Former World Bank supremo gives stark warning on China ‘cold war’

The existential threats the world faces cannot be solved without China, the former vice-president of the World Bank warns, as a threat of a cold war between the West and the Asian superpower looms.

Ian Goldin, a one-time adviser to South African President Nelson Mandela, told one of the world’s biggest mining forums in Western Australia on Monday that such a cold war was his biggest concern as it would “lead to excuses for protectionism and nationalism … the antithesis of global trade”.

It also heightened the risk that humanity did not deal with systemic risks.

“We cannot stop the next pandemic if we are fighting a cold war, we cannot stop climate change … we cannot overcome the threat of cyber or financial or other crises … we have to work together on these critical challenges,” the University of Oxford professor of globalisation and development told the Diggers & Dealers conference.

“There is no global problem that I can think about that does not require China to be in the room as part of the solution, and its role is growing in this respect.

“It’s also a growing threat that countries have to ‘choose’ as they did in the old cold war with the Soviet Union, and those of us who were around then remember how terrible that was, how it led to skirmishes, how it led to a fragmented global system.

“This all has dramatic implications for Australia, for the future of minerals and mining, not only because of global growth, but of course the tensions between Australia and China have massive potential implications – they already have had – and I believe will greatly slow Australia’s potential.”

Pressed on the topic during questions from the floor, Professor Goldin advised against “sabre-rattling and talking up the tensions”.

“My own view is we should disagree fundamentally on human rights … on the trampling on democracy in Hong Kong, on what’s happening to the Uighurs, on other concerns,” he said.

“That has always been part of a conversation with China.

“One can in private have that conversation, but pushing into corners, public attacks are not going to get anything other than a negative response back, and I believe it’s escalating the tensions, whether it’s Australia – I also disagree with the Biden presidency on this, which is doing a rather similar strategy.

“(What) we need is de-escalation, an agreement to talk fundamentally on the things, the principles we uphold, but not allowing that to get in the way of business and agreeing to work together to solving global problems.”

The keynote speaker also provided an outlook for commodity prices.

He predicted gold would continue to be a store/hedge of wealth in uncertain times, with the price continuing to hover around $US2000 an ounce, while lithium and nickel demand would increase “eight to 10 times at least” over the coming decade amid huge demand for electric vehicle batteries.

For the same reason, rare earths also had a “tremendously good” outlook, while copper would be vital for rebuilding grids as the world increasingly moved to renewable energy and storage.

Professor Goldin was also bullish about potash for its use in agriculture.

“But one needs to be more agile,” he said.

“Things that you would have thought would have developed over the next 10-20 years are going to have to happen in the coming couple of years.”

There would be continued strong demand for iron ore, but reducing the carbon content in steel would be vital, he said.

“One cannot do the carbon transition without steel – how are you going to build a wind turbine?”

The world needed to “program in” slowing demand for petroleum and an ultimate end to fossil fuels, while carbon capture and storage would be necessary, and there was “no doubt” there would be carbon taxes.

On currencies, Professor Goldin predicted the US dollar would continue to dominate for the rest of this decade, but the Euro would “come into its own”, as would China’s Renminbi – with central banks starting to hold it – while Japan’s yen and the British sterling would diminish, and cryptocurrency would remain “a marginal play”.

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