Whats China up to? Its Behaviour Predicts Crisis is Afoot

China was the first country to react with alarm when Russia deployed 150,000 troops closer to the Ukrainian border, a year before the Ruso-Ukro war commenced. Over the past two years, China has been aggressively accumulating a wide range of resources, including copper, gold, oil, and iron ore.

In Dec 2021, American media had distracted everyone by claiming that China’s panic buying of metals and stockpiling of frozen food was associated with Taiwan. The world believed the theory! But clearly China was worried that Ruso-Ukro war will impact it.

What is afoot this time?

What’s China up to???

China is amassing reserves of various commodities, ranging from copper to oil to nickel to iron ore. There are reports suggesting that China is considering currency devaluation.

It appears that China is gearing up for something significant. Despite challenges on the ground, China posted a robust year-on-year growth of 5.2% in the first quarter. Local financial institutions are holding onto bonds due to sluggish credit demand growth, while Chinese authorities are seemingly accumulating resources at a rapid pace, according to Steno research reports.

For more than a year, China’s central bank has been buying up large amounts of gold. The move, along with the wars in Ukraine and Gaza, have helped spike the price of the precious metal to new highs.China’s central bank purchased gold for its reserves for a 17th straight month in March.

Gold is seen by investors as a safe haven in times of turmoil and a hedge against currency devaluation, so the conflicts in the Middle East and Ukraine have helped the recent price rise, along with the post-COVID inflation spike.

The move by China’s central bank, the People’s Bank of China (PBC), has been mirrored by other mostly emerging market central banks, who are all keen to up their gold holdings.

China’s trade with the rest of the world heavily hinges on the US dollar. Being the world’s reserve currency, most commodities are priced in dollars, and over half of global trade is conducted using the greenback.

Over the past three decades, as China has grown to challenge US economic dominance, it has amassed substantial foreign exchange reserves, primarily denominated in dollars.

However, Beijing has grown concerned about its overreliance on the greenback and is eager to diversify the People’s Bank of China’s (PBC) reserves.

Gradually, China has been reducing its dollar holdings, which have decreased by approximately one-third since 2011 to around $800 billion, according to US data. This reduction has accelerated since the onset of the COVID-19 pandemic.

The objective of diversification aligns with that of other countries in the BRICS (Brazil, Russia, India, China, and South Africa) group, whose economies are projected to dominate the global economy by 2050.

China’s commitment to the Taliban: Aynak cooper mine back in headlines

China’s assurance to the Taliban regarding the Aynak copper mine has brought the project back into the spotlight. China has pledged to extract copper from Aynak while ensuring the preservation of Afghanistan’s historical monuments. The Chinese ambassador in Kabul has conveyed to the Ministry of Information and Culture of the Taliban that the Aynak copper project will proceed without causing harm to cultural artifacts.

According to reports from Bakhtar News Agency, Zhao Xing, the Chinese ambassador, has reaffirmed China’s commitment to cultural and economic cooperation with the Taliban. Despite repeated promises from official authorities and the Aynak copper mining company to initiate the project over the past two years, it has yet to commence without any official explanation.

The Aynak Logar copper mining contract, signed in 2008 between Afghanistan and the Chinese company MCC, stands as the largest copper mine in Afghanistan and the second-largest globally. This contract grants the Chinese company MCC the privilege to operate the Aynak copper mine for a period of 30 years.

Since China has been stockpiling everything, many experts believe that its not just about China. Its possible the Russia-Ukraine war which was spilled over to Israel, will also soon drag more countries into it.