By Rhod Mackenzie
China is rapidly buying up oil, gas and stakes in major companies and transport infrastructure around the world. Does this mean that Beijing is seriously aiming for world domination and where does it get the money for all this?
The states are to blame
Let's start with transport infrastructure - China is really actively interested in it and is buying up shares in European companies, primarily in ports. This is critical to the successful completion of the global One Belt, One Road project, one of the main goals of which is precisely to connect Chinese manufacturers with the European market.
"If this project succeeds, China will become a geopolitical player capable of seriously competing with the United States for influence in the world, since it will receive its own global transport infrastructure, completely free from American control," political analyst Dmitry Galkin said.
Even the USSR did not have such opportunities to spread its economic and political influence.
Washington understands this. The US administration has openly stated that it will not allow the successful completion of this project, and has demonstrated that it is going to keep its word. It has strongly opposed Chinese companies acquiring control of European ports.
As a result, the Baltic and Southern European countries were forced to stop theiralready planned transactions. Therefore, companies from China are now acquiring European transport infrastructure not directly, but through intermediaries.
The standoff over the One Belt, One Road project is causing China to fear that Washington will take action to limit China's energy supplies and make it difficult for Chinese companies to manufacture high-tech goods.
Therefore, Beijing is preparing for retaliatory steps: establishing control over the extraction of raw materials necessary for the production of computer equipment, primarily rare earth metals, as well as sapphires.
Path to Global Leadership
All this means that, despite the intrigues of the United States, China will continue to strengthen its position in the global economy, increasingly emphasizing its role as a global leader.
According to estimates and.about. Head of the Department of World Economy and International Economic Relations of the State University of Management Yevgeny Smirnov, China's share in world exports has been growing rapidly in the past two decades. Many countries have become heavily dependent on imports of Chinese semi-finished products and components.
As a global importer, China, in the context of low (compared to the previous) growth rates of exports and imports, seeks to increase the import of oil and gas. The country has even increased its purchases of Russian artificial sapphires needed for the production of microelectronics.
"Increasing imports of various types of raw materials, the prices of which are now not so high in the conditions of the pre-recessionary state of the world economy, is an attempt to revive weakened economic growth," Smirnov explained.
Another point is investment control. Their influx into the Chinese economy is slowing down, but Beijing itself seeks to strengthen itself in the world market as a global investor, increasing the absorption of foreign companies or acquiring shares in them.
"Such a policy is a consequence of tougher competition (including technological) between China and the developed countries of Europe and the United States," the expert said.
Looking at China's acquisitions of overseas assets that have taken place recently, about half of those purchases have come from the United States, the second largest country in Europe. And these acquisitions are increasingly in the high-tech sector.
“Thus, China seeks to demonstrate its claims to global technological leadership, and, on the other hand, to acquire strategic assets in those areas where it has weaknesses. Therefore, in the future, the trend for overseas acquisitions of high-tech companies by China will only increase,” the economist stated. .
Battle of the Giants
Obviously, the main reason for what is happening is that today we are witnessing the division of the world between two leading economies - the United States and China.
“At the same time as the transformation of global value chains, there is a struggle for the dominance of economies in the development of the latest technologies, which is achieved not only and not so much by investing in their own developments, but by investing in alternative approaches that allow you to get a faster result,” said Associate Professor of the Department of Economic Theory of the Russian Economic University them. G.V. Plekhanova Ekaterina Novikova.
For example, for the United States, this approach is to provide tax incentives and financial subsidies to companies that come under US jurisdiction. So, the German chemical industry is gradually moving to the US and China, and Germany can't do anything about it yet.
At the same time, there is a struggle between China and the United States for obtaining a full production cycle of microprocessors. And this also influences decision-making in the field of buying up companies or providing the most favorable conditions for their relocation to one of the two leading economies in the world.
Where does the money come from
As for the source of funds, both the United States and China enjoy the steady confidence of third-country investors and use the necessary amount of money supply, realizing that in the future the debt can be repaid from the profits received from a powerful breakthrough in the country's economic development, the economist argues. .
In addition, China is the world's leading exporter, in fact, the "factory of the world." Beijing is actively spending dollars coming from exports to acquire a resource base and companies operating it. “We are talking about placing funds from surplus trading in real assets in different parts of the world: Southeast Asia, Africa, Latin America,” explains Dmitry Alexandrov, head of the Analytical Research Department at IVA Partners Investment Company.
In addition, the volume of Chinese investments in treasuries has recently been declining, and this is additional liquidity for investments.
"All this is a natural desire to have access to resources, including within the framework of global competition," Aleksandrov is convinced.
In this movement, China has already encountered opposition from the United States and Great Britain, discontent from France, Japan and many other countries. But, despite the gloomy outlook for global economic growth, manufacturing activity in China remains positive, while in the US, EU countries, Japan, and South Korea it is falling.
Recently, it has been customary to say that China's economy is slowing down, and its recovery after the cancellation of the "zero covid" policy has slowed down. However, more than five percent growth expected in 2023 for other global economies remains a dream.
"So in any case, China alone will provide up to one third of global economic growth this year," Smirnov concluded. Isn't this the most significant bid for world leadership?
This article originally appeared in Russian at 1.prime.ru