Chinese World Domination: Controlling the World's Commodities

The previous article on Chinese world domination covered their goal of cornering the world’s supply of energy. However, energy isn’t the only item they are striving to control. China is very active in acquiring and controlling as much as possible of the world’s commodity markets.

Chuin-Wei Yap reports in the Wall Street Journal: Asia Business that Chinese imports of agricultural commodities have increased significantly over the past couple of years. Corn imports have increased 18 fold in a single year; wheat imports increased 36 percent; “soybeans reached a record of 54.8 million tons”; they even imported over 10 times as much rice as the year before. Regarding wheat, Chinese buyers are talking to all of the major growers in Australia.

As China becomes more and more dependent on grain imports to feed their large population, there is little doubt that they will do everything necessary to retain and grow the supply lines they are able to establish. At least until such time as they are able to supply their vast grain needs domestically, “… the leadership reaffirmed earlier this year that China aims to produce at least 95% of the grain it consumes through 2020.” Even then, they will want assurances that they will be able to meet their needs in the case of a major drought.

China is also very concerned about other commodities, as was shown in this article from CNBC, “M&A Activity Returns to China’s Mining Sector.”

China’s mining companies are back on a shopping spree after a short break, signaling the sector still has the appetite and the funds for overseas acquisitions, even as the government’s tightening measures squeeze liquidity.

According to Ernst & Young, M&A deals involving Chinese mining companies increased from $2.1 billion at the end of March to $5.3 billion at the end of May. The Big Four accounting firm also expects M&A activity to accelerate further, outpacing 2010 by 15-25 percent.

However, there is one segment of the commodity market that China controls with a heavy hand. Investment U reports that China currently supplies,

98 % of the global demand for rare earth elements. … Reuters reported on Tuesday that the Chinese raised the price for rare earth metals past the $100,000 per ton mark – the first time ever that the price per ton has vaulted into the six-figure range. According to Reuters, that’s an almost nine-fold increase from a year ago, and up an astonishing $34,000 per ton in the last month alone. … At the same time China has also been reducing its exports of rare earth elements since last year. Why? Because its ultimate goal is to keep all the rare earths it produces. … Nevertheless, [it has] obviously shocked China’s rare earth industry customers. Unfortunately, they have few options available in the short term, other than to pay China’s exorbitant asking price.

This is a critical issue, since rare earth elements are an essential ingredient in many products that have resulted from our technology. The Christian Science Monitor in their article titled, “Top 5 ‘rare earth minerals’: What are they?” lists many uses, for example:

Reuters reported last year that a single Toyota Prius electric motor requires 1 kilogram (2.2 lb) of neodymium, and each battery uses 10 to 15 kg (22-33 lb) of lanthanum.

Neodymium (atomic No. 60) is most commonly used in magnets for microphones, loudspeakers, in-ear headphones, and guitar and bass guitar pick-ups. It’s also used in modern weapons, sparking concerns over China‘s corner on the market, Bloomberg reported in September:

For the Monitor, science reporter Pete Spotts reports: “… Erbium placed at intervals along fiber-optic lines amplifies the light carrying data, allowing it to travel long distances.”

Erbium will bring you The Super Bowl. I’m not kidding!

The element is essential in fiber-optic telecommunication cables, which bring cable television and Internet to your homes and apartments.

China is not only using their monopoly in rare earth metals to raise the price as high (or higher) than the market can stand; they are also using this monopoly in a commodity critical to the technology of the modern world, to control their rare earth customers in ways not related to the market. In September, 2010 the Business Insider reported,

The Japanese government is considering filing a complaint with WTO over the alleged halt of rare earth metal exports by China, … China allegedly banned the export of the materials, used in the production of electronics, as retaliation over the capture and continued holding of a fishing captain.

Even though China has stated that the ban did not happen, the quick release of the fishing captain seems to suggest that something was going on. Japan’s entire auto and technology industries depend on rare earth metals, with 92 percent of their supply coming from China.

There is no doubt that as China is able to gain control of various sectors of the world’s commodity markets, they will use their advantage in any and every way possible.

To illustrate the extent to which China will go to force their own citizens to bow to their will, in the provincial capital of Wuhan, a 68-year-old woman jumped to her death rather than face the demands of the government.

Li [Jingxiu] lived with her husband in a four-story building, and had relied on renting out the first floor as their main source of income. When authorities offered them less than one third of the usual amount of compensation for their home, they refused to move.

Earlier this month, another family who refused to move was severely beaten by thugs. When eviction officials threatened Li in the same way, she apparently panicked and decided to take her own life.

If they treat their own citizens in this way, there is little doubt they would do whatever was necessary to gain and retain the commodities they need to assure the security of the Communist Party, and then use this power to bend the rest of the world to their will, as they did with Li Jingxiu’s family.