A correspondent writes,
"China's Strategy to Secure Natural Resources" looks like it might be an interesting read. Note that this was written within a year or two of the peak of the commodity capex cycle.Has anyone read this?
"Evidence from the 16 largest Chinese natural resource procurement arrangements shows that Chinese efforts--like Japanese deployments of capital and purchase agreements in the late 1970s through the 1980s--fall predominantly into categories that help expand, diversify, and make more competitive the global supplier system"
I hadn’t thought about the parallels to Japan. Might be interesting to go back and look at that, there are some interesting parallels. A mercantilist model built on an export economy, a sustained period of economic growth at fairly high rates creating another major node in the world economy (ie third node after Europe and US, now China has become 4th node), tremendous free cash flow which is then leads to substantial mal-investment, and demands on the resource base that lead to high prices followed by huge capex and eventually a bust. We had two big spikes in oil prices in the 70s followed by a bust in the early 80s…same pattern with a lot of other commodities.