Sunday 19 November 2017

Business: A warning to west as china buys up earth's resources

By Dambisa Moyo

James Pressley

As with shoppers, so with nations: What they buy reveals what they need and desire.

China's acquisitions in recent years have included tons of copper inside a Peruvian mountain, 20 years' worth of Russian crude, and vast tracts of fertile land across Africa and South America.

The pattern of conquest couldn't be clearer. The Chinese have embarked on a "commodity crusade", becoming the pre-eminent buyer of resources ranging from metals to foodstuffs, as Dambisa Moyo writes in 'Winner Take All', a book that investor Jim Rogers calls "a must read".

The astonishing thing, judging from this jeremiad, isn't that China is locking in supplies, the real curiosity is that other nations aren't doing more to stave off potential shortages of food, energy and water as surging populations and wealth put unprecedented pressure on Earth's resources.

"With precision, execution and foresight, China is doing everything to be prepared for that fateful moment," the former Goldman Sachs banker writes. "But for the rest, without focus and concerted efforts many hundreds of millions of people will face famine, conflict and worse."

Stop squandering

Moyo, a Zambian-born economist with a doctorate from Oxford and a masters degree from Harvard, is a contrarian by nature. In 'Dead Aid', she argued that foreign aid has immiserated millions of Africans instead of helping them. In 'How the West Was Lost', she urged advanced economies to stop squandering their lead.

'Winner Take All' revives the views of Thomas Malthus, the Anglican clergyman who argued in 1798 that the population tends to grow faster than the food supply.

The grim result:recurring wars, famines and epidemics. Though mankind has so far escaped a Malthusian cataclysm, the fear persists, as can be seen from Moyo's opening survey of global supply and demand.

The world's population may reach 10 billion by 2050, and the greatest growth is forecast for regions where wealth is expected to rise at the fastest pace, she writes.

Can the planet provide enough food, water, energy and other commodities to allow ever more people to eat as well as Belgians, drive as fast as Germans and shop as much as Americans?

Moyo lets the reader decide by ladling out statistics, tables and charts, documenting the planet's limited supplies of fresh water, oil, metals and arable land (about 11pc of the surface not covered by water).

On the demand side, she cites China's urbanisation drive, which envisions building about 225 new cities with one million inhabitants each by 2020.

That will require tons of copper for plumbing and wiring, mountains of coal for electricity generation, and innumerable barrels of oil to keep thousands of Chery QQs and other new cars humming down China's new highways.

To ensure they can ship commodities home quickly, China is rolling out railways and other infrastructure in Africa and South America. Many of the project workers are Chinese, helping curb domestic unemployment. The upshot is a web of symbiotic relationships in which China secures resources, creates jobs and makes friends.

Strategic 'genius'

"This is the genius of the China strategy: every country gets what it wants," Moyo says.

Though Moyo's writing lacks zing, her sharp perceptions and lucid exposition merit the jacket blurb from Jim Rogers.

"You must read this book if you want to understand the reality of what's happening in the world today," says the investor who co-founded Quantum Fund with George Soros. "I'm afraid the West is going to wake up too late to prepare for the future." The praise is somewhat inflated. The warning is not. (Bloomberg)

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