China is set to become increasingly aggressive in its drive to find natural resources, and now has the cash to do so, a senior fellow at think tank Chatham House said Tuesday.
China
is
set to become increasingly aggressive in its drive to find natural resources,
and now has the cash to do so, a senior fellow at think tank Chatham House said
Tuesday.
Dr Kerry Brown said
China
's key
priority is to ensure 7% gross domestic product growth in order to secure
social stability and the continuance of the Chinese communist party in power.
"Anything less than 7% for the next 10 years and
China
will
have big problems," Brown said. "Therefore it will be very aggressive
in its search for natural resources," he added.
China
has
built up huge interests but has been relatively cautious to date. Many of these
have been built through joint ventures and partnerships, but
China
now
has the financial clout to up the ante, Brown said.
One such target in recent years has been
Africa
, a
continent rich in copper, oil, gold and platinum. Investment in
Africa
officially only totals around $4 billion but is increasing rapidly, despite a
relatively cautious approach so far.
China
's
outward investment was around half this amount at the end of 2008 but had
doubled within a year.
Investment in
Latin America
in contrast was around $1.7
billion at the end of 2009, Brown noted, citing official state data.
Total Chinese outward investment was $200 billion at the end of 2009, of which
around 48% goes to
Hong Kong
.
"
China
has
never historically outwardly deployed capital but has upped it in its drive for
resources," Brown said. "
China
has
felt it is locked out of developed markets, but it's been cautious in its
approach, and not made the sort of killings we'd expected," he added.
China
's
experience in
Africa
has been mixed, with positive
success in terms of building infrastructure and deploying capital quickly, and
criticism for entering countries with regimes that have a poor ethical record,
such as
Sudan
and
Zimbabwe
.
"It's a little bit like the good, the bad and the ugly, but there's no
question about it--
China
will
step up and become aggressively dominant in natural resources outside its own
borders," Brown added.
Brown was speaking at the Commodities Week conference in
London
.
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