Book Report: Winner Take All


Winner Take All“The world is arguably facing seemingly insurmountable constraints across the whole gamut of commodities – arable land, water, energy, and other minerals. Moreover, with China’s aggressive rush for resources, many countries are likely to be caught short as the commodity shortages become much more acute and the commodity constraints more severely binding. Save China, which has faced the prospect of the forthcoming global resource disaster and is doing what it can to avert the crisis, the world is ill prepared for a commodity calamity.” (Winner Take All – p74
)

Title: Winner Take All – China’s Race for Resources and What it Means for the Rest of the World

Author: Dambisa Moyo

Publisher: Harper Collins

Publication Date: 2012

Origin: I’m fairly certain that I just saw Winner Take All in a Chapters display and figured that it covered an important topic. Geopolitics, global economics, and resource constraints, in the spirit of Guns, Germs, and Steel, Collapse, and The Shadow Market…yay!

Summary: Winner Take All details China’s extensive worldwide investments in commodities (e.g., arable land, fresh water, energy, and minerals) and the means of their production and transportation. In a nutshell, China has a lot of people to look after, and about 800 million of them hope to move into the middle class in the relatively near future. Feeding and energizing these people is a fairly important component of preventing revolution.

The book begins by quite thoroughly examining many of China’s purchases, partnerships, and agreements, and explains the methods by which the country is taking over the commodity markets. Next, we learn what the impact is for the rest of the world, and what the rest of the world is doing (spoiler: nothing).

China, showing foresight and commitment, is relentlessly executing on a strategy to secure resources for the future, and unlike past Western attempts is doing so in a manner that the host countries wholeheartedly welcome.

The rest of the world, locked in short-term election cycles and myopic self-interest, is doing nothing. And this lack of action does not bode well for the rest of the world.

My Take: While I found Winner Take All a bit tedious and dry, this was the result of its thorough explanations and exceptional detail. It covers a number of topics that, sadly, don’t get enough attention: the coming resource/commodity crunch, ineffective and selfish governments, and baseless political finger-pointing, among others.

I was taken by surprise at the many ways in which China’s activities are positively impacting the resource-rich host countries. When I opened the book, I was expecting doom, gloom, exploitation, skullduggery, human rights abuses, etc. But, in a refreshing twist, it turns out that the countries where China is active in this endeavour actually welcome China’s activities. And not just the political elites – the average citizen sees China as being responsible for roads, hospitals, schools, air and seaports, and other infrastructure (check out the quotes from p133, 165, and 170 for more on this point).

And, frankly, I find it refreshing that there’s at least one country out there that is being realistic with long-term planning and, rather than just squabbling, is actually doing something pragmatic.

Read This Book If: You want a glimpse into the future, and want an explanation for why things are going to get a lot more expensive in a couple of decades.

Notes and Quotes:

  • p74 is a typically realistic passage: “The world is arguably facing seemingly insurmountable constraints across the whole gamut of commodities – arable land, water, energy, and other minerals. Moreover, with China’s aggressive rush for resources, many countries are likely to be caught short as the commodity shortages become much more acute and the commodity constraints more severely binding. Save China, which has faced the prospect of the forthcoming global resource disaster and is doing what it can to avert the crisis, the world is ill prepared for a commodity calamity.”
  • p80…after mentioning a deal for China to take over some shipping terminals and ports; vertical integration on a global scale: “As this deal suggests…China’s strategy is not solely to get a full range of commodities from a variety of countries; it also is actively pursuing the underlying infrastructure to ensure that once the resources are extracted, they can be transported back to China in the quickest and most reliable way. To do this, China is investing in ports and buying the shipping assets and transportation links to ferry the resources home.”
  • p85: “For China, the most pressing matter at hand is how best to move some eight hundred million people from abject poverty to a modern lifestyle, marked by the trappings of a middle-class existence: washing machines, refrigerators, cars, and the like. With a relatively high income inequality and a dangerous and growing split between the haves and the have-nots, the Chinese government has its work cut out for it. Resources on a large scale are a significant part of remedying the situation. It’s a race from a revolution.”

For China, the most pressing matter at hand is how best to move some eight hundred million people from abject poverty to a modern lifestyle. Resources on a large scale are a significant part of remedying the situation. It’s a race from a revolution.

  • In case you’re worried that China is exploiting the resource-rich countries, p85 continues: “China is executing its resource strategy with considerable aplomb, doing seemingly everything it can to make certain that commodity deals benefit both signatories to the trades. In fact, the motivation for the host countries is also not complicated: They need infrastructure, and they need to finance projects that can unlock economic growth. To achieve this, they are willing to sell their assets to the highest bidder. This is the genius of the China strategy: every country gets what it wants.”
  • I must say, this isn’t the tone I expected when I started the book, p89: “One does not have to accept that China’s motives are anything other than to look after China nor dismiss the possibility that there is potential for abuses, including propping up of undemocratic regimes, to conclude that China’s resource campaign is, on balance, a good thing. Whether it’s much-needed investment, job creation, or trade, hundreds of millions of people across the globe are in desperate need of exactly what China is happy to provide.”
  • I either have never seen this word, or have forgotten it, from p125: “monopsony” – a market form in which only one buyer faces many sellers (the opposite of a monopoly)
  • p133: “Barring the creation of a coordinated, universally subscribed-to legal framework to govern the behavior of the Chinese state, most policymakers will continue to adopt a national rather than global purview, unprepared for the very real cross-border commodity risks that will be faced in years to come. Meanwhile, China will likely continue to increase its market share, access, and control in land acreage, energy, and minerals worldwide.”
  • I find the disinterest refreshing…p157: “Simply going by the basic definition of colonialism, China is not going down this path. China’s modern-day interests are largely transparent and driven by its dogged and narrow motive to establish commercial relationships. It is pretty clear that China’s ambition is not for dominion over a sovereign state but rather over resources. Its foray – one largely limited to commodities, at least for now – is a mode of operation that flies in the face of literal claims of neocolonialism. In fact, China appears wholly disinterested in assuming sovereign responsibility and particularly in shaping the social and political infrastructure of host nations.”

China appears wholly disinterested in assuming sovereign responsibility and particularly in shaping the social and political infrastructure of host nations.

  • p165: “Centuries ago, when European countries colonized the world, they made a fatal mistake: they did not take into account the locals’ views and thus never made colonialism worth their hosts’ while. In time this contributed to the demise of their empires. The Chinese have apparently learned from this experience, choosing instead to give their hosts exactly what they want – money, roads, railways – for access to their minerals, land, and so on: a win for all involved.”
  • p165: “In fact, China is apathetic or agnostic at best in regard to anything other than its resource crusade. Its sortie can be seen through the prism of the purest form of the rational economic investor.”
  • p165: “China is in Africa (and elsewhere) for the oil, the gold, the copper, and the land. To say that Africa is being recolonized – as is often proclaimed – or that the average African is not benefiting is just false.” To support this statement, Moyo provides many surveys of African citizens (across many countries) that assess these citizens’ opinions on China’s presence and contributions, painting the unmistakable picture that the average African see China’s investments and contributions in an overwhelmingly positive light. The United States does not fare nearly as well.
  • p170: “Because polls reveal that Africans’ opinions of China is generally positive and because the available evidence strongly suggests that the Chinese are building roads and hospitals and providing much-needed investment money to African nations while showing little interest in controlling their host countries’ political process, the questions regarding social issues must ultimately fall not on China but instead on the governments of the host nations themselves.”
  • p173 *sigh*: “The sad truth is that in democracies with regular election cycles, government officials rationally focus on ‘imminent dangers.’ Under the pressures of the ballot box, the urgent usurps the important. A more brutal way to put it is that governments tend not to care for future generations; these supposedly desirable models of government actually encourage political myopia.”

The sad truth is that in democracies with regular election cycles, government officials rationally focus on ‘imminent dangers.’ Under the pressures of the ballot box, the urgent usurps the important.

  • p174: “When the day of reckoning comes in the form of resource scarcity, as it most certainly will – sooner rather than later – who will be ready, stocked up with inventories, saved up for the rainy day? With precision, execution, and foresight, China is doing everything to be prepared for that fateful moment.”
  • p212…I just found this bit very interesting in general: “Harvard psychologist Daniel Gilbert argued that threats must have four characteristics in order for us to sit up and take notice. First, we must feel the threat to be deliberate, in that someone somewhere is deliberately trying to harm us. Second, we are spurred into action against threats that we regard as an attack on our moral framework and an affront to our honor code. Third, we respond to threats that are imminent. The human brain is structured to care more about things occurring today than sometime in a hazy future. Finally, humans react to threats that are instantaneous or happen quickly as opposed to ones that occur over a longer period of time.”
  • p217: “The current discourse around commodities – to the extent it even exists – is woefully inadequate. Any effort at meaningful resource debate almost inevitably ends up hamstrung by squabbling and finger pointing…Faced with a potential commodities calamity, self-interest and myopia rule the day, especially in those regions and among those governments that should be leading the charge.”
  • p225 closes the book: “We find ourselves on earth at a unique time with the extraordinary challenge of managing and navigating the headwinds of commodity shortages that the world faces of the next two decades. At present we are ill prepared to contend with this eventuality, yet the challenges we face go beyond our living standards to the survival of the planet as we know it. This fight is about life or death.”
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