The dragon does the ant walk in hunt for oil

There is a whole new world in China

We see a leap in farm output,

Farming has seen a new climax

Our steel sector has risen, so has coal and oil.

So went a song thoughtfully translated into English by the state-run CCTV, as China began its musical extravaganza on October 1, the 60th anniversary of the founding of the republic.

The rather awkward lyrics, sung enthusiastically by two of China's well-known stars, are no longer the stuff of Communist propaganda. Instead, it's a story written in the energy and metals markets by China's meticulous policymakers, its obedient banks and pliant state-owned companies.

Thus, when the recession gripped the world, China worked its own script. It boosted spending on oil and mining acquisitions, upsetting major Western giants. And when the China stock markets closed for eight days for the mid-autumn festival, news of more acquisitions in West Africa unsettled the energy markets.

China's oil appetite has grown to almost equal that of the United States. Consumption doubled in the last decade, rising to 8 million barrels a day last year from 4.2 million barrels in 1998. China's need for energy is projected to increase by 150 per cent by 2020.

With an ever-increasing oil demand, China has set off on its biggest buying spree in history, picking up stakes in oil companies like never before. According to investment expert Jim Rogers, the Chinese are going around the world buying up what they can.

Not only are the Chinese determined to ensure energy security, they are also gearing up for crisis situations. "They see a crisis coming and are preparing for a rainy day," says investment expert Jim Rogers in an email from Singapore.

"The International Energy Agency's recent study has warned of a crisis in energy supplies in a decade or so. Plus food inventories are the lowest in decades. Mines are being depleted since no one can get a loan to open a mine. There will be big shortages of commodities within a decade or so and perhaps a crisis. China sees what is coming and are preparing - much like the proverbial ant and the grasshopper."

This 'ant-like' conduct has been obvious in all its energy acquisitions. Last week, the $300 billion (Dh1.10 trillion) China Investment Corp, a sovereign-wealth fund, decided to put in $1 billion in buying shares of Kazakhstan's JSC KazMunaiGas Exploration Production. The latest deal boosts China's already significant investment in Kazakhstan.

Reports of the Niger-ian government negotiating with China National Offshore Oil Company (CNOOC), China's biggest offshore oil producer, on 23 oil blocks, has also set off alarm bells in the West. CNOOC is keen to expand its position in the West African nation by wresting drilling rights. The company is also talking with Uganda to invest in a large project led by Tullow Oil that could be worth $5 billion to $6 billion.

The African negotiations are the latest in a series of determined efforts by China National Petroleum Corp, CNOOC and Sinopec, China's top three state-owned energy companies, to grab assets in Africa, Latin America, the Middle East and Central Asia. Sinopec, the country's second-biggest oil company, bought Geneva-based Addax Petroleum Corp for $7.6 billion in June, giving them access to oil reserves in Iraq's Kurdish territory.

Although China is spreading its net around the world, Middle East remains the focus. Former special envoy to Middle East, Sun Bigan, has said: "Both now and in the future, the Middle East should be China's first choice in importing oil and developing oil cooperation." Despite American displeasure, China continues to invest in Iran. This year, Iran remained China's third biggest foreign source of crude oil.

With China's demand for oil growing the fastest, experts now look at Shanghai for the first signs of crude oil demand recovery. Analysts in Asia say it's important for those keeping an eye on oil prices to pay attention to the Chinese stock market. The price of crude oil is increasingly being impacted by which way the Shanghai Composite Index moves. On August 31, the Shanghai Index fell by 6.7 per cent in a single day. During the same period, the price of crude oil fell by 3.8 per cent. This, experts say, is no coincidence.

The fluctuation of China's stock market also has a direct effect on emerging markets like Brazil and Russia. According to the Wall Street Journal, China's purchase of commodities like oil and iron ore pours money into nations which have those resources. This makes their economies more and more dependent upon the rise and fall of the Shanghai Composite Index.

- The columnist is a freelance business writer based in Shanghai, China.