To have power and independence, any country needs a solid economic base. That’s even more true of superpowers/empires. To secure their economic sovereignty they need the raw materials and markets of less powerful countries. They reinforce their economic sovereignty by taking others’. The British did it through colonialism. The US, USSR, and Germany through expansionism. During the Cold War, the Superpowers used ideology and proxies to gain political control and access to markets. China’s approach is different. It is less concerned with political control. It just wants to buy up supply chains.
China gets that we are living in an increasingly resource-constrained world and it’s getting in to buy up what it can while it can.
This is an extension of the ‘neo-mercantilist’ approach to trade. Neo-mercantilism is an economic strategy whereby countries attempt to maintain and improve their economic power by running high current account balances – exporting more than they import. It emphasises central control and currency control, while discouraging domestic consumption to build the State’s economic power on the world stage.
With its current account surplus and the need to keep its currency down, a neo-mercantilist country needs to spend its surplus overseas. China does it, in part, by buying up the foreign resources it needs to import. In doing so, China is able to re-coup the profits from its own imports and further builds its economic independence. Of course, some element of political control is usually necessary.
We see this in Africa, where China’s oil investment Sudan, for example, helps prop up a government that the West wants to isolate but that is more of a side-effect. The objective is control of the oil. In the Pacific, China buys the favour of rulers with mana-enhancing white elephant projects like the Samoan Aquatic Centre. Built by Chinese workers with Chinese funds for the South Pacific Games, even the expense of maintaining this glory project is beyond Samoa, so its rulers are dependent on Chinese money to keep it running. In return, China is allowed to buy up fishing licences.
And we also see it in New Zealand. Natural Dairy New Zealand, which is aiming to buy the Crafar farms as a first foothold into owning the base of New Zealand’s dairy supply, is really China Jin Hui Mining Corporation Limited. This is a state-owned company. By buying Crafar farms, the Chinese government would be starting to gain control of the supply of one of its fastest growing imports. The farms would be in New Zealand but the product and the profits would flow to China.
Some switched on people asked ‘what’s in it for China?’ when they agreed to negotiate a free trade deal with a small country that already had nearly no tariffs on its imports. Well, this is the answer – control over the source of most of its dairy imports.
In light of this, and the growing concerns in New Zealand about regaining a measure of our economic sovereignty, the formation of the ‘New Citizens’ Party and the new ‘United’ newspaper are very interesting. Both seem to be about pushing Chinese government interests, keeping New Zealand open for Chinese investment. I wouldn’t be surprised if it turns out that the people behind both rather shadowy organisations are Party members.
New Zealanders shouldn’t have any problem with immigration, it’s a central feature of our history. Immigrants enrich our culture. We shouldn’t necessarily be anti-foreign investment. While we continue to fail to save to build our own capital base, we need others’ money. But letting a foreign government – it doesn’t matter which government – buy up our primary export industry is a strategic mistake.