China is roaming the world to source metals directly from Africa and elsewhere in order to cut out middlemen such as the London Metal Exchange (LME), according to director of the Centre of Chinese Studies at South Africa"s Stellenbosch University, Matryn Davies.

In a recent interview and report published by Purchasing.Com, Matryn Davies says China is trying to avoid key commodity markets while it creates markets for Chinese exports. "The policy makers and powers in Beijing have an extreme dislike for the London Metal Exchange.

"Why? It is a middleman and a consequence of the colonial economic construct and that is why the metal exchange sits in London and not in Johannesburg," says Martyn Davies, who is also the CEO for the strategy consulting firm Emerging Market Focus.

He says the Chinese prefer to acquire the asset source and negotiate long-term off-take agreements for 20 to 25 years with the governments of commodity producing countries. He says China will attempt to set up parallel markets and exchanges during the course of the next two to three decades.

"Of course we will have the traditional markets with the mining majors and the like selling on the traditional LME market, but China will seek to change the rules of the game."

Last year, China attempted to become the keystone player in world iron ore pricing negotiations with Brazilian and Australian miners. The move failed, because of long-standing use of steel mills in Europe as the pricing trendsetter for the Brazilians and the steel mills in Japan for the Australians.

"When buying commodities - ranging from ores to scrap to semi-finished mill products - China's problem is not a lack of capital, it is its inability to spend it productively," says Martyn Davies. "That's because mainland China doesn't yet have as refined an investment climate as North America and Western Europe."