Friends,
Marshall Loeb in MarketWatch makes the
following statement.
“Meanwhile, China's
President Hu is urging the country to actively develop oil substitutes. China
holds the world's third largest reserves of coal, and it is projected to be the
largest producer of nuclear energy by 2050. Beijing
stands to become a strong competitor to the U.S. in creating safe and
environmentally sound nuclear power and clean coal power -- and marketing the
technology to the world.”
The U.S. et al. are destroying economic capacity by leaving
decisions to narrow individual profitable projects. A few nukes displace
a little gas, and gas prices come down… no more nukes. No National
interest. The “energy bill” is inadequate as an “energy
policy bill.”
They are also currently buying a Canadian oil company.
Regards, Jim Muckerheide
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China's new commodity diplomacy
Commentary: Oil isn't the only
thing Beijing
needs
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By Marshall
Loeb, MarketWatch
Last Update: 12:01 AM ET Aug. 26,
2005
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NEW YORK
(MarketWatch) -- There was a deeper significance to this week's report that
the China National Petroleum Corporation has made a deal to buy
PetroKazakhstan, a Canadian-owned oil producer in the former Soviet Union, for $4.18 billion.
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It was yet another sign of China's huge new thirst for oil,
which is a major reason why petroleum prices have spurted in the last 18
months.
But that is only part of the story.
Three great forces are now at work in the global economy that may
well cause not only oil prices but also prices of many other kinds of
commodities to jump.
First, now that it is the workshop of the world. China's demand for oil will continue to expand
voraciously, moving Beijing
to line up secure sources of supply. This it will do by buying foreign oil
companies, like PetroKazakhstan, or negotiating purchase deals with them.
Second, demand for oil will also keep on growing from a number of
other expanding Third World nations, notably India,
pitting them in bidding wars with China. Indian companies will
probably continue bidding for PetroKazakhstan in hopes of upsetting the deal --
and winning it in the long run.
Third, demand both from China and other developing
countries will rise not only for oil but also for other commodities needed to
feed industry. Already one important consequence is that China is eagerly pursuing a new commodity
diplomacy, signing trade agreements with many countries rich in oil and/or
other commodities, in return for development aid from Beijing. That way, the Chinese get assured
supplies of aluminum, copper, nickel and iron ore.
"An unprecedented need for resources is now driving China's
foreign policy," write David Zweig and Bi Jianhai, both scholars at the
Hong Kong University of Science and Technology, in the September/October issue
of Foreign Affairs.
They note that China
is winning access to key resources, from gold in Bolivia
and coal in the Philippines
to oil in Ecuador and
natural gas in Australia.
Beijing is particularly making deals with some of the U.S.'s long-time allies. Brazil's development minister visited Beijing nine times in 2003
and 2004. Trade between China
and Latin America has quintupled since 1999,
reaching almost $40 billion by the end of last year.
"Energy diplomacy," write Zweig and Jianhai, " has
also prompted China to seek
access to Canada's
resources, especially the massive tar sands of Alberta. Since late 2004, Beijing
and Ottawa have concluded a series of energy and
resource agreements, providing for greater Chinese involvement in developing Canada's
natural gas industry, its vast oil sands deposits, and its uranium sector. By
treading on what Americas
perceive as their turf and vying for resources they also covet, Beijing is stepping on
some very sensitive toes."
Beijing's search for resources moves it to tighten relations with
countries whose civil rights records the U.S.
abhors, such as Iran, Sudan
and Myranmar, all of which have oil for sale.
"Business is business. We try to separate politics from
business," said then Deputy Foreign Minister Zhou Wenzhong in 2004.
Meanwhile, China's
President Hu is urging the country to actively develop oil substitutes. China
holds the world's third largest reserves of coal, and it is projected to be the
largest producer of nuclear energy by 2050. Beijing
stands to become a strong competitor to the U.S. in creating safe and
environmentally sound nuclear power and clean coal power -- and marketing the
technology to the world.
In this sensitive and fast-changing period, the politics of oil
could move in any direction. As Zweig and Jianhai write, "Given the White
House's current penchant for unilateral intervention and loud voices in
Congress calling China a
military threat, Beijing might reasonably begin
to fear that the United
States will try to block its purchases of
natural resources to destabilize it.
[But] this should not detract from the vast room for cooperation
that the country's new energy needs allow. After all, The United States and China
share an interest in viable oil prices, secure sea-lanes and a stable
international environment, all of which can't help sustain their economic
prosperity, and that of the rest of the world."
Reporter Sarah K. Wulfeck contributed to this
story.