China's economic emergence has been a defining event for global energy and commodity markets. Over the past decade, China has accounted for more than half of the growth in global energy demand and today consumes more than half of the iron ore, cement, copper, and a host of other commodities produced around the world. The stock of global direct investment by Chinese companies has grown from $53 billion in 2004 to $609 billion in 2013, a significant share of which is in natural resources.In By All Means Necessary: How China's Resource Quest Is Changing the World, Elizabeth Economy and Michael Levi help us make sense of Chinese natural resource trade and investment. While the title suggests the book might succumb to the alarmism and hyperbole that often dominates both public and academic discussions of China's rise, it is in fact an exceedingly nuanced, balanced, and well-researched assessment. The combination of Economy's deep China expertise and Levi's natural resource market and energy policy acumen provides an extremely valuable contribution.The book's chief strength is its combination of compelling storytelling and in-depth analysis-a commodity rarer than any resource Chinese companies search for around the globe. The authors put recent Chinese natural resource trade and investment trends in context, discussing precedents from Chinese history as well as from the economic emergence of the United States and Japan. They debunk the view, widely held in the West, that Chinese companies work in lockstep with the government, seeking to improve the security of the Chinese state at the expense of companies and countries elsewhere in the world. The book shows instead that Chinese companies are primarily commercially driven and that their motivations and interests often differ from the government's, just as is the case in Europe, Japan, and the United States.Economy and Levi rightly note that the most significant global impact of China's resource quest to date has been the country's rapid growth in energy and commodity consumption. This has put upward pressure on global prices and helped enrich resource-producing states. But what Chinese demand giveth, it can also taketh away. The growth of Chinese resource consumption has slowed dramatically over the past few years, leading to a sharp correction in the price of many commodities. Iron ore and copper prices fell by more than one-third between 2011 and 2013, and aluminum, steel, and coal prices have declined sharply as well. This development has been painful for resource exporters, from Australia to Chile and Brazil. And if the leadership is successful in rebalancing the Chinese economy from investment and industrial production toward services and domestic consumption, the resource-intensity of Chinese growth will likely continue to decline.Economy and Levi judiciously evaluate the positive and negative impacts of global resource investment by Chinese companies, both for recipient countries and competing firms. As the authors point out, Chinese resource investment has had less impact than Chinese imports of foreign-produced goods, despite attracting equal if not greater attention by foreign policymakers, scholars, and the press. Chinese companies are late to the resource game and often must pick through the scraps that U.S., Japanese, and European companies do not want to touch. Diplomatic support from Beijing and low-cost capital from state-owned banks help Chinese companies compete for investment opportunities in many developing countries. …
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Open Access
Jul 26, 2019
Trevor Houser 