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    China Business
     Jul 15, 2008
China's veto just part of business
By Peter Navarro

China last week once again demonstrated its willingness to opportunistically trade diplomatic favors for access to African riches. Joining with Russia, the People's Republic vetoed a UN Security Council resolution that would have imposed tough sanctions on Zimbabwe's President Robert Mugabe and other members of his illegitimate regime for rigging the country's presidential election.

China has in the past "sold" its UN veto power to protect Sudan from sanctions over the killing of people in Darfur in exchange for access to Sudanese oil. China is now Sudan's biggest customer. Beijing has also provided Iran with diplomatic cover at the UN for the Middle East country's nuclear development program in

 

exchange for access to its huge natural gas reserves.

In Zimbabwe, it's not petroleum that China covets. Rather, the African nation is the world's second-largest exporter of platinum, a key input for China's auto industry. China is also the world's largest steel producer, and Zimbabwe controls more than half of the world's known chromium reserves, used in making stainless steel.

On the agricultural front, China has long coveted Zimbabwe's rich tobacco fields. As the world's largest cigarette producer, China produces roughly 2 trillion sticks a year (which annually kill about a million Chinese). Over the past decade, by providing Mugabe with diplomatic cover at the UN and by lending his regime huge sums, China has been able to gain control of much of Zimbabwe's valuable tobacco output.

Zimbabwe used to sell its tobacco at international auction for top dollar and hard foreign exchange. Today, Zimbabwe’s crop is funneled directly to China's 300 million smokers as payment in kind for the loans Beijing provides. Even as Zimbabwe's agricultural sector collapses under Mugabe's rule, Chinese companies control land the Zimbabwean government once confiscated from white farmers.

China's Zimbabwe gambit is symptomatic of a broader brand of Chinese imperialism that would have Vladimir Lenin and Mao Zedong turning in their graves. It is a strategy driven by China's reliance on a heavy-manufacturing economic model, leading to the country now consuming half of the world's cement, one third of its steel, one fourth of its copper, one fifth of its aluminum, and having the fastest-growing share of the world's oil.

China's strategy for securing these scarce natural resources is a zero-sum game played against the West. Rather than relying on world markets as do Europe and the US, China seeks to gain physical control of these resources. It does this by first ingratiating itself with foreign governments, then encircling the country's natural resource riches with virtually every strategy described by Lenin in the "imperialist playbook".

As its core strategy, China dangles lavish, low-interest loans as bait and uses its huge army of engineers and laborers to help the country build up its infrastructure, from roads and dams to hotels and stadiums, from parliament buildings and palaces to satellite capabilities and telecommunications networks. In countries from Angola to Zimbabwe to Myanmar, China also sells the ruling elites the weapons they need to hold on to power - and rig the occasional election, as Mugabe just did.

Today, more than a thousand Chinese firms, private and state-owned, have been deployed to more than 50 African countries, many bringing in their own workers to add to the estimated 3 million Chinese working overseas. Backed by heavily subsidized, low-interest loans from the government, both state-owned and private Chinese construction firms have been able to put down deep economic roots in African soil, while helping China to solve its own politically volatile unemployment problems.

The investments made in highway systems and communications quite literally and digitally pave the way for precisely the kind of imperialistic "high-low" trade that Lenin once railed against. On the high end, China directs its financial capital and human resources to the development of the extraction and harvesting activities and transport of the natural resources back home for the production of higher value-added goods.

In the process, China systematically strips nations of their raw materials and natural resources. Adding injury to injury, China recovers the costs of these resources and materials by dumping cheap finished goods into these same countries, often driving out local labor and driving up the local unemployment rate.

That China implements this imperialistic strategy by leveraging its position as a permanent member of the UN Security Council with veto power is arguably one of the most reprehensible aspects of an amoral foreign policy. That foreign policy is founded on a principle that China's own President Hu Jintao has preached like the lowliest of rug merchants across Africa and Latin America: "Just business, no political conditions."

Peter Navarro is a business professor at the University of California-Irvine, a CNBC contributor, and author of The Coming China Wars (FT Press). www.peternavarro.com

(Copyright 2008 Peter Navarro.)


China joins UN peacekeepers in Sudan (Sep 25, '07)

Darfur: Forget genocide, there's oil
(May 25, '08)


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