Resources for Change
Three decades ago, China was an oil exporter—sales of its fossil fuels accounted for nearly one-quarter of the country's GDP and helped finance its economic reforms. After 30 years of rapid economic growth, China has now surpassed the United States as the world's largest net oil importer. The country's surging demand for energy, as well as for mineral resources and food products, has contributed to rising prices and raised fears about Chinese state-owned companies scouring the world for resources and locking up supplies.
Is China's global quest for resources a game changer? In By All Means Necessary: How China's Resource Quest Is Changing the World, a wide-ranging analysis of Chinese resource-acquisition strategies, Elizabeth Economy and Michael Levi debunk alarmist myths about China's growing footprint in global resource markets. They are uniquely placed to do so—Economy is an expert on China's environment, resources, and foreign policy, while Levi is an authority on energy policy, climate, and technology. Unlike many recent books that focus on China's demand for a particular resource, By All Means Necessary compares China's global quests for oil, gas, minerals, food, and water. The authors argue that it is necessary to examine the particular dynamics in each resource sector to assess the impact of Chinese demand and corporate practices. In particular, Economy and Levi caution against attributing recent increases in resource prices to China's pressure on markets.
Oil producers, for example, have revenue targets. Once met, if prices are high enough, there is little incentive to increase supply regardless of demand pressures from China and other countries (p. 26). Moreover, contrary to the oft-heard trope about Chinese state oil companies locking up supplies, their production activities actually bring more oil to world markets. Some economists further note that the oil used in China's production of goods for export—known as embodied oil—obviates the need by other countries for that oil in their own production process because they buy the finished products from China. Chinese demand for oil, in effect, reflects global demand for goods produced in China. 
In the case of iron ore, developments in the Chinese steel industry unintentionally made the dynamics of the global iron trade more market-oriented. Economy and Levi recount how the emergence of small steelmaking companies in China undercut efforts by major Chinese firms to demand lower prices from the three main global producers of iron ore, Vale, Rio Tinto, and BHP Billiton, which control 70% of the trade (p. 37). As a result of changes in the Chinese industry, the iron trade shifted radically from an emphasis on long-term contracts to a system where spot markets play a much greater role (p. 39).
According to Economy and Levi, it is in commercial relationships where China's impact is increasingly felt, as Chinese companies invest more extensively in a wide variety of countries and sectors (p. 45). Chinese firms are relatively new players and have to work harder to make friends, drawing on networks of informal and personal relationships. This can cause deals to unravel when the leadership changes in target countries. Chinese companies may also overbid or overpromise to win a deal, only to see their projects collapse or turn out to be less profitable than anticipated (p. 73).
The complex interconnections between Chinese political and economic elites present both opportunities and risks. Unlike in other countries, Chinese companies can depend on top political leaders to act as “diplomat deal makers” (p. 72). However, this means that political disputes have the potential to spill over into trade and investment, as was seen in 2010 when increased tensions between China and Japan disrupted the trade in rare earths between the two countries (p. 75).
China claims to follow the principle of “noninterference” in the domestic affairs of other states, and its companies enter into deals with none of the preconditions on human rights, governance, or environmental protection that Western countries demand. Authoritarian governments appreciate this no-strings policy, which enables Chinese companies to seek opportunities that Western companies have left aside in countries such as Sudan, North Korea, and Afghanistan. However, such investments complicate Chinese foreign policy when partner states are subject to international sanctions or are riddled with corruption, instability, and human rights abuses.
Economy and Levi note that Chinese “firms and officials behave abroad in very much the same way they behave at home” (p. 71). These practices include a lack of transparency, substandard labor practices, inattention to environmental consequences, and an overriding interest in using investments to generate employment for Chinese citizens, either in resource extraction overseas or in processing at home. According to Economy and Levi, Chinese companies, like many other multinationals, argue that it is up to the host country to enforce governance standards (p. 191). They also observe that corruption is a two-way street, involving corrupt investors as well as host-country partners. Nonetheless, Economy and Levi see some recent efforts by Chinese NGOs and banks to demand improvement in corporate social responsibility. Fearing harm to China's reputation, for example, the China Development Bank and Export-Import Bank of China have had some success in using their leverage to make concessionary loans to Chinese firms in exchange for adherence to environmental and social guidelines (p. 103).
Although there are many books about China's growing footprint on the world's resources, By All Means Necessary makes an important contribution by presenting the other side of the story—the impact of overseas investments on China itself. Economy and Levi write that “it is not only the world that is being changed. China is changing as well” (p. 191). In response to higher commodity prices (in part caused by greater Chinese demand), the Chinese government has endeavored to improve energy efficiency and increase domestic production, particularly of grains. To gain a foothold in new markets and acquire new skills, Chinese firms increasingly are partnering with foreign companies. Where corporate social responsibility is taken more seriously, Chinese companies are obliged to adapt (p. 192). Economy and Levi show that China's investments face the most scrutiny in developed countries like Australia, Canada, and the United States or in developing countries facing a transition to democracy, such as Burma.
What the authors leave unsaid is which transformative force they think will prevail: will China change the world more or will China's own transformation be the more profound one? Economy and Levi admit that the scale of China's resource demand is unprecedented. For this reason, the comparison they establish with Japan's quest for resources in the 1960s and 1970s (see pp. 3–5) seems misplaced. Although the surge in Japanese resource demand and expansion of state-supported investments may have been controversial at the time, the scope of these pressures on global markets was different because Japan has one-tenth of the Chinese population. Moreover, pressures from Japanese companies soon abated in the 1990s once the Japanese economy began to stagnate, while China's sustained economic growth and expanding middle class portend increasing demand for resources. As a democracy and a U.S. ally, the Japanese government and the firms it supported were also more accountable to domestic and international publics.
Another reason this question is difficult to answer is that China's development path involves many unknowns. Despite calls by Chinese leaders and influential experts for the country to pursue a more sustainable development policy, the authors acknowledge that “China has not managed to follow a resource-efficient, environmentally friendly developmental path; by most measures, it ranks as one of the most energy-inefficient and polluted countries in the world” (p. 78).
Even as China exports its model to the developing world, Economy and Levi find the prospect of resource wars in the Middle East or Africa unlikely, due to China's limited power-projection capability (p. 139). The authors note, however, that China's resource quest comes at a time of rising nationalism and military capacity (p. 163). Even if we assume that the expansion of naval capacity and efforts to diversify sources of resource supply, particularly oil and gas, are driven by China's concerns about its own perceived vulnerabilities, other states may nonetheless view some of these activities as threatening their own interests, creating security dilemmas that are difficult to resolve. The focus of By All Means Necessary is primarily on China's commercial relationships, and it would have been interesting for the book to explore the foreign policy implications of these relationships further.
Economy and Levi see changes in Chinese corporate governance as the primary vehicle for reducing tensions with host countries, although they optimistically leave open the possibility that new cooperative mechanisms may emerge to address conflicts between China and its resource partners—on water issues, for example (p. 163). Yet China's lack of multilateral engagement to date on resource issues and its preference for bilateral mechanisms will leave smaller, weaker states without much recourse. Is better corporate governance an adequate solution to allegations in the developing world that China is acting like a colonial power? The authors raise this intriguing question in chapter five but do not answer it fully. According to Economy and Levi, countries like the United States will need to play the leading role in ensuring that China's engagement in resource-producing regions remains benign.
By All Means Necessary weaves a complex tale in explaining the myriad consequences of China's global quest for resources. What emerges most strongly is that China's overseas involvement is not a one-way extraction; rather, it is a learning process that will change China as well as the world. Australia and Canada have already sought to restrict Chinese investments in their resource sectors, and Economy and Levi foresee similar policy changes in the United States in the event of attempts by Chinese firms to acquire a major U.S. resource producer. The authors argue, however, that thus far “China and its companies have had to change most” (p. 137).
Far-flung investments by Chinese companies have required China to develop the capability to remove Chinese workers in an emergency, as was the case in Libya in 2011. Similarly, oil investments in Africa have provided China with an incentive to participate in a series of extensive antipiracy missions in the Gulf of Aden since 2008. Nonetheless, changes in China's approach to corporate responsibility will depend on progress in human rights, environmental protection, and anti-corruption measures at home, all of which face major political hurdles.
Moreover, although China's growing demand for resources reflects its dependence on other countries, major investments by Chinese companies compound security dilemmas in China's relations with other states, as the steps China takes to reduce its resource vulnerabilities are viewed as threats to the interests of others. As Minxin Pei has noted, China is “the loneliest superpower,” with many business partners but few real friends. 
 Xu Tang, Baosheng Zhang, Lianyong Feng, Simon Snowden, and Mikael Höök, “Net Oil Exports Embodied in China’s International Trade: An Input-Output Analysis,” Energy 48, no. 1 (2012): 471.
 Minxin Pei, “The Loneliest Superpower,” Foreign Policy, March 20, 2012, http://www.foreignpolicy.com/articles/2012/03/20/the_loneliest_superpower.