Shopping the globe for resources
Posted in Culture, Life on October 23rd, 2004 by Michael
Both the National Post as well as the Globe and Mail have their frontpage dedicated to China today. The Globe turned their entire front page into chinese (well almost, they replaced their name with Chinese Characters as well as the main headline) and the National Post is looking closer at the “hunger” for resources that the “Red Dragon” seems to have right now.
All of this was sparked by a bid by the Chinese Government owned Company China Minmetals Corp to buy a Canadian Company by the name of Noranda Inc.(Stock) a Canadian Mining and resource company. This has caused some concern here in Canada as some are wondering if we are throwing away the key to our own resources.
China meanwhile doesn’t really seem to have a lot of choice.
The move by state-run China Minmetals to buy Noranda Inc. is stoking fears of an all-out takeover of Canada’s resource sector and a call for investment restrictions to be imposed on China.
The country’s super-heated growth has caught the world off guard and put acute demands on the country’s resources. As a result, China is forced to look abroad to oil and mineral rich countries like Canada to feed its needs. “This is just the beginning,” says David Hale, a noted China consultant and fund advisor in Chicago.
“They’re desperate for raw materials and they’re prepared to pay a high price to get those materials. China will be looking for more resources in Canada.”
This could be bad news for all of us, not just for china, let’s think about this for a moment.
One of the best indicators that we are steering into a direction that can’t be good is the news that China has record oil imports, this in and on itself might not be to surprising, but you might be interested to know that China isn’t importing oil for very long.
Currently, China is the world’s third largest oil consumer, behind the United States and Japan. It is expected to surpass Japan within the decade and by 2020 reach a consumption level of 10.5 million bbl/d. China only recently became a net importer of oil, as consumption exceeded production for the first time in 1993. By 2020, China is expected to import 8 million bbl/d, more than the projected net imports of Japan, Korea, New Zealand and Australia combined. Oil production in China was virtually nonexistent 50 years ago. Production rose from 0.5 mb/d (thousand barrels per day) in 1970 to 3.2 million bbl/d in 1997. In 1990, China exported five times more crude oil than it imported, yet by 1997 its imports had grown to twice the size of its exports.
There are 1 illion people (1/6th of the world population) living in China, another 1.2 billion people are living in India and a mere 300 million in the US and Canada. If you have a look here you’ll come to realize that the picture is somewhat out of whack. Try to imagine what will happen when China has the same standard of living for it’s 1 billion people as we do, add on top of that india….. What do you think will happen?
Toronto already has pretty bad air quality and it ain’t really getting better, regardless if the Ontario Government is gonig to close coal fired power plants by 2007 or not. There are only 4.5 million people (give or take) living in the GTA, now try to imagine what would happen if suddenly 1 billion people would fire up their cars in the morning, use as much power as we use and just live as destructive as we do.
The current resource hunger that China is showing is not in the least because of us.
In 2001 the total exports from China to Canada totalled roughly 1.1 trillion USD. China has become a huge factory for the Western World, especially for your friends at Walmart, so it makes only sense that they now want resources, don’t worry, you’ll get it back in form of cheap TVs, clothes and other “indispensible” items.
And now I stop before I start ranting…. Just keep thinking about “selling out” when in the end your buying habits are supporting exactly that.
