Thursday, November 16, 2006

China’s capitalists are more rapacious than America’s robber barons of the 19th century or Russia’s bandit capitalists of the new Russia of the 1990s. More greedy than the multibillion-dollar fortunes accumulated on Wall Street’s fast tracks that once took several generations to build and that are now made in a year or two? “More capitalist than the U.S. ever dreamed of becoming, and viciously so,” said one Chinese expert at a closed meeting of the private sector and the intelligence community.

China now has almost 20 billionaires. The Chinese jet-set around the world in G5s, overnight in $12,000 suites in Dubai, charter $30,000-a-day boats in the Caribbean — and run business conglomerates in China. The only rule they have to obey is to keep their nose out of politics. Otherwise, anything goes. Futurologists didn’t see this tectonic geopolitical upheaval coming.

In 1972, the late, great know-it-all Herman Kahn, the “super genius of futurology,” coauthored (with B. Bruce-Briggs) “Things to Come.” Its 490 pages looked at the “Seventies and Eighties,” but oil wasn’t mentioned once. In that year, 1972, Saudi King Faisal secretly pledged to Egypt’s President Anwar Sadat an oil embargo if Egypt sustained reverses in a war against Israel.

The surprise attack by Egypt and Syria, known as the Yom Kippur War, came in October 1973. After initial Egyptian battlefield successes, Israel punched back. No sooner did Gen. Arik Sharon cross Oct. 16 to the west side of the Suez Canal, 10 days after the war began, than King Faisal delivered on his pledge to cut oil to the West. The embargo soon quadrupled the price of oil — and triggered a major shift in the geopolitics of the region.

Futurologists also overlooked deployment of armies of Chinese purchasing agents to developing countries from Southeast Asia to Africa to Latin America. Armed with billions of surplus dollars from accumulated reserves of almost $1 trillion (earned chiefly from cheap exports to the U.S.), Chinese snapped up all manner of raw materials and oil to feed its double-digit growth. More recently, Africa’s 58 heads of state or government were invited to Beijing for an unprecedented summit meeting to seal long-term commercial accords. Suddenly, China was seen as black Africa’s principal benefactor.

To keep up with its gargantuan energy needs, China has also embarked on the world’s most ambitious nuclear power expansion — 40 new plants by 2020. But this still won’t produce more than 5 percent of the new industrial giant’s energy. Seventy percent of its power consumption will still be coal-based, an industry that will consume $100 billion in development programs to produce 3 billion tons of coal a year through 2020. In the last five years alone, coal mining has increased 80 percent. Double digit growth, if sustained, would require 5 billion or even 6 billion tons of coal per year.

For the next two decades, Chinese domestic coal will remain more important than foreign oil. From 7 million barrels of oil per day at present, China’s oil consumption is expected to double to 14 million barrels in the next 14 years. And from 28 million vehicles today, China is expected to field 170 million cars and trucks by 2020 and 400 million by 2030. The emerging superpower will soon spew more pollutants into the atmosphere than the United States. In some cities, one can’t see across the street.

Income discrepancies caused 85,000 “disturbances” last year as local party chiefs appropriated land to enrich themselves with everything from hotels to casinos.

At a recent closed meeting organized by the Office of the Director of National Intelligence, American experts on China said there is a growing mismatch between availability and needs. Energy governance is panting to catch up. There is no single voice on reforms to improve energy management. There are government departments that don’t talk to each other. The 1999 fuel tax is yet to be implemented. The biggest vacuum is the lack of an energy ministry “with the coercive powers.”

China’s oil companies are the country’s most influential because they are headed by former ministers who bypass the bureaucracy. Corporate interests already compete with the government’s. One non-Chinese who raises money for the energy sector said the biggest headache is the lack of qualified personnel. Some of the jobs require 10 years of training. Bankers hire anyone who can do a spreadsheet.

Arnaud de Borchgrave is editor at large of The Washington Times and of United Press International.

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