China is determined to be globally competitive, notably in what it sells to the world, but also

in what it buys. The agglomerations are initially concentrated in industries where China can
sell its heavy manufactures, such as railway construction and nuclear power stations.
Shipbuilding is another industry due for a shotgun wedding, and maybe even the oil
industry, which has for decades extracted two million tons a year of Tibetan oil from Amdo
Tsaidam.
For Tibet, its a mixed picture, at least in the short term. So far, there has been no
announcement of compulsory state-driven mergers in the mineral extraction industry, or in
the hydroelectric dam builders who jointly dominate the new economy of the Tibetan
Plateau. Competition may be narrowing, behemoths building. Will the dam builders, all
state-owned, also be agglomerated? If export competitiveness is to be the trigger for
industry consolidation, they do qualify, as dam building expertise, hard won in the steep
valleys of Tibet, is a highly exportable capability.
The logic of this new policy of agglomeration is to make China more competitive in foreign
markets. For China, operating in Tibet is very much like operating in a foreign market: the
distances are great, infrastructure is not there, supply lines are long, markets are far away,
everything is different. The SOE mineral extraction corporations, and hydropower SOEs are
already used to operating worldwide, and, in the boardroom, the real world decision is
whether the next copper mine will be in Peru or Congo or Tibet.
Xi Jinpings centralisation of power, agglomeration of SOEs and (so far) reluctance to allow
the metals and water extractors the freedom to set prices, add up to a centralisation of
exploitation of Tibet. Xis regime is clearly out to do what it takes to revitalise the
profitability and export success of Chinas manufacturers. If that means bigger and more
powerful SOEs, that is a familiar formula, that takes us back to the 1970s and 1980s. If
bigger profits for the worlds factory, now relocating to Chongqing and Chengdu, also mean
suppressing prices of the raw materials Tibet provides, so be it.
Official control over the price miners and electricity generators can charge for what they
produce may lead the big SOEs in these sectors to look for better places than Tibet for their
capital. Yet it is part of the new official policy that newly agglomerated SOEs must become
more profitable, and hand over a bigger proportion of those profits to the central
government, which, in turn, keeps the centre supplied with the fiscal means to invest in
more infrastructure in Tibet.
So in the immediate future, the SOE mining companies have few prospects for making
much money from exploiting Tibet, but as demand picks up, and agglomeration grows, they
will be in a stronger position, especially if, as is the case at the Shetongmon copper and
gold mine near Shigatse, the SOE mine owner is itself a major smelter company, eligible for
much official favouritism.

This may mean the exploitation of Tibet will continue to intensify, as predicted in Spoiling
Tibet in 2013. It also means the electricity producers, miners and dam builders will have to
put up with slender margins, an incentive for them to ignore frivolous expenses such as
compliance with environmental laws, or worker health and safety.
The Saudi oil producers, the Brazilian and Australian iron ore miners, the coal diggers all
remain confident that China, even if it slows, will still need their raw materials, in huge
quantities, for a long time to come, to make manifest the China Dream of a city apartment
for all.
This period of low prices, low profits and suppressed environmental compliance will end,
and we will be back to the world of Spoiling Tibet, a world where demand once more
exceeds supply. By the time the next cycle kicks in, incentivising the SOEs to accelerate
extraction from Tibet, China and the world will be dominated even more than
now by the biggest of multinational corporations, and China will have its national
champion SOEs in the big league.
All of the above affects the big state owned corporations that, with high visibility, and
maximum propaganda coverage, build and extract on a big scale. Almost none of the above
affects the smaller mining companies proliferating all over Tibet, who have a single, simple
agenda: to make as much money, as fast as possible, ripping out of the ground as much
stuff as they can, with no heed for environmental consequences or impact on nearby
Tibetan communities. Because they operate outside the gaze of the state usually because
local governments are paid to look the other way- none of the above complex and
contradictory agenda applies to them. They do not have to invest but keep profits low.
They do not have to be concerned about occupational health and safety, or environmental
impacts.
But if they are too successful in their singular pursuit of profit, they may become big enough
to get caught up in the coming compulsory round of mergers. And they do, for the time
being, have to accept prices that are lower than a few years ago. However, the primary
attraction of resource exploitation, all over Tibet, remains gold. The price of gold does
fluctuate, but not as sharply as other minerals.
The reason is simple. Eminent China-watcher David Shambaugh recently predicted:
Theendgame of Chinese communist rule has now begun, I believe, and it has
progressed further than many think. How did he reach this conclusion? Consider five
telling indications of the regimes vulnerability and the partys systemic
weaknesses. First, Chinas economic elites have one foot out the door, and they
are ready to flee en masse if the system really begins to crumble. In 2014, Shanghais
Hurun Research Institute, which studies Chinas wealthy, found that 64% of the high net
worth individuals whom it polled393 millionaires and billionaireswere either
emigrating or planning to do so. Meanwhile, Beijing is trying to extradite back to China a
large number of alleged financial fugitives living abroad. When a countrys elites
many of them party membersflee in such large numbers, it is a telling sign of
lack of confidence in the regime and the countrys future.

The discreet fungibility and portability of gold is at the heart of this flight of capital. Thi