By All Means Necessary (34 page)

64
. Ibid., 9. In contrast with North America, where steel makers are largely integrated, most domestic Chinese ore was also sold on a spot basis.

65
. “Chapter 2: Trade—Section 8: Non-Tariff Controls, ”
China Doing Business in China
, Economist Intelligence Unit, February 1, 2010,
http://store.eiu.com/article.aspx?productid=1950000195&articleid=1915242576
; and Zhengzheng Gong, “Iron Ore Import Rules Tightened, ”
China Daily,
December 29, 2006,
http://www.chinadaily.com.cn/bizchina/2006-12/29/content_770678.htm
.

66
. Wei Jiang, “China Accepts 19% Rise in Iron Ore Price, ”
China Daily
, June 21, 2006,
http://www.chinadaily.com.cn/china/2006-06/21/content_622052.htm
.

67
. “FM: China to Handle Spy Case of Rio Tinto Employees ‘According to the Law, '”
Xinhua
, July 9, 2009,
http://news.xinhuanet.com/english/2009-07/09/content_11680535.htm
.

68
. “Watchdog on Secrets: Rio Caused ‘Huge Loss, '”
Xinhua
, August 10, 2009,
http://news.xinhuanet.com/english/2009-08/10/content_11857950.htm

69
. In the months that followed, Chinese authorities began to walk back their accusations. In early August 2009, the charges were reduced to “mere” corporate espionage and bribery. The
Wall Street Journal
reported that “About a month after the Rio Tinto executives were detained, Beijing downgraded the case by appearing to drop the national espionage allegations and has ever since contended it was a nonpolitical, commercial criminal matter.” The
Journal
later noted: “The motive behind the bribes for the salesmen isn't clear but analysts say prosecutors likely alleged that steelmakers offered cash in order to secure access to supplies of iron ore, a prized commodity that is subject to a chaotic trading environment in China.” What actually happened remains unclear; those who know the most aren't the ones who are talking to journalists or scholars. See James T. Areddy, “Rio Tinto Trial Adjourns, ”
Wall Street Journal
, March 24, 2010.

70
. Khanna et al., “Vale, ” 10.

71
. Javier Blas, “Annual Iron Ore Contract System Collapses, ”
Financial Times
, March 30, 2010. Average spot market prices—first quarterly and then over shorter periods—have been used instead.

72
. Ibid.

73
. The large producers, once big defenders of the annual contract approach, have pushed steadily toward more flexible and transparent markets, with prices even under long-term contracts adjusting ever more frequently. Consumers, long used to relatively stable prices, have had second thoughts. Although derivatives markets for iron ore have begun to emerge, the process is exposing producers to high price volatility with only limited opportunity to protect themselves.

74
. Jiangning Yan and Boling Zhang, “Death Knell for Benchmark Iron Ore Pricing, ”
Caixin
, April 9, 2010,
http://english.caixin.com/2010-04-09/100133292.html
.

75
. Gustavo Bonato and Leila Coimbra, “UPDATE 3-Posco Wants Benchmark Iron Ore Prices, Vale Amenable, ”
Reuters
, June 21, 2012.

76
. Burns, “Bauxite and Alumina Moving Rapidly to Spot Pricing.”

77
. Warner ten Kate, Lászlo Varró, and Anne-Sophie Corbeau,
Developing a Natural Gas Hub in Asia: Obstacles and Opportunities
(Paris: International Energy Agency, 2013).

78
. “As Chairman D'Amato noted in his testimony, ‘it is critical to persuade China to abandon this mercantilist spree to lock up attractive energy supplies wherever it can, and instead participate [with the International Energy Agency] to plan for sharing oil in the case of supply disruptions, and to participate in the open market buying of its supplies and begin relying on free markets to promote energy security for everyone.'” From U.S.-China Economic and Security Review Commission,
2005 Report to Congress
, 109th U.S. Congress, First Session, November 2005, 171.

79
. Erica S. Downs, “The Fact and Fiction of Sino-African Energy Relations, ”
China Security
3, no. 3 (2007); Downs, “Inside China, Inc: China Development Bank's Cross-Border Energy Deals, ” Washington, DC, Brookings Institution, March 2011; and Shaofeng Chen, “Has China's Foreign Energy Quest Enhanced Its Energy Security?”
China Quarterly
207 (September 2011).

1
. Justin Scheck, Liam Moloney, and Alexis Flynn, “Eni, CNPC Ink Deal in Mozambique, ”
Wall Street Journal
, March 14, 2013.

2
. “Rio Tinto Writes Down Its Mozambique Assets, ”
Zimbabwean,
January 17, 2013,
http://www.thezimbabwean.co/news/africa/63196/rio-tinto-writes-down-its.html
.

3
. Stanley Reed, “Natural Gas Discovery Promises a Boon for Eni and Mozambique, ”
New York Times
, December 5, 2012.

4
. Globalization Monitor, “Preliminary Report on China's Going Global Strategy: A Labour, Environment, and Hong Kong Perspective, ” Working Paper Series, February 2009,
http://www.globalmon.org.hk/en/wp-content/uploads/2009/03/china_going_global_strategy_final.pdf
, 21–24.

5
. Ibid., 15–16.

6
. Peter J. Buckley, L. Jeremy Clegg, Adam R. Cross, Xin Liu, Hinrich Voss, and Ping Zheng, “The Determinants of Chinese Outward Foreign Direct Investment, ”
Journal of International Business Studies
38 (July 1, 2007): 514.

7
. “Cheng Ming (Hong Kong Monthly), 176, March 5, 1992.” As cited in Suisheng Zhao, “Deng Xiaoping's Southern Tour: Elite Politics in Post-Tiananmen China, ”
Asian Survey
33, no. 8 (August 1993): 742.

8
. “Southern Tour Legacy, ”
Global Times
, accessed April 24, 2013,
http://www.globaltimes.cn/SPECIALCOVERAGE/Dengssoutherntour.aspx
.

9
. Zemin Jiang, “Accelerating the Reform, the Opening to the Outside World and the Drive for Modernization, so as to Achieve Greater Successes in Building Socialism with Chinese Characteristics, ” Jiang Zemin's Report to the 14th Party Congress, October 12, 1992.

10
. Ibid.

11
. Rongji Zhu, “Report on the Outline of the Tenth Five-Year Plan for National Economic and Social Development, ” Report to the Fourth Session of the Ninth National People's Congress, March 5, 2001.

12
. Ibid.

13
. Author interview with Chinese scholar and CSR consultant, Beijing, China, June 21, 2013.

14
. Leslie Hook, “Sinopec Chief Tipped for Political Post, ”
Financial Times
, March 22, 2011.

15
. Yuanyuan Ding, “The Party, the Oil Companies, and Energy Security: Who Determines Chinese Policy?” Georgia State University Department of Political Science, April 22, 2008.

16
. Author interview with Chinese scholar and CSR consultant.

17
. Barry Naughton, “SASAC and Rising Corporate Power in China, ”
China Leadership Monitor
, March 12, 2008,
http://media.hoover.org/sites/default/files/documents/CLM24BN.pdf
.

18
. “Hu Jintao: China Will Further Adhere to ‘Bringing in and Going out' [Hu Jintao: Zhongguo Jiang Jin Yibu Jianchi ‘Yin Jinlai He Zou Chuqu'], ”
Xinhua
, December 11, 2011,
http://finance.qq.com/a/20111211/000657.htm
.

19
. “Full text of Chinese President Hu Jintao's speech at opening ceremony of Boao Forum, ”
Xinhua
, April 15, 2011,
http://english.gov.cn/2011-04/15/content_1845382.htm
.

20
. “Xi Jinping Had Informal Discussions and Issued a Speech with Representatives of Chinese-backed Companies in Angola [Xi Jinping Yu Zhu Angela Zhongwi Qiye Daibiao Zuotan Bing Fabiao
Jianghua], ” Xinhua, November 21, 2010,
http://news.xinhuanet.com/politics/2010-11/21/c_12798135.htm
.

21
. “Xi Jinping: China's Development Will Bring Enormous Business Opportunities for Companies in Many Countries [Xi Jinping: Zhongguo Fazhan Jiang Gei Geguo Qiye Dailai Juda Shangji], ”
Xinhua
, February 20, 2011,
http://www.chinanews.com/gn/2012/02-20/3683583.shtml
.

22
. Jiangning Yan, “MCC Seeks Mineral Wealth Abroad [Zhongye Haiwai Zhao Kuang Lu], ” Century Weekly, September 6, 2010,
http://magazine.caixin.com/2010-09-04/100177070.html
.

23
. Deborah Brautigam, “Chinese Development Aid in Africa: What, Where, Why, and How Much?” in
Rising China: Global Challenges and Opportunities
, ed. Jane Golley and Ligang Song (Canberra: Australian National University E Press, June 2011), 204–205.

24
. Erica S. Downs, “Chapter 4: Who's Afraid of China's Oil Companies, ” in Energy Security: Economics, Politics, Strategies, and Implications (Washington, DC: Brookings Institution Press, 2010).

25
. Peter Cai, “Chinese Urged to Invest in Resources, ”
Sydney Morning Herald
, March 15, 2012,
http://www.smh.com.au/business/chinese-urged-to-invest-in-resources-20120314-1v3mu.html
.

26
. “Global Investment Still Active in China's Mining Industry, ”
China Daily
, November 7, 2011,
http://www.chinadaily.com.cn/bizchina/2011-11/07/content_14047390.htm
.

27
. Global Environmental Institute,
Environmental Policies on China's Investment Overseas
(Beijing: China Environmental Science Press, 2011), 42.

28
. Johanna Jansson, Christopher Burke, and Wenran Jiang, “Chinese Companies in the Extractive Industries of Gabon & the DRC: Perceptions of Transparency, ” Centre for Chinese Studies at the University of Stellenbosch (August 2009), 12. The report is a research undertaking by the Centre for Chinese Studies, prepared for the Extractive Industries Transparecy Initiative (EITI) and the Revenue Watch Institute (RWI).

29
. Global Environmental Institute,
Environmental Policies
, 38.

30
. “China in Africa, ” IDE-JETRO,
http://www.ide.go.jp/English/Data/Africa_file/Manualreport/cia_11.html
.

31
. William Laurance, “China's Appetite for Wood Takes a Heavy Toll on Forests, ” Yale Environment 360, November 17, 2011,
http://e360.yale.edu/feature/chinas_appetite_for_wood_takes_a_heavy_toll_on_forests/2465/
.

32
. This description is from Kevin P. Gallagher, Amos Irwin, and Katherine Koleski, “The New Banks in Town: Chinese Finance in Latin America, ” Inter-American Dialogue Report, February 2012.

33
. Ibid.

34
. This description comes from Steve Coll,
Private Empire: ExxonMobil and American Power
(New York: Penguin Press, 2012).

35
. China National Petroleum Corporation, “Annual Report 2011, ”
http://www.cnpc.com.cn/resource/english/images1/pdf/11AnnualReportEn/0-CNPC%20Annual%20Report%202011.pdf?COLLCC=1054606136&%202
,; and authors' calculations. The balance of production went to its joint venture partners and to host governments.

36
. The figures for ExxonMobil include “domestic” production in the United States, while those for CNPC do not include production in China, but since China is largely closed to Western oil and gas companies, this is the right comparison when looking at the presence of both countries in international oil and gas production. ExxonMobil, “2011 Annual Report, ”
http://www.annualreports.com/HostedData/AnnualReports/PDF/XOM2011.pdf
.

37
. “Sinopec Group Says Plans to Double Overseas Equity Oil Output, ”
Reuters
, January 4, 2012,
http://www.reuters.com/article/2012/01/05/china-oil-sinopec-idUSL3E8C50HI20120105
; and Sinopec Corp., “2011 Annual Report and Accounts, ” March 28, 2012,
http://www.sinopecgroup.com/english/Pages/2011AnnualReport.pdf
, 12.

38
. CNOOC Limited, “Annual Report 2011, ” March 28, 2012,
http://www.cnoocltd.com/encnoocltd/tzzgx/dqbd/nianbao/images/2012412936.pdf
, 11.

39
. Julie Jiang and Jonathan Sinton,
Overseas Investments by Chinese National Oil Companies: Assessing the Drivers and Impacts
, Information Paper (Paris: International Energy Agency, June 2011).

40
. “GABON: Oil Pact with China Aims to Boost Falling Reserves, ” Integrated Regional Information Networks, February 5, 2004; and author interviews in Nairobi, Kenya, with investors and industry officials, February 2013.

41
. Woodrow Wilson Center, “Stepping Lighter? Environmental and Social Impacts of China's Overseas Oil, Mineral, and Gas Investments, ” China Environmental Forum, January 13, 2012,
http://www.wilsoncenter.org/event/stepping-lighter-environmental-and-social-impacts-china%E2%80%99s-overseas-oil-mineral-and-gas
.

42
. China Council for the Promotion of International Trade, “Survey on Current Conditions and Intention of Outbound Investment by Chinese Enterprises, ” April 2010, 21.

43
. Ibid.

44
. Dinny McMahon and David Wessel, “Corporate China Spreads Its Wings, ”
Wall Street Journal
, November 9, 2011.

45
. Authors' calculations based on Heritage Investment Tracker.

46
. “Yanzhou Coal Successfully Acquires Australian Mining Company [Yanzhou Meiye Zaici Chenggong Shougou Aodaliya Kuangye], ” Department of Outward Investment and Economic Cooperation, December 23, 2011; and Luke Hurst and Bijun Wang, “Australia's Dumb Luck and Chinese Investment, ” East Asia Forum, April 1, 2012,
http://www.eastasiaforum.org/2012/04/01/australias-dumb-luck-and-chinese-investment/
.