A little practice before the House of Levy tomorrow.

My proper teachings to the article writer of this article are after the cited article. The article of exercise can be found at:
http://www.eastasiaforum.org/2010/09/26/is-chinese-dominance-distorting-natural-resource-markets/comment-page-1/#comment-168475

"Is Chinese dominance distorting natural resource markets?


September 26th, 2010

Author: Theodore Moran, Georgetown University and PIIE, Washington



When Chinese companies take an equity stake in African oil fields, extend loans to mining and petroleum investors in Latin America, and write long-term procurement contracts for minerals and LNG from Australia, do these activities cut off other buyers from access to world supplies? Or, might Chinese investments, loans, and long-term contracts constitute a positive influence for non-Chinese buyers, helping to multiply suppliers and open up new sources of raw materials?
On the demand side, Chinese appetite for vast amounts of energy and minerals puts tremendous strain on the international natural resource sector. On the supply side, the effect of Chinese efforts to procure raw materials is more ambiguous.
Which outcome Chinese procurement arrangements generate depends upon whether those arrangements solidify a concentrated global supplier system (and enhance Chinese ownership/control within that concentrated supplier system), or expand, diversify, and make more competitive the global supplier system (using Chinese ownership/control as a lever for expansion, diversification, and enhanced competition).
The Chinese deployment of capital to procure natural resources takes four forms.
In the first procurement arrangement, Chinese investors take an equity stake in a very large and already established producer so as to secure a share of production on terms comparable to other co-owners.
In the second procurement arrangement, Chinese investors take an equity stake in an up-and-coming producer so as to secure an equity-share of production on terms comparable to other co-owners.
In the third procurement arrangement, Chinese buyers and/or the Chinese government make a loan to a very large already-established producer in return for a purchase agreement to service the loan.
In the fourth procurement arrangement, Chinese buyers and/or the Chinese government make a loan to finance an up-and-coming producer in return for a purchase agreement to service the loan.
All four strategies are intended to ‘lock-in’ future supplies. Their effects on the global system, however, are quite different. If the procurement arrangement simply solidifies the Chinese company’s legal claim to a given structure of production (the first and third arrangement), ‘tying up’ or gaining ‘preferential access’ to supplies has zero-sum implications for other consumers – that is, it cuts them out. However, if the procurement arrangement expands and diversifies sources of output more rapidly than growth in world demand (second and fourth arrangement), other consumers have easier access to a larger and more competitive global resource base.
So which strategies do Chinese companies typically embark on?
Examining China’s 16 largest procurement arrangements there are only three instances in which Chinese natural resource companies take an equity stake to create a ‘special relationship’ with a major already-established producer. But the predominant pattern (thirteen of sixteen) is to take equity stakes and/or write long-term procurement contracts with producers that might be considered along the competitive fringe.
Thus, popular concerns about Chinese ‘lock up’ of world resources are unsubstantiated. This should not be surprising. The Japanese government, for example, entertained the idea of creating the country’s own major resource companies, or engaging in procurement arrangements with major resource companies and/or producer governments during the early resource struggles of the 1970s. But from the late 1970s through the 1980s, Japanese policies shifted toward procurement arrangements with up-and-coming producers, and Japanese investment, loans, and off-take contracts became a major force in enhancing the competitive structure of global extractive industries and diversifying the geography of production, continuing through today.
Nonetheless, there are other big concerns about Chinese resource investments.
Chinese natural resource investment flows to problematic states and regions. Perusal of these sixteen largest cases shows long-standing activity by Chinese investors in Sudan, and determined Chinese efforts to enable Iran to circumvent external pressures. A review of smaller (but still large) Chinese projects reveals Chinese support for oil transport, natural gas, and mineral production in Myanmar.
In addition, Chinese oil and mineral investment may have a dubious impact on host country governance. The disbursement of the first Chinese Exim Bank loan of US$2 billion for infrastructure projects in Angola, in return for access to resources, generated such a scramble for payoffs that the Chinese Secret Services had to appeal to President dos Santos for guidance about who the special recipients should be. The ultimate impact of Chinese investments and loans in the Democratic Republic of Congo will not be known for some time.
The world community must assess the potential implications of Chinese resource investments for regional conflict, corrupt payments, repressive government, and violation of human rights. Undertakings such as the Extractive Industries Transparency Initiative must be structured – via company-by-company reporting of tax payments and procurement contracts, for example – to help induce Chinese investors to observe best practices equal to OECD competitors in the business of international resource development. But on the specific question of ‘locking up’ the world resource base, Chinese investment has been helping to multiply and diversify sources of supply.
Theodore H. Moran is the Marcus Wallenberg Professor of International Business and Finance at Georgetown University, and Non-Resident Senior Fellow at the Peterson Institute for International Economics.
This article is an edited extract from the PIIE Working Paper, Chinese Strategy to Secure Natural Resources: Risks, Dangers, Opportunities."
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Article writers lessons as per a logical attack on its primary conclusion before before presenting post primary examples of its own statement being refuted by the writer.
I seem to find your statements misleading and easily rebutted.
I will use your own words to show an inconsistent statement
"In the
This statement to me would show a competitive fring. As China is sharing the resource ownership with other co-owners. Allowing the other owners to have say and possible allow other relationships to begin.
"Examining China’s 16 largest procurement arrangements there are only three instances in which Chinese natural resource companies take an equity stake to create a ‘special relationship’ with a major already-established producer."
I would think that this relationship based on equity stakes would allow China to own part of the company. Meaning that they have control. Then the a statement was made that:
"But the predominant pattern (thirteen of sixteen) is to take equity stakes and/or write long-term procurement contracts with producers that might be considered along the competitive fringe."
Then this statement specifically that not only is China taken share of the company but they and or are writing long term procurement contracts. This would mean that if China is taking equity stakes. They could keep out other buyers by seeing who is purchasing or who is trying to purchase. Then with China being able to actually create long term procurement contracts this would be eve worse. If we take the procurement contracts in context of owning the company the primary conclusion that is come to seems null. If we take the context that China just wishes for long term procurement of the resources against the primary conclusion to these statements seems null.
The primary conclusion to these statements is:

"Thus, popular concerns about Chinese ‘lock up’ of world resources are unsubstantiated."
Therefore you primary conclusion to the matters of China locking up world resources is not valid. This is because. Your statements include the fact that China is taking equity stock in three of China's resource contracts. Then in the other 13 they and or are taking equity stakes. However, the reality of the consequences is the procurement of long term contracts in which China can easily stop other companies from using the resources or purchasing them. Because China has a long term contract. Which does not go up for bid within a reasonable amount of time for fairness and competition to other countries or business. As such. China's locking up resources as per your statements is a valid worry. Along with that your primary conclusion does not hold water to the statements you made to create the vessel to hold it in. Thus stating that China has only three equity stakes in which other companies could still get resources and China would just get dividends from ownership. Leaves way for the pre primary conclusion. Which states that China is procuring long term contracts plus and or equity stakes in the majority of their major resource contracts.
How an article write could try and validate such a primary statement as China is not locking up world resources, with China is buying equity shares, and in their majority they are locking up contracts for long periods is beyond the scope of reason ability to understand such a business dealing. As such fair competitive resource acquisitions would not be allowed to be locked up for so long without new and different bidders getting a chance to gain access to those resources. As such China has found a way to keep it unfair by buying equity shares and then using such power to further long term procurement contracts. Were if the Free market societies national economists were doing their job. Such contracts should not be allowed to go for the length of the mine or to point of exhaustion or even such creation of comparative advantage as to create a relative absolute advantage.

Thus the primary conclusion is not supported by your statements. In fact your statements support the very opposite of your primary conclusions.



Rider I

Trust me, we should worry that China is locking up resources. They own 95% of the worlds rare resources by unfair contract bidding through use of multiple SOE's that are run by the same centralized agency. Thus creating a monopsony style bidding uncompetitive business dealings. Nice try though.



The CIA an agency I do look up too has started a proper briefing to the President about Foreign Economics and their effects on foreign sovereign national security and domestic US national security. This program was started in 2009. I am sure that the World Should follow suit for its major leaders, as usually light the way. China's massive fast growth I believe has given the world the bends and probable created bubbles in the system, that have popped.



Sorry about grammar have to move on.
The Lesson here my you're streamer is that if you make a primary statement do not then use statements that rebut your own primary statement or that create massive wholes in your vessel that you wish to hold water in. As such your vase no longer holds water as your own statements created weak points in your articles. This then makes your article weak and misleading as the statements do not back up the primary conclusion that China. Further more your statement's were so weak that they were easily turned on their own primary statement.