China’s Resource Race and its implications on the World

China’s remarkable economic growth and its pursuit of global leadership in green energy have fuelled its quest for raw materials and resources worldwide. This not only sparks competition amongst the global powers, but also causes several concerns for the resource-rich countries which are being exploited.

China’s rapid industrialization and transition to green energy have necessitated a constant supply of raw materials such as rare earth metals, lithium, cobalt, and copper. To secure these resources, China has engaged in an aggressive global race, investing heavily in resource-rich regions of Africa and Latin America. This strategy aims to establish a reliable supply chain and secure a leadership position in the green energy sector.

Beijing’s race for resources has consequences for the power dynamics in the world. All global powers – like the United States and the EU and its countries – are in need of ways to keep up with the energy transition. However, China is decades ahead in its efforts to secure the necessary resources. And as China now strengthens its position in the green energy industry, it gains leverage over other countries. The country’s growing influence allows it to shape the terms of trade, dictate prices, and exert economic pressure, thus diminishing the bargaining power of the US and the EU, and possibly even making these powers dependent on China. This possible dependence is already causing friction between Western allies; while the US still maintains a hard line policy towards Beijing, the EU is trying to achieve more balanced relations with the rising Asian power.

These contrasting policies of western allies might have serious consequences in the future, but China’s resource race does already result in serious consequences for African and Latin-American countries today. To gain access to the resource-rich areas, the Chinese government often makes deals with the countries concerned that – on paper – should also grant them substantial benefits. For example, China often promises to invest in infrastructure and development projects on a large scale. While these investments have brought about some benefits for the developing countries, there are, however, a number of concerns.

African countries often face limited negotiation power, resulting in lopsided agreements that favour China. In Africa, China’s approach to resource extraction often involves unfair trade practices and the exploitation of labour. Additionally, environmental degradation and social disruption have been observed in areas where Chinese companies operate, impacting local communities and indigenous populations.

A clear example of the downsides of these deals can be found in Congo. In 2008, the two countries signed the Sicomines deal, under which China would invest billions in Congo’s infrastructure in exchange for access to valuable resources. Even though China presented this as a win-win deal, widespread criticism arose. First, the deal was drafted as a joint venture, but Congo only received a narrow third of the shares, making it a very skewed distribution of profits. Second, the IMF fears that this deal will lead to an unsustainable debt for Congo in the long run, which might weaken the country’s economy rather than strengthen it. And third, resource-rich countries such as Congo often suffer from corrupt governance. Therefore, critics highly question whether the benefits of these billion dollar deals will actually trickle down to the population.

Similarly, in Latin America, China’s quest for resources has led to concerns about environmental sustainability and social implications. The extraction of minerals and other resources can cause irreversible damage to fragile ecosystems and indigenous territories. The Guardian already addressed these concerns ten years ago: ‘’Amazonian forest cleared in Ecuador, a mountain levelled in Peru, the Cerrado savannah converted to soy fields in Brazil and oil fields under development in Venezuela’s Orinoco belt’’. All a result of China’s ambitions.

Even though China’s aggressive pursuit of resources raises legitimate concerns, it is essential to acknowledge its significant role in advancing the global transition to green energy. China’s investments in renewable technologies, manufacturing capabilities, and infrastructure development have contributed to the expansion of clean energy worldwide. By ensuring a stable supply of raw materials, China aims to become a leader in the green energy sector, which is crucial for combating climate change on a global scale.

Overall, while China’s contribution to the global transition to clean energy should be recognized, concerns regarding resource exploitation in Africa and Latin America cannot be dismissed, as it is crucial to ensure sustainable practices and equitable benefits for local communities. Finding a balance between resource acquisition and responsible investment is key to addressing these challenges while fostering international cooperation for a sustainable future.

Written by: Alexandra Iburg

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