China scores own goal!?
by, 6th-July-2009 at 10:32 AM (1267 Views)
It's a goal!
** seems plausible. But I was of the opinion all the while that the Chinese stocking of all kind of base metals in the last few months is very much a defensive move, driven by multi-facet needs - political, monetary, financial, etc.
Thus far, if I can recall correctly they had been piling up all kind of commodities including oil and gas as a diversification away from the US$. In addition, she has been signing up deals with various commodity countries all over the globe including Australia (others are Russia, Brazil, Central Asian blocs, Mid East Oil States, etc).
Depending on how one chooses to view the whole scheme of thing, if you are a small minded person and see only small things from a singular perspective, may be there's some truth in this claim; but if you were to cast away this narrow view and instead "see" thing from the Chinese perspective, the Chinalco-Rio deal is just one battle in the whole "war".
In fact, in my view, Rio's walking away from Chinalco frankly is a stupid own goal to the company. It was given an opportunity to be the biggest mining company in the world, but instead it gave it away and handed itself on a platter to BHP. Just imagine what a steady stable long term demand from China in the next 20 or 50 years can do for Rio. And the prestige of the Rio management in the Chinese leadership eyes and the potential of almost unlimited capital for global resource exploration and expansion?
Too bad, the share holders got bogged down by all the vested interests through petty parochial short sighted emotional appeals. The politicians won the day but the real losers are the Rio share holders themselves.
In any case, the game is not over yet. As long as Rio intends to sell 50% or more of its iron ore to China, it will have to face up to this unpleasant truth - the Chinese can walk away from dealing with it any time, just like it did to Chinalco. It might not happen just yet but it's something that will always linger behind every encounter and negotiation and there is no telling if the Chinese will or will not return this favour.
What goes around comes around... this is a basic human trait. The best everyone including the media brains can/should do at this stage is keeping a "neutral" stance. Avoid rubbing more salt or raising the sensitivity of the Chinese. It won't help the Australian cause at all, for as long as China remained Australia's biggest customer.
Of course Australia can always choose the current path of antagonising the Chinese in every deal we have with them... and why not? Since this is a proud country and the people can always go hungry a little, eat a little less, face a little more economic hardship... all these are all secondary consideration, right? What is important is we can do what we like and kick **** as we like, right?
Sure... first we kicked the Chinese butt; next we kicked the Indian butt through how their students are being treated, next, who else?
Who needs friends from Asia?
... since we are such a proud people. Yea!