In the final part of my blog series featuring content edited out of my book The Yes Book (now out on Random House), I take a look at China’s behaviour in relation to its negotiations over shortages of essential modern minerals required for industrial production. It seems very much to be a mixture of “pressures” and “incentives” – a push-me, pull-you approach.
Some nations are stockpiling important materials and restricting exports in an attempt to protect their own businesses from increasingly fierce global competition. Among the countries known to be stockpiling resources, Japan has said it is storing supplies of seven rare materials it believes are essential to modern life and industry. China is also accused of this behaviour. The United States, the European Union and Japan filed complaints last year with the World Trade Organization charging that China is limiting its export of rare earths, minerals that are vital to the production of technology components.
China has a strong hold on the global supply of 17 rare earth minerals that are essential for making high-tech goods including hybrid cars, weapons, flat-screen TVs, mobile phones, mercury-vapour lights, and camera lenses. However, China has cut its export quotas of these minerals over the past several years to cope with growing demand at home, though the government also cites environmental concerns as the reason for the restrictions. U.S. industry officials suggest it is an unfair trade practice, against rules established by the WTO, a group that includes China as a member.
China is also adopting a more subtle approach to the problem though. Chinese are arriving in Africa in ever greater numbers. An estimated one million are now resident in Africa, up from a few thousand a decade ago, and more are coming. Among the visitors will be China’s new president, Xi Jinping, who is also going to Tanzania and the Democratic Republic of Congo on his first foreign foreign trip as leader – a significant statement of intent.
The origin of China’s interest in Africa is easy to see. Between the Sahara and the Kalahari deserts lie many of the raw materials desired by its industries. Almost 80% of Chinese imports from Africa are mineral products. China is Africa’s top business partner, with trade exceeding $166 billion. Until recently China concentrated on a few big resource-rich countries, including Algeria, Nigeria, South Africa, Sudan and Zambia. But places like Ethiopia and Congo, where minerals are scarce or hard to extract, are now getting more attention.
The negotiations over access to minerals for China bring some benefits to the region too, which is how China incentivises its involvement. China is investing in Africa. Last summer the Chinese ambassador to South Africa, TianXuejun, said: “China’s investment in Africa of various kinds exceeds $40 billion.” Chinese investment creates local jobs and skills transfer. China even mediated in a dispute between Sudan and South Sudan last year, when these two big trading partners of China threatened to go to war.
The growth of Chinese interest in the region appears sinister to some commentators – especially given China’s withholding of its own minerals for export – but perhaps this kind of strategic plan is also an example of a sophisticated negotiation, showing that China can utilise incentives to get what it wants as well as exercising pressures.
