Saturday, October 2, 2010

Fears of Chinese land grab as Beijing's billions buy up resources

China is US dollar rich as a result of our balance of payments deficit over many years. Growing at their current rate, there is a great need for energy and they are buying up resources at a record pace.

The sorry state of our manufacturing base and exports here in the US is a direct result of punitive tax policies and union excesses. We need to lessen the influence of unions in the industries they have not already bankrupted and get rid of the numbing regulations and high tax rates that are keeping us from being competitive on the international market.

China is doing what is needed to insure they have the energy resources needed to fuel their economic growth. Unfortunately, they are using US dollars to do it.

China is pouring another $7bn (£4.4bn) into Brazil's oil industry, reigniting fears of a global "land grab" of natural resources.

The Repsol deal is not China's first in Brazil. In February last year, Sinopec stumped up a $10bn loan to Petrobras, the state-owned oil company, in return for guaranteed supplies of 10,000 barrels of oil every day for the next 10 years.

It also follows a slew of similar deals across the world. While much of the developed world is baulking at its debts in the aftermath of the financial crisis, China has continued a global spending spree of unprecedented proportions, snapping up everything from oil and gas reserves to mining concessions to agricultural land, with vast reserves of US dollars.

This year alone, Chinese companies have laid out billions of dollars buying up stakes in Canada's oil sands, a Guinean iron ore mine, oil fields in Angola and Uganda, an Argentinian oil company and a major Australian coal-bed methane gas company.

"China is rich in people but short of resources, and it wants to have stable supplies of its own rather than having to buy on the open market," Jonathan Fenby, China expert and director of research group Trusted Resources, said.

But it is a strategy causing anxiety elsewhere in the world. Rumours in recent weeks that China's Sinochem may make a bid for Canada's Potash Corporation raised fears that the Middle Kingdom would corner the global market for fertiliser.

Fears of Chinese land grab as Beijing's billions buy up resources

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