive Fringe.
Buyers (and/or their home
government) make a loan to a “price
taker” producer in return for a purchase
agreement to service the loan.
The evidence from the fourteen
largest Chinese natural resource
procurement arrangements shows
that Chinese efforts fall
predominantly into categories that
help expand, diversify, and make
more competitive the global
supplier system
Scorecard of China’s Procurement Arrangements
I. Take an Equity Stake to Create a “Special Relationship” with a Major
Producer.
Buyers and/or their home governments take an equity stake in a “major”
producer so as to procure an equity-share of production on terms
comparable to other co-owners.
8.
CNOOC Acquisition of 45 percent Ownership of Akpo Field,
Nigeria 2006
11.
Sinopec, CNOOC in Angola 2004
II. Take an Equity Stake to Create a “Special Relationship” with the
Competitive Fringe.
Buyers and their home governments take an equity stake in an
“independent” producer so as to procure an equity-share of production
on terms comparable to other co-owners.
1.
Sinopec Proposed Acquisition of Addax Petroleum for $7.2
billion in 2009
2.
Chinalco-Rio Tinto 2008-2009 (aborted)
5.
Socomin Joint Venture in the Democratic to Finance $9 billion in
Infrastructure 2008
6.
Sinopec and the Yadavaran Oil Field in Iran 2007
7.
Chalco-Aurukun Bauxite Project 2007
9.
CNOOC-Unocal 2005 (aborted)
10.
China National Petroleum Company (CNPC) and
PetroKazakhstan 2005-2009
12.
CNOOC-North West Shelf Ventures LNG Exports from
Australia 2002
13.
China National Petroleum Corporation (CNPC) and Sinopec
with PetroDar Operating Company, Sudan 2001
14.
China National Petroleum Corporation (CNPC) and Greater
Nile Petroleum Operating Company (GNPOC) in 1996
III. Loan Capital to a Major Producer
to be Repaid in Output.
Buyers (and/or their home government) make a loan to a “price maker”
producer in return for a purchase agreement to service the loan.
IV. Loan Capital to be Repaid in Output
from the Competitive Fringe.
Buyers (and/or their home government) make a loan to a “price taker”
producer in return for a purchase agreement to service the loan.
4.
China Development Bank Loan to Rosneft and Transneft of
3.
Sinopec-Petrobras 2009
Chinese attempts to exercise
control over “rare earth
elements” (REE) mining may
constitute a significant
exception, however.
Other separate important issues
include the impact of Chinese
resource procurement on rogue
states, on authoritarian leadership,
on civil wars, on corrupt payments
and the deterioration of
governance standards, and on
environmental damage.
Such effects may make patterns
of Chinese resource
procurement objectionable, on
grounds quite apart from the
debate about possible “lock up”,
“tie up”, and “control” of access
on the part of China and
Chinese companies.