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Is China Building the New-and-Improved Global Empire?

by Damien Hoffman
Friday, September 10, 2010

First the the Egyptians gave it a run. Then the Greeks and Romans took a try. Later the Iberian Peninsula and Great Britain sat atop the throne for a round. And, of course, there is no shortage of historical dynasties in Asia.

However, since the end of WWII, the United States has held the title of most powerful empire on Earth. It all came together with a concoction of confidence, ambition, work ethic and unity. There were also some very helpful details such as sanctions on Germany and Japan, a war-torn Europe and Russia and a surprisingly insulated Asia.

Fast-forward to 2010. The U.S. has squandered a couple generations of wealth through trade imbalances and costly wars. Then the recent economic crisis created the perfect window of opportunity for a faster growing and more economically stable China to start deploying their rooks and bishops.

My passion is strategy. And when I look at how China has started diversifying away from the dollar, building an internal consumer class and buying huge reserves of natural resources across the globe, I see an emerging global empire that may never shed an ounce of blood in conquest for their prize.

Bloomberg BusinessWeek published an incredibly revealing look at how China is empire building second-millennium style. The article specifically focuses on how China is buying up natural resources across Australia while purchasing equity positions in the companies collecting the cash. Earlier this week, Chinese state-owned chemicals group Sinochem was seeking to bid for key fertilizer company Potash (POT – News).

This strategy alone guarantees China will take back at least a portion of the wealth they are sending to Australia in exchange for finite resources. Contrast this strategy with that of the U.S.: The U.S. chose not to own equity in most of the companies serving up resources via China or the Middle East. Instead, the cash sent abroad stayed abroad.

On another note, China has found more peaceful ways to control foreign resources in Africa, Brazil, Canada and other countries across Asia and the Pacific. To date, China has not entangled itself in a war comparable to Iraq I or II. When you own a big slice of the foreign operations, there’s less room for partners to go rogue.

Looks like the Chinese learned something from our gigantic missteps. Unless you think they aren’t intelligent, I think we are bearing witness to what will one day be seen as an empire expansion as important as those I mentioned at the start of this post. But worry not: China will make mistakes and in those gaps the seeds for the next great empire will be sown.