Because of this China and its demand still remains at the heart of the global resources industry. China once consumed 60 per cent of all seaborne iron ore, and despite its waning appetite it still has the largest influence on many metals due to its overwhelming demand for raw materials – relative to other nations.
“If you believe that China is one of the most significant factors in the global mining market – whether it be capital, consumption, stockpiling, project construction or its announced infrastructure initiatives – then it’s imperative to pay attention to the economic and political issues shaping the country’s future,” australianmining.com.au reports in reference to Deloitte Canada’s global leader for mining M&A advisory, Jeremy South.
Unlike many other nations China has a highly interventionist government, which dictates market controls. “Beyond interfering with the free movement of markets, the government’s fiscal intervention may threaten its ability to fund new programs designed to spur future growth,” Deloitte reports.
In particular, the mining industry has been keeping a close on three primary initiatives: the Asia Infrastructure Investment Bank (AIIB), created to fund a range of commodity intensive energy, transport and infrastructure projects across Asia with a capital pool starting at what the Financial Times believes is US$100 billion; the One Belt, One Road program designed to spur trade between China and its neighbouring countries along the Silk Road; and the megacity project, which aims to link Beijing, Tianjin, and Hebei into a single city of 130 million people.
Despite these transparent plans, China’s trade regime remains opaque, with Deloitte stating that “without access to transparent official data, miners remain in the unfortunate position of making forecasts based on potentially flawed information”.
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