1. Is China “Locking Up” the World’s Natural Resources? Theodore H. Moran Georgetown University Peterson Institute for International Economics

2. On the demand side, Chinese appetite for vast amounts of energy and minerals puts tremendous strain on the international supply system.

3. On the supply side, Chinese efforts to procure raw materials can exacerbate the problems of high demand, or help solve the problems of high demand.

4. Do Chinese procurement arrangements solidify a concentrated global supplier system (and enhance Chinese ownership/control within that concentrated supplier system)?

5. Or do Chinese procurement arrangements expand, diversify, and make more competitive the global supplier system (and use Chinese ownership/control as a lever for such expansion, diversification, and enhanced competition)?

6. I. Take an Equity Stake to Create a “Special Relationship” with a Major Producer. Buyers and/or their home governments take an equity stake in a “major” producer so as to procure an equity- share of production on terms comparable to other co-owners.

7. II. Take an Equity Stake to Create a “Special Relationship” with the Competitive Fringe. Buyers and their home governments take an equity stake in an “independent” producer so as to procure an equity-share of production on terms comparable to other co- owners

8. III. Loan Capital to be Repaid in Output to a Major Producer. Buyers (and/or their home government) make a loan to a “price maker” producer in return for a purchase agreement to service the loan.

9. IV. Loan Capital to be Repaid in Output to the Competitive Fringe. Buyers (and/or their home government) make a loan to a “price taker” producer in return for a purchase agreement to service the loan.

10. The evidence from the fourteen largest Chinese natural resource procurement arrangements shows that Chinese efforts fall predominantly into categories that help expand, diversify, and make more competitive the global supplier system

11. Scorecard of China’s Procurement Arrangements I. Take an Equity Stake to Create a “Special Relationship” with a Major Producer. Buyers and/or their home governments take an equity stake in a “major” producer so as to procure an equity-share of production on terms comparable to other co-owners. 8.CNOOC Acquisition of 45 percent Ownership of Akpo Field, Nigeria 2006 11.Sinopec, CNOOC in Angola 2004 II. Take an Equity Stake to Create a “Special Relationship” with the Competitive Fringe. Buyers and their home governments take an equity stake in an “independent” producer so as to procure an equity-share of production on terms comparable to other co-owners. 1.Sinopec Proposed Acquisition of Addax Petroleum for $7.2 billion in 2009 2. Chinalco-Rio Tinto 2008-2009 (aborted) 5.Socomin Joint Venture in the Democratic to Finance $9 billion in Infrastructure 2008 6.Sinopec and the Yadavaran Oil Field in Iran 2007 7.Chalco-Aurukun Bauxite Project 2007 9.CNOOC-Unocal 2005 (aborted) 10.China National Petroleum Company (CNPC) and PetroKazakhstan 2005-2009 12. CNOOC-North West Shelf Ventures LNG Exports from Australia 2002 13.China National Petroleum Corporation (CNPC) and Sinopec with PetroDar Operating Company, Sudan 2001 14. China National Petroleum Corporation (CNPC) and Greater Nile Petroleum Operating Company (GNPOC) in 1996 III. Loan Capital to a Major Producer to be Repaid in Output. Buyers (and/or their home government) make a loan to a “price maker” producer in return for a purchase agreement to service the loan. 4. China Development Bank Loan to Rosneft and Transneft of IV. Loan Capital to be Repaid in Output from the Competitive Fringe. Buyers (and/or their home government) make a loan to a “price taker” producer in return for a purchase agreement to service the loan. 3.Sinopec-Petrobras 2009

12. Chinese attempts to exercise control over “rare earth elements” (REE) mining may constitute a significant exception, however.

13. Other separate important issues include the impact of Chinese resource procurement on rogue states, on authoritarian leadership, on civil wars, on corrupt payments and the deterioration of governance standards, and on environmental damage.

14. Such effects may make patterns of Chinese resource procurement objectionable, on grounds quite apart from the debate about possible “lock up”, “tie up”, and “control” of access on the part of China and Chinese companies.