China Inc: When China goes Global

Resource Is The Key

10 years after the Iraq War, most of us assumed that the war was fought for the oil reserve. However, most of the US oil majors have minor presence in the Iraqic landscape. This is due to the inability to reach a profitable agreement with the Iraqic Government on profit sharing.

The biggest winner then seem to be China State owned oil majors, who are not driven by profit, but more by access to oil imports. Thus, wells that US Oil Majors do not want to drill, the Chinese are happy to take it up. We see that happening all over emerging markets, in Africa most noticeably. And recently in Sri Lanka where the second international airport is built by Chinese construction companies with loans from Chinese banks.

So now it seems, the world order is changing, countries now have choices of who they want to partner for development. What does it mean for US? What does it mean for the rest of us? For decades after the Second World War, US has tried to spread its influence on the world through military action; Vietnam, Afghanistan, Iraq… They do it through economic support with military support; Japan, Germany, South Korea, Singapore, Taiwan… Many have prospered due to this support; many have willingly sought US help for fear of the alternative, Communism. This created a long term relationship of US being a “parent” to the rest of the world, influencing the rest of us “kids – new to democracy” on how we do business, how we run our economy and how we run our politics.

But in this new world, where the communists have also embraced capitalism, what should we fear? And in a world where our “parent” has run into the same economy problems they criticize us for in 1998, with their politicians in disarray and our “aunties and uncles” in Europe blaming one another, that air of superiority seem to be ever fading… Maybe, just maybe, they are not as all knowing as they appear to be. Maybe, just maybe, we are all the same after all.

The problem is no one knows what the agenda of China is. They seem to have approached the question a little differently, they do not want to change the way we do things in our country (as they do not want anyone to change the way THEY do things in their country), they are just interested in business. They want to help us build roads and bridges for exchange of access to our oils and mines. They want to give us loans when we have no money to pay them for their work. It seems that they are not interested to take us over with their guns, but more interested to own us through their wallets.

As the two superpowers fight for influence, one with guns and one with wallets, what does it mean for Southeast Asia? As we seen in recent weeks with what is happening to Vietnam and China, there is a new bully in town and it seems, they are here to stay.

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The information provided is for general information purposes only and is not intended to be any investment or financial advice. All views and opinions articulated in the article were expressed in Stanley Lim’s personal capacity and do not in any way represent those of his employer and other related entities. Stanley Lim doesn’t own shares in any companies mentioned above.

 

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