China's Economic Model Will Fail

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China's rapid growth and rising middle class is going to run into some physical constraints that cannot be overcome. Only one of them is oil consumption.

It has been said the United States, with 5 percent of the world's people, consumes a third or more of the earth's resources. That was true. It is no longer true. Today China consumes more basic resources than the United States does.

Among the key commodities such as grain, meat, oil, coal, and steel, China consumes more of each than the United States except for oil, where the United States still has a wide (though narrowing) lead. China uses a quarter more grain than the United States. Its meat consumption is double that of the United States. It uses three times as much coal and four times as much steel.

These numbers reflect national consumption, but what would happen if consumption per person in China were to catch up to that of the United States? If we assume conservatively that China's economy slows from the 11 percent annual growth of recent years to 8 percent, then in 2035 income per person in China will reach the current U.S. level.

If we also assume that the Chinese will spend their income more or less as Americans do today, then we can translate their income into consumption. If, for example, each person in China consumes paper at the current American rate, then in 2035 China's 1.38 billion people will use four fifths as much paper as is produced worldwide today. There go the world's forests.

If Chinese grain consumption per person in 2035 were to equal the current U.S. level, China would need 1.5 billion tons of grain, nearly 70 percent of the 2.2 billion tons the world's farmers now harvest each year.

If we assume that in 2035 there are three cars for every four people in China, as there now are in the United States, China will have 1.1 billion cars. The entire world currently has just over one billion today. To provide the needed roads, highways, and parking lots, China would have to pave an area equivalent to more than two thirds the land it currently has in rice.

By 2035 China would need 85 million barrels of oil a day. The world is currently producing 86 million barrels a day and may never produce much more than that. There go the world's oil reserves.

What China is teaching us is that the western economic model-the fossil-fuel-based, automobile-centered, throwaway economy-will not work for the world. If it does not work for China, it will not work for India, which by 2035 is projected to have an even larger population than China. Nor will it work for the other 3 billion people in developing countries who are also dreaming the "American dream." And in an increasingly integrated global economy, where we all depend on the same grain, oil, and steel, the western economic model will no longer work for the industrial countries either.

The challenge is how to feed and transport a rapidly growing global population. The world added one bullion people since 1999. It is expected to add another billion by 2023. People eat, consume products made and transported with oil and drive cars powered by oil.

The crisis resulting from the current population explosion will be felt long before 2035, 2025 or even 2020. We do not have enough resources to continue producing oil at the rate needed to meet the ever growing demand. China will be producing 20 million cars per year before 2020. China's oil consumption of 9.0 million barrels per day is expected to double by 2020. Unfortunately oil production has no chance of increasing by 10-15 mbpd to accommodate China's growth as well as the rest of Asia.

Trouble is coming despite what your governments are "NOT" telling you.

Jim Brown

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