CFR Scholars Economy and Levi Debunk Myths about China’s Resource Quest, in New Book

China’s meteoric growth and transformation into a major economic power is demanding ever-larger quantities of energy, minerals, land, and water. In a sweeping new book, Senior Fellow for Asia Studies Elizabeth C. Economy and Senior Fellow for Energy and the Environment Michael Levi show how China’s quest to secure those resources is changing the world—and China itself.

In By All Means Necessary: How China’s Resource Quest Is Changing the World, Economy and Levi debunk warnings of inevitable and intolerable rises in commodity prices; unprecedented and unavoidable social and environmental damage to countries where China invests; a competitive playing field consistently tilted against Western companies; and inescapable conflict—even wars—between China and other powers over resources.

But Economy and Levi caution against complacency—particularly on the investment and military fronts. "Some observers have been too quick to extrapolate modest impacts from past Chinese efforts to secure natural resources into the future," they write, "thus blinding themselves to possible challenges down the road." They show why China is often different from others. "Understanding Chinese behavior abroad requires understanding Chinese behavior at home," they emphasize. The central government and state-owned enterprises are powerful actors in establishing China’s overall strategy—much more so than in the West. And institutional weaknesses within China, including in environment, labor, transparency, and the rule of law, are exploited not only at home but also abroad.

However, as China ventures outward, it is also changing itself. As Chinese corporations work with different political regimes, participate in international markets, and adopt foreign standards and practices, pressures for change mount. The authors show that "popular domestic pressure," partly in response to the damage Chinese firms have done to the country’s reputation abroad, is "pushing change in companies’ operations and corporate social responsibility practices." And as China gains greater experience in international markets, policymakers are increasingly accepting markets as a reliable way to secure resources.

Economy and Levi conclude that each country will need to form its own response to China’s quest for resources. They emphasize four approaches:

• As consumers, countries should curb their own demand for resources.
• As producers, countries should maintain open environments for trade and investment, and promote high social and environmental standards.
• As investors, countries should avoid a race to the bottom with China.
• As a great power, the United States should remain committed to providing security for the sea lanes through which resources travel, and stability in resource-producing regions.

PRAISE FOR BY ALL MEANS NECESSARY

"This is the best analysis to-date of the three-way economic and security game among China, other countries, and global market forces. With trenchant policy recommendations, it should be read by all those interested in China’s impact on the world."

—Dennis Blair, former Director of National Intelligence and Commander in Chief, Pacific

"By All Means Necessary is a valuable corrective to the hype—both positive and negative—that typically accompanies accounts of China’s global search for natural resources. Economy and Levi combine an understanding of Chinese politics and economic policy with a detailed knowledge of different global markets, from oil to ore. The result is a myth-busting book that offers insights and advice for policymakers, business leaders, and anyone interested in China and the world."

—Anne-Marie Slaughter, President, the New America Foundation

"Will the twenty-first century be dominated by China in the same way that the last century was dominated by the United States? Economy and Levi have provided a compelling assessment of how supercharged and commodity-intensive growth in China has led to an unprecedented global buying spree for resources as varied as oil and gas, industrial metals and rare earth minerals, ores, and coal, as well as farmland. China’s foreign policy and global geopolitics have been influenced in tangible ways, but they argue convincingly that Beijing’s motivations are not nefarious and the global system will find ways to curb feared excesses, even as the Middle Kingdom moves to secure the territorial seas around it and build a significant naval presence."

—Edward L. Morse, Head of Global Commodities Research, Citigroup

"If we are to intelligently manage China’s resurgence, there are few areas more deserving of our attention than China’s voracious global appetite for natural resources. In this well-written and insightful new study, the authors vividly limn how China’s restless quest for rejuvenation is simultaneously upsetting the old world order and demanding that the other countries develop new ways of understanding and interacting with it. For anyone wishing to come to terms with this aspect of China’s rise, and the policy choices it raises for countries like the United States, this is the go-to read."

—Orville Schell, Arthur Ross Director, the Center on U.S.-China Relations, Asia Society

Elizabeth C. Economy is the C.V. Starr Senior Fellow and Director of Asia Studies at the Council on Foreign Relations. An expert on Chinese domestic and foreign policy, her most recent book was The River Runs Black: The Environmental Challenge to China’s Future.

Michael Levi is the David M. Rubenstein Senior Fellow and Director of the Program on Energy Security and Climate Change at Council on Foreign Relations. An expert on the global politics and economics of energy, resources, and the environment, his most recent book was The Power Surge: Energy, Opportunity, and the Battle for America’s Future.