China is pouring another $7bn (£4.4bn) into Brazil’s oil industry, reigniting fears of a global “land grab” of natural resources.
State-owned Sinopec clinched the deal with Spain’s Repsol yesterday to buy 40 per cent of its Brazilian business, giving China’s largest oil company access to Repsol Brasil’s estimated reserves of 1.2 billion barrels of oil and gas.
The Repsol deal follows a slew of similar deals across the world. This year alone, Chinese companies have laid out billions of dollars buying up stakes in Canada’s oil sands, a Guinean iron ore mine, oil fields in Angola and Uganda, an Argentinian oil company and a major Australian coal-bed methane gas company.
But it is a strategy causing anxiety elsewhere in the world.
Contrary to the conspiracy theories, China is not looking for world domination. It has seen economic growth averaging a massive 10 per cent for the best part of three decades and the natural resources required to support even slightly moderated growth are an overwhelming priority.
But concerns remain about China’s involvement in politically difficult countries, particularly in Africa. China is not squeamish about the politics of its business partners. It follows a simple formula, offering premium prices and massive infrastructure investments in return for long-term concessions for key resources.
But China is also involved in some of Africa’s more controversial countries. It came in for widespread criticism in 2008 for arms sales to war-torn Sudan, a major trade partner, and its alleged refusal to help resolve the humanitarian crisis in Darfur. It has also been accused of paying multimillion-dollar backhanders in return for African leaders repudiating Taiwan at the UN, although nothing has ever been proved. And because the majority of the deals are done on a government-to-government basis, there is no way to be clear on the extent of the relationships.
