Thursday, November 15, 2007

Chinese Takeaway.

China has been accused of "eating the world", as the jaws of the dragon consume more and more resources to feed a relentless appetite for growth, which is anticipated at a sanguine 10% for the year 2008. Indeed, the slack from slowing western economies is being taken-up by the expansion of Chinese industrialisation and commerce. The IMF has reckoned that around half of the world's economic growth will, in this year, be provided by the BRIC's (Brazil, Russia, India and China), and now India is adding more growth to the world economy than the United States, Japan and the EU altogether, while China rises above all nations. Indeed, without China, the world economy would probably be in recession by now.

China's demand for oil, copper, zinc, nickel and all other basic resources is forcing their prices increasingly upward, and the International Energy Agency (IEA) has predicted that the thirst for oil by China and India will quadruple by 2030. Whether this will really happen, given the lack of available crude oil way before then, it seems there will be a "crunch" in supply by 2015. Significantly, 2015 is the upper limit predicted by the Norwegian Statoil for the emergence of the "peak" in oil production, which they forecast could hit as soon as 2010. More likely the peak is already with us, as some analysts think, and the output of oil is being maintained artificially by enhanced recovery methods; hence, beyond the peak, oil supplies will drain rapidly, and it is not obvious to me how any increase in oil production is then possible, let alone a quadrupling in consumption by the Chinese or Indian industrial leviathans.

Meanwhile, China has asked for a 30% increase in its imports of crude oil from Saudi Arabia, and plans also to increase its imports of oil from Iran, having built two new oil refineries to increase the nation's fuel capacity. It is expected that imports of Saudi crude will increase from 460,000 barrels per day (bpd) to 600,000 barrels next year. The two new refineries can handle 240,000 bpd (Fujian on the south east coast) and 200,000 bpd in Shandong province, both of which are scheduled for completion next year. Apparently, China is unperturbed by the US sabre-rattling over the Iranian uranium enrichment programme, and wants to increase oil imports from the country above the 17% enhancement rise during the first nine months of 2007.

When such information about the burgeoning Chinese Economy is quoted, it is usually done so in the spirit of culpability toward its nation. However, it is the West that drives growth, in buying manufactured goods from China, much cheaper than we could make them ourselves. Western Culture is the counter-trade of this imported booty, in terms of quite understandable aspirations toward a "western lifestyle", which in reality even the West can no longer afford to maintain, or not for much longer, against the backdrop of rising oil prices. Therefore, outlets of McDonalds, Starbucks and Kentucky Fried Chicken (KFC) have appeared in the Chinese novo riche east. The traditional rice-diet is being superceded by a meat-rich diet, and imports of pork, beef and milk, which used to be in short supply in China are soaring.

In an effort to assuage memories of an austere socialist past, and mass starvation at times, China is now a net importer of food. As I wrote in "Can we Feed the World?", even if all of us (in the East and the West) adopted a pre-Green Revolution diet, which was largely vegetarian since meat production is more intensive in terms of the amount of land required per person to survive upon, only about 3 billion might be maintained as a total global population, or less than half the current number of 6.5 billion, in the absence of synthetic pesticides and artificially manufactured fertilizers.

To call this scale of events economic "growth" is illusory, since it reflects the plundering of the earth's resources under the false premise that we can continue to consume more and more, essentially forever and without limit, in terms of oil, food and energy. The reality is an artificially enhanced population with relentlessly voracious tastes, and a finally greater die-off in its numbers if world resources, and that includes its population too, are not managed to the aim of a sustainable balance between what might be supplied and what might reasonably be demanded from the capacity of the earth. The weight of demand has swung way down, and our chances of pulling-out of the nose-dive we are into, diminish increasingly in this protracted state of addicted denial. We need to trammel-in "growth" according to a definite worldwide plan. The governments of the world must decide on how to sustain its populations, and the available natural wealth must be apportioned to do so.

Related Reading.
(1) "How China is Eating the World," By Sean O'Grady, The Independent, November 9th, 2007.
(2) "China seeks 30% increase in Saudi oil imports," Reuters, Friday November 9 2007.

1 comment:

Anonymous said...

F. William Engdahl is a prominent scholar of geopolitics who went from Peak Oil believer to skeptic -
or here

What's upsetting the Big Game is how small players in, for example, France and Australia have (nearly) perfected, among other devices, the "air car" (compressed air as fuel).
The French version is on sale in 2008.