China's push for control of mineral resources will almost certainly lead to heightened geopolitical tensions in South-East Asia, according to contrarian Swiss investment guru Marc Faber.
Speaking at Mining Indaba yesterday Mr Faber said China's expansion had become the most important feature of global economics, replacing the US consumer as the primary agent of economic growth.
"We are living in a new world - in which the whole world no longer depends on the American consumer, but it now largely depends on China," he said. "Because as China expands they will buy raw materials, then the resource producers do all right, and then they buy goods from China and from other countries and so on and so on."
But Mr Faber said as US economic might became less important, its attempts to contain China's growing influence would grow, potentially leading to political and military tensions in the Asia Pacific region. "If you read foreign affairs papers in the US, the words 'how do we contain China' repeatedly come up," he said. "We can just switch and turn off the oil tap - that's one way to contain them.
Mr Faber said the presence of US military bases in South-East Asia, and particularly its potential to dominate shipping routes China relies on for the delivery of raw materials, would lead to a rise in tension between the US and China.
"What would you do if you were a strategist for the military in China, and you knew all the raw materials come here from the Strait of Malacca - and you have an American fleet around, and military bases and naval bases? I think you would be very concerned," he said.
"I am quite negative, I think we will head into huge tensions - not just in the Middle East, but also in South-East Asia because that is the backyard of China."
The Swiss fund manager said that tension could spill over into Africa, as China seeks control of major resource projects to feed its industrial needs. But Mr Faber said he was bearish on the medium-term outlook for the Chinese economy.
"In iron ore and copper China has probably reached a level where demand may not contract, but it's not going to go up as rapidly," he said.
Mr Faber said China was running out of time to solve issues around its real estate bubble."I think they can again postpone a crisis, but this is probably the last time they can do it," he said.