Beneath our eyes the vector of global force which has been pointing at the US for two decades is changing its direction pointing at the Asian giant – China.
Although China’s economic power may seem “speculative” to someone, in reality the Chinese have already taken a firm hold of rare earth metals production setting quotas for their exports and easily regulate prices on these metals on the foreign market. China accounts for 97% of rare earth metals production in the world. These metals are widely used in production of electronics, weapons and production of renewable energy resources.
About two weeks ago the US, Japan, and the EU filed a suit against China to the WTO following Beijing’s decision to introduce restrictions on exports of rare earth metals. China restricted its export of rare earth metals in order to lower prices for national industries which widely use them. China has also increased its revenues from sale of rare metals abroad. Since the early 2011, the prices on rare earth metals have soared fivefold due to the introduced restrictions. According to Reuters, Beijing has announced plans to establish a single association of rare earth metals producers in order “to speed up consolidation in this field”.
China has already taken dominating position on the markets of Europe, North America, Africa, South America and Australia. China has achieved impressive success in exports of its hi-tech products. Meanwhile the Chinese mass media note Beijing’s attitude towards the economic dictate of the US, which scares many countries.
“The US has resumed its criticism of China ahead of the presidential elections”, “Jenmin Jibao” newspaper read. The candidates are acting tough accusing China of “unfair trade” hoping to “protect employment opportunity for US citizens”. Once again the Chinese industry is becoming a “scapegoat” in the internal political game of the US politicians. “Uncle Sam” is trying to attack practically every field of the Chinese-American trade from bilateral relations within the WTO to criticizing the work of new legal enforcement agencies in China’s trade sector and regulations, which allow collection of countervailing duties. China is the world’s largest producer and more than 70 % of countervailing duty investigations are linked with China.
But violation of the WTO rules and introduction of subsidies with regard to China following the loss of own profits are not objective measures. China’s industrial development is the result of the efficiency of the national economy including the scale, diversity and rapid growth of production … Instead of putting pressure on Chinese companies the US companies should adopt the experience. The US is claiming that the Chinese government by setting low prices on land and electricity and providing beneficial loans helps national companies and at the same time creates “unfair competition environment” for the US companies. But it does not seem logical to come up with such critical remarks because the US also provides beneficial loans to its companies on the domestic market. That is why after the US initiated a countervailing duty case in photoelectric industry, China’s Ministry of Commerce started an investigation into trade barriers, state support and subsidies in the field of renewable energy sources provided by the US”. It is difficult to name another country, which can afford such a “slap in the face” with regard to the US. “Uncle Sam” should understand that serious problems in production in the US are first of all due to difficult situation in the country”, “Jenmin Jibao” concludes.
And what China’s (and also Russia’s) response to the tax Brussels imposed on emission of carbon dioxides by air carriers? Here is an extract from the article published by “Corrieredella Sera”: “There is a risk that the world will be thrown several decades back and cargos and passengers will be transported much slower. This will happen if Russia and China continue to take their responsive measures, they have already informed the EU about… The Russian authorities have refused to open its air space to 19 of 30 cargo aircraft carrying German goods to China, Japan, Taiwan and South Korea. German flight will have to choose a longer route, which will inevitably lead to price hikes and losses for Deutschland AG”.
“The passenger flights from Italy to Beijing, Shanghai and Tokyo may face the same problem… Beijing’s response may become the toughest. It has already banned the landing of Airbus 380 in Shanghai. The airliner was bought by the German company for its Frankfurt-Shanghai route: $240 million investments have turned to be useless. The Chinese government has also banned its air companies to buy European airliners and the air companies have cancelled the orders for 40 Airbus airliners”. This is a dry residual. I don’t think that aircraft producers will forgive Brussels that “bitter pill” (the tax on emission of carbon dioxides).
By the request of London, Play Fair, a Western “non-governmental organization”, began investigations into the activities of two Chinese manufacturers of souvenirs for summer Olympics in London, “Corrieredella Sera” reports. As it was expected, the investigation revealed that “buyers will look at these Olympic souvenirs thinking how nice these small things are and they will never learn how much work and sweat it took to produce them how low the salaries of the workers are and how badly their meals are”.
But all this is like a mousy squeak under the feet of “the world’s main producer of goods”. When it comes to oil and gas no one remembers about small souvenirs anymore. In 2011, the Chinese oil and gas company Petro China became the world’s largest oil producer outrunning US Exxon Mobil and is continuing to buy assets all over the world. Last year, Petro China produced 886.1 million barrels of oil with average daily oil production norm amounting to 2.43 million barrels. Where do the Chinese take all this oil without having its own rich oil fields? Analysts at IHS World Markets Energy attribute the increase in oil production to the development of gigantic Rumaila oil field in Iraq. They say that “in the future the production will continue to grow thanks to exploitation of new oil and gas fields such as Halfaya in Iraq and oil sands in Canada. Besides that, China will continue to develop oil projects in Kazakhstan and Indonesia. Petro China may keep its superiority over Exxon Mobil for several more years”.
Eighteen months ago the management of Petro China announced that in ten years the company plans to invest at least $60 billion in acquisition of assets all over the world. Back then the company bought a 60% stake in the project on producing of hydrocarbons from Mac Kay Riverу oil sands of Canada’s Athabasca Oil Sands. In the beginning of the year, the Chinese bought the rest 40% of the project, which cost $2.5 billion. The Chief of Petro China Jiang Jiemin said his company plans to buy many assets: “We are focused on the Chinese market but in the long term prospective we plan to expand our activities beyond China”, he said.
The way Beijing is acting in the neighboring countries can be illustrated on the example of Myanmar, which shares more than 2,000 km of border with China. Myanmar, where for the first time in 20 years oppositional leaders have been allowed to take part in the elections, now is expecting the West to abolish its economic sanctions against it in exchange for political reforms. The US State Secretary Hillary Clinton has already said that US is trying to support the reforms conducted by the country, meaning that the opposition received 47 of 48 free seats in the parliament. But it seems that Yankees are a little bit late with their reforms: in the years of the blockade Myanmar became an economic protectorate of China. Now it depends on Beijing not on Washington how comfortably the Myanmar people “who won the elections” will live.
Today China clearly shows that it will respect only strong neighbors. This can’t be regarded as a challenge for Russia but this is a condition of peace and stability in Europe.
