May 06, 2010

Events from Around Town: China's Appetite for Raw Materials and Energy

Today we'll be giving you a double dose of blog-ness, with postings from Will and myself. Today, I'll recap an event I attended on Wednesday across the street at the Wilson Center on China's appetite for raw materials and energy.

Much of the discussion centered around the economics of China's foreign investments in raw materials rather than the reasons they need these resources, which was a bit of a disappointment.

I was also slightly disappointed to hear that the panel's expert on Chinese-African relations, Deborah Brautigam, respond that she hadn't thought of it, when asked whether China's investments in raw materials and infrastructure in Africa was more economic or national security based. (Though perhaps there's an argument to be made that they are one in the same given that China must maintain 8 percent economic growth just to support its growing working class.)

What did stand out to me were some investment figures. According to panel member Derek Scissors of the Heritage Foundation, China is like a state level version of Brewster's Millions: it’s not spending its money for the purpose of gaining money, as that would just exacerbate their problem. He elaborated by explaining that China has so much money currently that it is physically unable to invest in itself and has elected to invest abroad instead. Being starved for resources in many sectors, its investments are largely used to secure energy and mineral resources. Scissors stated that Chinese bond investments in energy last year alone were $60 billion, and $70 billion in metals. Mind you, he was citing statistics from the Heritage Foundation's own database.

Scissors went on to explain that China is not worried so much about an equal trade partnership, or even paying fair market values, citing that China had paid nearly $500 million too much for a Canadian oil sands investment. He argued that China has the money, needs the resources and that's all that matters to them. His overall argument was that China is not trying to buy up the world politically, they just want some resources, and have the money to get it.