Tag Archives: natural resources markets China

Free Trade is Dead: Protect, Protect, Protect…

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There were three times the number of discriminatory trade policies—including tariffs, export controls and sanctions—introduced from 2020 through 2025 than in the preceding five years. The world’s shift to protectionism likely stems “from a succession of shocks,” starting with the pandemic-related disruptions of 2020, followed by China’s power-market shortage in 2021* and then the food and energy market crises in 2022 after Russia invaded Ukraine.

As a result, countries have become much more focused on resource security. India, for example, stocked up on rice inventories after the 2022-23 global food crisis. China, which typically consumes about 14 million tons of copper a year, has been buying 1 million to 2 million tons more than its economy needs…The country has also been building up its oil reserves. Earlier this month, the U.S. unveiled a $12 billion critical-minerals stockpile.

Excerpt from Jinjoo Lee, Global Markets No More: Trade Barriers Mess With Commodities From Metals to Oil, WSJ, Feb. 21, 2026

  • In late 2021, China experienced a severe electricity supply crisis that affected 20 provinces. Industrial activity was curtailed, and even households suffered prolonged outages in some areas.

Markets for Natural Resources: China

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A nationwide  carbon-trading scheme, to be set up in 2017, is the most visible example of a broader trend in China towards using market mechanisms in environmental matters…[A] reform plan issued by the government on September 21st, 2015  laying out the basis of future policy, talks about developing “a market system which allows economic levers to play a greater role in environmental governance”. If the plan is to be believed, China will go further than any other country in developing environmental market mechanisms.

The plan talks of selling “green” bonds, ie, those financing projects certified as environmentally sound. The government will improve financial guarantees for low-carbon projects. But those are becoming common. More fundamentally, the reform says China will separate the ownership of all natural resources from the rights to use them—and sell the usage rights at market.

This is much more radical. The idea is rooted in communist dogma, which says all natural resources—land, rivers, minerals and so on—are collectively owned. The reform plan begins by calling for a massive Domesday-like inventory of who owns what, whether central government, provincial governments or lower tiers. It then says, with utter insouciance, that “with the exception of natural resources which are ecologically important [eg, national parks], the ownership rights and use rights for all other natural resources can be separated”. And, having separated them, the usage rights can be bought and sold, rented out, used as collateral or as the basis of loan guarantees, and so on.

The carbon-trading scheme suggests what this could mean in practice. It is like a market in energy-usage rights, with the carbon treated as part of the cost of using fossil fuels. A market in water rights will also be set up. Trials will be held in Gansu and Ningxia, two north-western provinces. The plan talks cryptically of setting up a “natural resource asset exchange”.

Excerpts from Markets and the environment: Domesday scenario, Economist, Oct. 3, 2015, at 46