China is stockpiling — we must do the same

When China was in full gallop the country’s industries gobbled up the world’s rare metals and energy. Now it is growing more slowly, yet it is still buying in huge amounts of commodities. Hoarding them for what exactly? A further bid to supplant the US in world markets — or something more sinister?

There are two conventional explanations. The first is that Beijing is following a long-term plan that will position it as the undisputed champion of the green revolution: a global leader in electric vehicle (EV) production, in solar panels and wind turbines.

Until now it has been the major refiner of lithium for EV batteries but has only hard-to-extract reserves of its own. Xi Jinping’s ambition is to take a commanding position in the whole supply chain. By 2029, 101 of the additional 136 lithium-ion battery plants planned for development will be in China.

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That is the Chinese mercantilist playbook. It has recognised there is a potentially profitable gap between the Paris climate goals and the global production of the metals needed to produce EV vehicles and other planet-saving kit. That project has been given urgency by the possible re-entry to the White House of Donald Trump.

His tariff war on Chinese exports — Xi retaliated by imposing duties on American soya beans — marked the start of a miserable phase in US-Chinese relations, the first augury perhaps of the beginning of the end of China’s long rise.

A President Trump, the Chinese assume, will wind down the US commitment to Ukraine and focus on the containment of China. That could mean a regional flashpoint — tension over Taiwan, perhaps — leading to an attempt at a US-led blockade of shipping lanes on the approach to Chinese ports.

From that point of view, the current stockpiling by the Chinese authorities makes some sense. It’s not just defence-related minerals that are being bought in, not just gas and oil, but also wheat, maize and the soya beans that feed China’s 400 million pigs.

Here then is the nub. China is digging in not only for an open scrap for market share but also for a kind of siege led by a Trump administration determined to thwart Beijing’s cross-spectrum challenge to US power. The Chinese seem to be succumbing to the kind of blockade-phobia that gripped Europe in the late 1930s: a time of sanctions and counter-sanctions, trade embargos aimed at changing political behaviour, stockpiling and a drive for national self-sufficiency.

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Warehouse space has been expanded massively, so have underground gas caves. Soya bean storage has more than doubled since 2018; China’s maize stocks will soon account for 67 per cent of the world’s total.

This is the point where fear of Trump’s unpredictable China policy intersects with a kind of war-readiness of its own. The lesson from the Ukraine war for Chinese military planners is that this is not the age of Blitzkrieg. Russia fired 11 million artillery shells against the Ukrainians in 2022 alone — the amount of copper contained in those shells was the equivalent of that used in 10 per cent of Britain’s total wind turbine capacity.

Just as Vladimir Putin failed to snatch Kyiv in the early days of his war against Ukraine, so a blockade or full-scale military invasion of Taiwan will not necessarily be the quick knockout blow deemed likely in tabletop exercises. The question, short or long war, thus haunts the Chinese military as surely as it dogged the German general staff in the first half of the 20th century.

The length of the Great War exhausted the generals; afterwards a detailed account of the performance of each service was compiled and deposited in a strongroom for the secret perusal of the next generation of military leadership. Given Germany’s lack of raw materials for arms production — the copper used in artillery shells, the nickel in armoured steel — how could the country expect to slog it out for as long as the Great War? That was an argument for Blitzkrieg, quick and mobile, followed by fuel substitution and synthetic materials and ersatz food, for the seizure of foreign oil fields and, above all, for long-term storage.

Or, one could argue, for not engaging in a long war in the first place. But China does not seem to be treading that path. Rather, according to US estimates, it is spending about $700 billion, just behind American levels of expenditure, on modernising its armed forces. It can now boast the largest navy in the world, the biggest coastguard and maritime militia, the biggest army and sub-strategic missile force, as well as significant advances in hypersonic missiles and quantum computing. Most of that has come to fruition on Xi’s watch.

Underpinning that hardware are the metals and minerals disappearing into China’s warehouses. That’s the copper wiring used in guidance systems, the nickel used in the armour plating of tanks, in military batteries and aerospace alloys, the lithium used not only in the electric limos purring down our high streets but also powering China’s intelligence satellites, the antimony handy for armour-piercing bullets and night-vision goggles. It’s quite a stash.

What do we do about it? We stop neglecting our own depleted stocks of metals and ammunition, we compete more strenuously with China in the “Lithium Triangle” of Argentina, Bolivia and Chile, and we stop looking away as Beijing develops 62 mining projects in lithium, cobalt, nickel and manganese.

Xi hints that 2027 is the target year for China “reunifying” with Taiwan. That’s when the world changes. Now’s the time, as they used to say in the trenches, to dig or die.