Chinas Friendly Resources: India, Russia, Africa, Saudi…

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China has been building closer ties with its Asian neighbours for some time, and is central to the development of the East Asian Free Trade Area (EAFTA), but China has not been ignoring its largest neighbours, India and Russia, or those further afield in Africa.

This year is the year of India-China Friendship, reflecting the new strategic and cooperative partnership between the two countries. Part of the strategy is to avoid competition for resources. This has resulted in a memorandum of understanding, and a successful joint bid by India’s Oil and Natural Gas Corp (ONGC) and China National Petroleum Corp. to buy Petro-Canada’s 38 percent stake in a Syrian oil company, Al-Furat Petroleum, for US$573 million. India and China also share an interest (20 and 50 percent respectively) in Irans Yadavaran, the worlds largest undeveloped oil field.

Earlier deals have involved competition that has driven up costs, most recently in the case of offshore oil assets in Nigeria, and in the purchase of PetroKazakhstan the Chinese prevailed in both cases.

China has also worked hard to improve ties with Russia, a major source of natural resources and political power, and is holding the Russian National Year to improve the bilateral relationship.

Further afield, China has developed a comprehensive strategy for Africa where recent activities include CNOOCs US$2.3 billion oil deal in Nigeria, and where Chinas political and commercial influence are likely to grow. In addition, a deal was signed this month with Saudi Arabia, which supplies 14 percent of China’s oil, for “cooperation in oil, natural gas and minerals”.

These moves reflect Chinas need for secure supplies of resources, but also its increasing geopolitical influence. While some in the West are still tempted to see China as a threat, the opportunities it offers are being readily accepted by others. Positive engagement is in any case likely to have more chance of success than short-sighted attempts at containment.

Foreign companies need to account for the impact of Chinas regional and global activities, and must also monitor risk issues such as competition for resources and political sensitivities.

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(Updated 31/1/06))

2 Responses to “Chinas Friendly Resources: India, Russia, Africa, Saudi…”

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