China’s growth rate may be slowing in concert with the world economy, but even at that slower rate, its economy continues to expand, requiring a steady increase in supplies of oil, copper, aluminum and other minerals. And laying in sources of supply for those commodities also helps it prepare for the next boom. As economies across the world shrink, Chinese officials have told reporters in Beijing in recent weeks that they see a rare chance to expand its sources for primary commodities. “There are editorials in the Chinese press saying that this is a one-in-one hundred-year’s opportunity,” says Erika Downs, China energy fellow at the Brookings Institution in Washington. “There is a sense that this is a moment to be seized, that with competition lower they can get a good deal.”
Recent deals with Brazil and China highlight Beijing’s ability to use loans a means of securing energy supplies. In mid-February, Beijing negotiated a $10-billion loan to Brazil’s state-owned oil company Perobras, as well as a $25-billion loan to Russia’s state-run oil company Rosneft. Both companies’ revenues have plummeted in recent months as crude oil prices fell by more than two-thirds. China offered large cash amounts in a tight credit market, but rather than require that the loans be serviced and repaid in cash, Brazil and Russia will repay the loans in crude oil supplies to China over the next two decades. Russia will ship eastern Siberian oil, while in Brazil, China hopes to get a share of major offshore fields which have recently been discovered. So, no matter what happens to the global economy, China is assured steady oil supplies over the next 20 years from two major oil-producing countries, in regions which are far more politically stable than China’s suppliers in Africa.