On China's search for oil and savings rate

More insights from Brad Setser on China:

Russia is to China as ...
Canada is to the United States? Large in area, scarcely populated, cold and a major supplier of natural resources to its large southern neighbor ... Well, not yet. Russia, I think, generally exports its energy to Europe, not to China. The pipelines flow west, not south and east. But that may be changing. It seems like the Yukos stake formerly held by western investors is being offered to China...

[T]he (hidden) battle between private US companies (and investors) and state owned Chinese companies for control over existing oil fields (or more precisely, for minority stakes in locally owned oil firms that have control over most countries domestic oil fields) is worth watching. The really high stake game, though, is for control over new oil fields which, with foregn investment, can be brought on line to meet the world's growing demand for energy -- not for control of the world's existing oil fields...

A (long) aside:... Compare slow growing Mexico to fast growing China and look for lessons... Mexico's comparatively low savings rate...generally translates into a low rate of investment. That alone probably explains a large share of the growth difference between Mexico and Asia. Putting all the emphasis on structural reform seems off when Asia's structural...are at least as big as Mexico's. If you can finance investment of well over 40% of GDP out of domestic savings, you are likely to grow fast, even if structural problems mean a large fraction of domestic savings is being invested inefficiently ... that, it seems to me, is the real lesson as Asia's post war miracle, and China's current economic miracle.

And in the comments, Brad adds the following points:

Geo-oil says the US gets supplied from Vennie and West Africa (almost as close to the US as to Europe, as the supertanker floats), and the rest of the world drinks in the Gulf, with a bit of Russian crude thrown in. Geo-politics, though, has the US troops sitting on or next to the gulf oil fields, and the US navy defending the sea lanes that take gulf oil to Singapore to be refined, and then up the South China Sea to the world's new industrial heartland.

An interesting mix. China has to trust us to assure the steady supply of their oil, even in a global supply shortage, or try to hedge their bets. The irony is that right now they seem more inclined to hedge their bets on oil than to hedge their exposure to the dollar ...

Which suggests, perhaps, that China's priorities may not always be aligned with those of the rest of the world. An interesting mix indeed.