Xi’s Costly Obsession With Security
How a Quest for Control Threatens China’s Economic Growth
THE common use of phrases like "the yellow peril," "the awakening of the Far East," "the challenge of Asia," imply a widespread belief in the capacity of the Far East[i] to advance in culture and industry, as well as in political and military power, to a position more or less comparable to that of Western Europe and the United States. It is apparent from the nature of the discussions that this belief is based principally on a consideration of the human factors involved in education, in the growth of population, and in political development. One looks in vain for correspondingly adequate consideration of the physical environment, to see how far it will permit of the expected advances. It seems to be assumed that the necessary physical resources will be found when the eastern peoples come to a point where they can use them. The Far East of the future is pictured with the familiar lineaments of highly industrialized western countries, where the "industrial revolution" has been based to a large degree on the extensive use of coal, iron, and other mineral products. It is pertinent, therefore, to appraise the mineral potentialities in the Far East, in order to see how far they justify the assumption that changes will take place there of the kind we ordinarily associate with modern industrial progress.
At the present time the countries of the Far East yield only an insignificant proportion of the world's total of the essential commercial minerals, -- for example, about five percent of the copper, one percent of the iron ore, five percent of the coal, and three percent of the oil. Only in a few of the less essential mineral commodities are the proportions larger. In contrast, the countries bordering or tributary to the North Atlantic now furnish the vastly larger part of the world's requirements in essential minerals, -- 90 percent of the coal, 98 percent of the iron ore, 65 percent of the copper, and 90 percent of the oil.
There is a tendency to attribute this situation to the mere lack of exploration in the Far East, and to assume that when this has reached a stage comparable to that of the North Atlantic countries the production of essential minerals will be more or less equalized. But a survey of the facts proves this assumption to have but a slender basis. In fact, the conclusion seems inevitable that (with certain exceptions to be noted) the present small scale of mineral production in the Far East is not a temporary but a permanent condition, being due to the absence of mineral resources in quantity or grade or distribution suitable for effective use. This conclusion has been repeatedly reached by competent investigators.[ii] Nevertheless, due principally to travelers' tales, the prevailing popular notion is that the countries of the Far East, especially China, contain fabulously rich mineral wealth.
In the discussion of this problem confusion may arise unless a scale of comparison is indicated. There are in the Far East many units of mineral resources which seem large in an absolute sense, but which on a world scale must be assigned to a subordinate position. Also, the world scale used for comparison should be that of recent years, for the reason that the demand for mineral resources has so multiplied during the last quarter of a century that it can now be satisfied only by a relatively small number of mineral districts of exceptional size. The result is a marked concentration of the mineral industry in a few places. While in the aggregate other districts may contain vast quantities of minerals, they are so small individually, or so scattered, or are of such a low grade, or involve such high mining costs, that they play only a subordinate part in the satisfaction of present world demands. Much remains to be learned about the world's ultimate resources, but exploration has gone far enough to disclose many salient features of the mineral geography of the future, from which can be gleaned some of the essential facts of the mineral resource situation of the Far East.
Iron and Coal Resources. In the Pacific region of the Far East the most talked of and significant of the resources to be considered are the coal and iron ore of China. The coal resources, though but slightly developed, are very large, some estimates indicating that they form nearly a quarter of the world's supply. Some of the largest reserves, however, are in remote regions which will be inaccessible for commercial development for a long time to come. The only coking coal available in large quantities for metallurgical purposes is in Chihli, Fengtien, and Shansi in the north, and Kiangsi in the south.
The iron ore reserves of China, according to latest estimates, aggregate 950,000,000 tons, a figure which represents about one-fifth of the reserves of iron ore of present commercial grade in the United States. An analysis of the estimates, however, shows that much of this tonnage may not be considered workable under present conditions, due to inferior grade or remoteness from existing lines of communication, and should not be included in any comparison that is made with reserves of commercial grade existing elsewhere. For example, it includes low grade, banded hematites and magnetites in Manchuria and north-eastern Chihli, running 30 to 36 percent in iron, which must be concentrated before smelting. The feasibility of effecting sufficiently cheap concentration is still to be proved. In the United States and other parts of the world there are large quantities of ores of this class which have not yet been able to compete with the ores concentrated by nature, and which are not included in estimates of commercial reserves. The inclusion of these low grade ores in the commonly quoted figures of China's iron ore resources but emphasizes the real poverty of China in ores of present commercial grade.
The immediately available Chinese ores of commercial grade, not requiring concentration, and not handicapped by remoteness from transportation, are estimated at about 100,000,000 tons, about three-fourths of which are along the Yangste river, and one-fourth in the Hsuan-Lung region north-west of Peking. The first named group, which is well known, has been mined on a modern scale. It would supply the iron and steel plants of the United States for less than two years. The remaining reserves will not be able to compete commercially in the world's iron and steel business for a very long time. The present rate of Chinese iron ore production is a million tons or less a year, -- less than two percent of that of the United States. Japan now controls commercially about 90 percent of the available reserves.
Obviously, then, the reserves of iron ore now known to exist in China do not warrant the huge capital investment necessary to the building of a great iron and steel industry.
Much has been said about the probability of the existence of great undiscovered reserves of iron ore in China. The best Chinese iron ores are of a type which is hard and resistant to erosion, and therefore outcrop freely. It is true that native methods of smelting favored the use of softer ores, and that the value of the harder ores was not recognized by the Chinese. Nevertheless, there are few records of actual "discovery," in the geographic sense, since China has been penetrated by foreigners. The chances, therefore, of adding to China's iron resources by further exploration are not promising.
Japan is the chief consumer of iron and steel products in the Far East, but its known resources of iron ore are largely confined to one deposit, the Kamaishi Mine, in Riquchu province, with an estimated reserve of 35,000,000 tons. In various additional sources some of the Japanese estimates indicate the existence of 45,000,000 tons more, but this ore is widely scattered and much of it is of low grade. Domestic production has averaged 209,000 tons yearly for the last ten years, or less than half of one percent of that of the United States. Japan also has reserves in Korea, estimated at 4,000,000 tons, and from this source has imported slightly more than the domestic production. Japan's paucity of iron ore explains its activity in acquiring and developing the Yangste deposits of China and its present attempts to concentrate the low grade ores of Manchuria.
Japan is better supplied with coal than with iron ore, but compared with the other principal industrial nations of the world, it is very poorly off. It has exhausted a much larger proportion of its reserves than any other country, and its industrial future is correspondingly limited. For some years the Imperial Steel works have been supplied by mixing Japanese coal with Chinese coal. Much of the coke from Japanese coal is weak and porous. The reserve of coking coal is so small that there has been much discussion of a government plan to electrify the iron works, in order to postpone its exhaustion.
The iron ore deposits of the Russian Far East aggregate hardly more than 5,000,000 tons, in scattered deposits. The only coal proved to be of good coking quality is in Sakhalin Island, where the fields are but little developed and good ports are scarce and ice-bound for several months of the year. Both iron ore and bituminous coal fields are insignificant in Indo-China. Siam has a few scattered undeveloped iron ore deposits, but the known coal is mostly lignite. The Malay Peninsula and British Borneo contain some iron ore deposits, but they are only of local importance, the aggregate being not more than 25,000,000 tons.
The situation seems more promising, at first glance, in the Netherlands East Indies, particularly in the south-eastern part of Borneo and in the central part of Celebes. The iron ore in these regions constitutes one of the largest reserves yet known in the Far East; it is estimated at 800,000,000 tons, much of it within easy reach of the sea. But this ore is of the lateritic variety, like that of Cuba and of Surigao Province in the Philippines, -- a variety which, because of its content of nickel, chrome, high alumina, and moisture, has thus far presented certain metallurgical difficulties which have prevented its extensive use even in favorable locations. A furnace is now being built by a Dutch syndicate, in coöperation with the Government of the Netherlands East Indies. While there is coking coal in this region, the amount is so limited and of such a low grade that a study is being made of the possibility of electric smelting, as well as smelting with oil residue. There is reason to believe, however, that neither of these methods can be developed much beyond the point of supplying small local needs.
The Philippines contain important deposits of lateritic iron ore, estimated at 430,000,000 tons or more, principally in Surigao, on northern Mindanao. Lignitic coal is abundant, and bituminous coal less so. Coking coal exists in very limited quantities, principally in southern Mindanao. Any iron ore industry which may develop is not likely to supply more than local demands.
It appears highly improbable, then, that an iron and steel industry on the scale of Western Europe or the United States can develop in the Pacific region of the Far East. China, with the best supply of coking coal, does not have enough iron ore of present commercial grade, and the geographic separation of the best available coking coal and iron ore is a heavy handicap. Netherlands East Indies and the Philippines have large supplies of iron ore, but very limited supplies of coking coal. Neither the ore nor the coal is of the best grade. Japan, with the largest plant capacity, largest consumption, and the best organization, lacks both coal and iron in sufficient quantities. The scattered supplies of coal and iron in all the other countries of the Far East are insignificant in comparison with the ones named. If all the coal and iron resources of the Pacific region were to be pooled under one operation, the total supplies would be adequate for a large industry; but there would still be heavy commercial handicaps, due to the grade of the iron ore and to the wide geographic separation of the best available grades of iron and coking coal, resulting probably in costs too high for successful competition with the other principal iron and steel producing nations of the world. Disregarding political boundaries, perhaps the best potential combination in the Pacific region would be between the iron ores of the Philippines and the Dutch East Indies on one hand, and the coking coal of the northeastern provinces of China on the other -- the whole under the management of the Japanese.
There remains to consider the iron and coal resources of India. Here are large reserves of high grade iron ore, estimated at upwards of one and one-half billion tons. These ores, though considerably less in quantity than the ores of the United States and Western Europe, are far the largest and best of the iron ore reserves of the Far East. It is much less certain that there is an adequate supply of coke in India, notwithstanding large reserves of coal. A committee of the Indian Government, appointed in 1920, indicated the probable exhaustion of the coking coal within forty years, but more recent discoveries are said to have increased the known reserves. (Much of the coal is vitiated by high phosphorus and ash content.) Production of iron and steel is as yet on a small scale, but the capacity has increased faster than has local consumption, pointing to export to Western Europe as the natural outlet. In summary, it may be said that the supplies of raw materials in India are adequate for the growth of a large iron and steel industry. The limiting factors are the small capacity for local consumption and the distance from the principal foreign markets. In the immediate future the mining industry will depend for growth mainly upon exportation, which is another way of saying that it will be dependent upon western industrial centers.
It is sometimes argued that even if the quantity and quality of the resources in the Far East do not favor the development of an iron and steel industry on a profitable commercial basis, such a development might still be effected, at a cost, for political and military reasons. This argument fails to take into account the fact that such an industry involves huge capital outlays, for thousands of plants, not only those necessary for the primary conversion of the raw materials, but for the finishing and manufacturing necessary to put the iron and steel into the highly varied forms used by the ultimate consumer. The financial strain involved in going much beyond the output determined by normal commercial feasibility would test the resources of even the financially strongest countries of the world, and it is hardly to be expected that the financial resources of the Far Eastern countries will permit much building of this kind.
Oil Resources. The oil produced in the Dutch East Indies, India, British Borneo, and Japan aggregates about 3 percent of the world's production. Of this about half comes from the Dutch East Indies. There are large possibilities for further development, particularly in the Dutch East Indies, in New Guinea, in the Philippines, in China, and in Sakhalin Island. The last named locality, nominally Russian, but under Japanese commercial control, is regarded as particularly promising. But while larger production may be expected in the Far East, there is nothing in sight to indicate that it will ever be a dominant world source ranking with the United States and Mexico, or with south-eastern Europe and western Asia. Local needs will be supplied, and the rest of the oil will be exported to parts of the world where industry is already established. Much of the oil production of the Dutch East Indies has been simply tributary to European demands, and will doubtless remain so. Moreover, in the absence of a general industrial development based on adequate supplies of all the essential minerals, particularly iron and steel, oil development alone has nowhere brought about a high degree of industrialization.
Copper. Japan is the only large producer of copper in the East, yielding about five percent of the world's total in 1924. The size of the copper reserves of Japan promises the continuance of production on the present scale, but little more. Outside of Japan the production of copper in the Far East is negligible, nor is there anything highly promising in sight.
Lead and Zinc. The lead and zinc production of Asia is insignificant, the total production in recent years from all countries being four to five percent of the world's total of lead and less than two percent of zinc. The outstanding lead field is the newly-developing Bawdwin district of Burma. There are other undeveloped deposits in China, but there is little hope that any of these will prove to be large, and as yet nothing promises any considerable change in world proportions. If there are to be any important new deposits revealed, present high prices should soon bring them out.
Gold and Silver. Gold is scattered in small amounts through Japan, China, Korea, British India, and the Dutch and British East Indies, but the aggregate yield of them all was only seven percent of the world's total in 1924. Much the same may be said in regard to silver, the total of eastern Asia for 1924 being about four percent of the world's output. The most promising silver development is in the Bawdwin field of Burma, where silver occurs in the lead ore. Gold and silver have been objects of search in the Far East for centuries, with results so unsatisfactory that there are no great hopes for anything better in the future.
Minor Commercial Minerals. The Far Eastern countries produce considerable amounts of minor commercial minerals, though no one country has any strong combination of them. China is the main source of the antimony supply of the world, supplying over 75 percent. Ceylon has long dominated the markets for flake graphite, but is now overshadowed by Madagascar. Korea is an important producer of amorphous graphite. Phosphates, used as fertilizers, are being mined in increasing amounts from various Australasian islands, particularly from Ocean Island (English) of the Gilbert group, the Isle of Angaur (Japanese) of the Pellew group, Tahiti and Makatea (French) of the Society group, and the Isle of Nauru (English) of the Marshall group. The sum total, however, is less than ten percent of the world's production. India produces nearly a quarter of the world's chrome ore, being second only to southern Rhodesia. In recent years, also, India has produced between a third and a half of the world's manganese ore. The most important tin region of the world is in the Malay Peninsula and the adjacent islands of the Dutch East Indies. Siam and China produce minor amounts. These countries together produce about 65 percent of the world's total. Over one-half of the world's production of tungsten, an important alloy in steel, comes from China, and about 15 percent from India. This is a comparatively recent war and post-war development.
Undiscovered Resources. But what about yet undiscovered resources in the Far East? There is a popular notion that it is largely an unexplored area. It may be pointed out that really large mineral deposits usually have some surface or geologic indications, which are likely to be known in densely populated regions characteristic of the Far East. Up to recent years certain minerals like tungsten, and zinc in the form of carbonate, were not recognized by the natives as valuable, suggesting that there are still possibilities for the discovery of ores not previously known as valuable. But as a matter of fact nearly every so-called discovery in recent years has been really a re-appraisal of a mineral occurrence already known. It has been comparatively easy for explorers to go directly to most of the known mineral indications, except in the far hinterland, and their activities for several decades have yielded results far less notable than those obtained by equivalent exploration in the great mineral-producing regions of the world. Liberal allowance is to be made for the fact that, on the whole, exploration in the Far East, particularly in the hinterland, has not yet been nearly as intensive as in western industrialized countries, and that much miscellaneous development of mineral resources is naturally to be expected. But the fact remains that the considerable mass of information already collected has a decidedly negative bearing.
Conclusion. The Pacific region of the Far East is deficient in essential minerals necessary for the development of a great industrial civilization, when considered in relation to their location, grade, and relative quantities. The more conspicuous deficiencies are in iron ore, coking coal, copper, lead, and zinc. India alone has really adequate iron and coal deposits, but even here the supply of coking coal is apparently far less than in the industrial nations of the West. Many of the minerals which are produced in abundance, like tin, tungsten, antimony, graphite, manganese, and chromite, are largely exported to the Western world, for the reason that they are of use mainly in a highly industrialized society and are not in themselves a sufficient basis for industrial organization. Inertia of invested capital will in itself tend to keep the balance of mineral control in the West. If all of the Far Eastern resources could be combined, they would still be far inferior to those of Western Europe or the United States.
This situation cannot be attributed simply to lack of exploration. There has been exploration enough to disclose the probable main outlines of the future.
In so far as the possession of adequate mineral resources is a necessary basis for building future industrial, political, and military power, the countries of the Far East are proportionally handicapped, -- the Pacific region more, India less. Whatever progress there may be must necessarily be of a kind produced by other factors. Supremacy resulting from the possession of mineral resources will remain centered about the North Atlantic. "The white man's burden" is partly one imposed by nature's distribution of raw materials.
It remains to consider the human elements in the problem. It appears, at least up to the present, that the kind of skill, organizing power, and initiative necessary for the effective use of mineral resources is found to a notable degree where the most adeqate resources are found, namely in the countries bordering the North Atlantic. Conditions there have of course afforded the best opportunity for bringing out these qualities. Thence have radiated the influences which have initiated most of the mineral developments in other parts of the world. Whatever the latent capacity of the peoples of the Far East for undertaking mineral developments, the physical conditions do not promise opportunity for rapid progress in its expression. Even though the potential resources were equal, which they are not, it remains to be proven that the human qualities necessary for their use are likewise equal, notwithstanding such conspicuous exceptions as are exhibited in Japan or in the Indian steel industry.
From the standpoint of mineral resources, therefore, we may regard the Far Eastern countries, not as challenging western supremacy, but as calling for our sympathetic coöperation in their contest with unsatisfactory environmental conditions.
World demand will continue to force the development of such resources as exist in the Far East, and this will require that capital and skill be supplied from the world's industrial centers. Japan, in taking a leading part in this movement, is merely doing what other industrial nations are doing the world over. Whatever we may think of the political desirability of this movement, it is a reality, based broadly on civilization's mounting demand for raw materials, and it probably cannot be stopped or even materially slowed up by any action of individuals or of governments.
[i] The "Far East" is here used to include India, Eastern Asia, and the adjacent islands of Japan, the East Indies, and the Philippines. It is subdivided broadly into the Pacific region and India.
[ii] No attempt is made to treat the subject exhaustively in this article. Readers interested in following this subject further are referred to:
"The Iron Ores and Iron Industry of China." By F. R. Tegengren: Memoirs of the Geological Survey of China, Ser. A, No. 2, in 2 parts, with atlas, 1921-1924.
"General Statement on the Mining Industry of China." By V. K. Ting and W. H. Wong: Special report, Geol. Survey of China, No. 1, June, 1921.
Reports of the Imperial Mineral Resources Bureau, London.
"The Mineral Industry." Published annually by McGraw-Hill Book Co., New York.
"World Atlas of Commercial Geology." Part I, Distribution of Mineral Production: U. S. Geological Survey, 1921.
"The Iron Ore Resources of the World." XI International Geological Congress, Stockholm, 1910, 2 volumes, with atlas.
"The Coal Resources of the World." XII International Geological Congress, Toronto, 1913, 3 volumes, with atlas.
"Geology and Mineral Resources of the Philippine Islands." By Warren D. Smith: Pub. No. 19, Bureau of Science, Manila, 1924.
"Certain Iron-ore Resources of the World: China." By H. Foster Bain: Trans. Am. Inst. of Min. & Met. Engrs., vol. 61, 1919, pp. 132-135.
"Recent Development in the Iron and Steel Industry of India." By Charles Page Perin: Am. Iron and Steel Inst., 1920.
"The Mineral Resources of China." By C. Y. Wang: Tientsin Press, Ltd., 1921 or 1922.