President Hu Jintao’s visit to Washington this week has members of Congress grumbling that the Chinese are selling too much to the rest of the world. CNN commentator Lou Dobbs calls it the “Red Storm.” But the bigger worry over the next 25 years is that a rising China will consume too much of the world’s resources. If existing models for economic growth don’t change, that’s a recipe for continual battles over oil and other scarce commodities.
Lester R. Brown, president of the Earth Policy Institute, presents some startling estimates of future Chinese consumption in a new edition of his book, “Plan B 2.0.” He begins by noting that China already has replaced the United States as the world’s leading buyer of basic commodities, consuming more grain, meat, coal and steel on an aggregate basis than America does. Only in oil does America remain the top consumer, using three times as much as China in 2004.
For all of China’s growth, in terms of per-capita consumption it still lags well behind the United States, which continues to gobble up vastly more than its share of world resources. But as the Chinese economy prospers and grows, it’s inevitable that living standards will push consumption toward American per-capita levels. That’s where Brown’s estimates become mind-boggling.
Let’s start with some assumptions about income and population. Brown reckons that if China’s economy continues to grow by 8 percent a year, by 2031 the per-capita income of its 1.45 billion people will equal that of the United States in 2004. If consumption patterns approximate those of today’s Americans, what would that mean? Brown reviews the list of basic commodities, starting with grain: If Chinese grain consumption per person equals the current annual U.S. rate, by 2031 it would consume about two-thirds of the world’s total current grain harvest. If the Chinese use paper at the current U.S. level, their 2031 consumption would be nearly double the current world production of 161 million tons.
If the Chinese match America’s rate of three cars for every four people, they would have 1.1 billion vehicles, nearly 40 percent more than the world’s current fleet. And if China consumes oil at the same per-capita rate as the United States, it would use 99 million barrels of oil a day by 2031, well over total current world oil production. In other words, if the Chinese consume at current U.S. rates, there wouldn’t be enough of anything left for the rest of the world.
But of course the Chinese won’t match America’s per-capita consumption of these resources. And that’s Brown’s real point: China’s overwhelming demand for commodities will break the existing models for economic growth. Prices for commodities will rise so sharply that the world will be driven onto a different growth path, where it takes a smaller input of energy to produce a given increase in output. New technologies and food sources will alter the supply-demand picture.
Either that, or the world will face an era of wars over resources.
Some would argue that war in Iraq and rumors of war with Iran are early harbingers of the coming battle for control of resources, but I’m skeptical. I wish Iraq were as simple as a war for oil.
As Brown puts it, “The western economic model – the fossil-fuel-based, automobile centered, throwaway economy – will not work for China’s 1.45 billion people in 2031.” The commodities markets already are signaling what China’s rise (and the uncertainties caused by America’s recent difficulties) will mean for the global economy. Oil hit a record high of over $70 a barrel this week. Gold, a measure of investor anxiety about inflation and instability, has more than doubled in price over the past four years. Silver has jumped even faster, more than tripling in price since 2002.
President Hu’s visit to Washington should focus our attention on the central geostrategic issue of the next 25 years – how to bring a newly prosperous China into the global economy. The existing economic structure will either adapt, or it will break.
