Will China Use Natural Resources to Get it’s Way?

China’s growing economy is dependent on its access to foreign sources of raw materials. The nation is a major consumer of copper, zinc, tin and aluminum.

The country is pursuing deals with mineral-producing countries to secure supply for its industries. It also has invested billions in building infrastructure to ensure it can obtain reliable supples of these resources.

1. Natural Gas

Natural gas, also known as liquefied petroleum gas (LNG), is a liquid fuel that can be burned to heat homes, cook food, and produce electricity. It is made from four naturally occurring gases, namely methane, ethane, butane, and propane.

China produces a lot of natural gas and has the potential to become a major supplier in the future, but many of its biggest fields are facing production challenges. The Ordos basin in northern China is a prime example, where output has peaked at about 36 bcm but can’t grow without new wells.

China recently introduced nationwide gas pricing reform that links the price of natural gas to oil prices in an effort to address shortages and increase transparency. However, this pricing mechanism creates biases in favour of suppliers and may distort the gas market.

2. Minerals

One of the biggest things China can do to get its way is by using natural resources. This can include securing minerals and oil from other countries.

Minerals are naturally occurring solids that have a distinct chemical composition, a crystalline structure and are formed by geological processes. They may consist of one or more elements, or a mixture of them called compounds.

Many of the materials that are used in our everyday life are made from minerals. Talcum powder, cosmetics, the pigments in paint and even our mobile phones and computers are all composed of minerals.

Some minerals are solid, such as ice (salt) or a rock like granite. Other minerals are more flexible, such as the mica minerals.

3. Oil

Robust industrial growth, increasing living standards, and an increasingly sophisticated population have left China with a nearly insatiable thirst for energy. Oil fuels China’s transportation, plays a critical role in industry, and is a significant input in agriculture.

Since 1993, China has become a net oil importer and is expected to continue to do so. This will have profound implications for global energy, trade, and financial flows as well as security and foreign policy.

Currently, the majority of Chinese oil imports come from the Middle East. Considering that Chinese domestic oil production is unfeasible, these imports are an essential part of the country’s energy strategy.

4. Water

Water is one of the biggest challenges facing China. It is a vital resource that has been polluted and depleted by decades of industrial growth and a heavy reliance on agricultural and power generation activities.

The problem is exacerbated by regional disparities in resources. A third of the country’s population lives in 15 northern provinces, which have a fraction of the freshwater available in the south and are suffering from severe water shortage.

In an attempt to alleviate this situation, the Chinese government has built megaprojects that are intended to redirect surplus water from southern to northern areas, including the world’s largest water diversion project, dubbed the South-to-North Water Diversion (SNWD).

This is a complex issue and will require cooperation among nations to address. The government must also break down bureaucratic barriers to data sharing between governmental agencies and make it accessible to the public. It will be impossible to implement a holistic policy without these measures.

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