China’s boom, which has been the driver behind the remarkable rise-and-rise of most commodity prices over the past five years, is fast becoming the China Syndrome – or, to be less cute, the China Problem.
The full extent of the issue is explored this week in the prestigious American magazine, BusinessWeek, and a reading of its excellent coverage of China and its energy requirements is compulsory for anyone in the oil patch – or for anyone interested in world politics.
According to Slugcatcher’s interpretation of BusinessWeek’s report, China is in danger of becoming the blob that ate the world.
Not only is oil demand surging for a vehicle fleet which is tipped to hit 56 million cars, buses and trucks by 2010, but the overall rate of energy consumption has risen from 9% of the world market to 12.1% and is on track to overhaul the U.S. which currently uses 24% of the world’s energy.
At this point, some readers will be asking has the Slug just discovered China, or where has this fool been for the past decade? Of course everyone knows China is on a roll.
But, and this is the key point, does anyone really know how far is China and its 1.2 billion people (and counting) are going to roll, and who is it going to roll over in the process?
Before exploring that aspect, and the political considerations, consider a few more facts about China and energy; natural gas demand to triple to 3.6 trillion cubic feet a year, and coal consumption up by 76% to 2.4 billion (yes, billion not million) tonnes a year.
To achieve these consumption growth targets over the next few years will place an enormous strain on global commodity supply. Sure, supply will rush to meet demand in keeping with Adam Smith’s invisible hand, but China is not a full signatory to the rules of capitalism.
In fact, the last time Slugcatcher looked China was still run by a bunch of communists with the only difference from the mob of 20 years ago being that they have swapped Mao suits for pinstripes.
This introduces the political aspect to what is happening. Here we have a country still coloured red on the world political map – and not the red once for members of the British Empire (God Bless Victoria, and all who sail in her!).
China’s politics, and its economy, remain to a large extent, the politics of command – and this is a situation which is going to have a seriously interesting clash with the politics of much of the rest of the world which appears to be going greener by the day.
Here then is Slugcatcher’s conundrum for the week. How will the greenies of the world, the ultimate anti-oil and anti-energy lobby group, handle the insatiable demands of a country which is so awfully close to their hearts.
In case you miss the point, take a gander at Germany where we have what is delightfully called a “red/green” coalition – a blending of good, old-fashioned socialist ideals (the red bit) with the anti-development, anti-energy consumption ideals of the environmental movement (the green bit).
Get the picture?
How will the greening world handle a rapacious, energy-hungry “red” China?
Will it be OK for China to burn whatever it likes, but not the U.S.? Will anyone in Germany’s red/green coalition speak up against China’s obviously inefficient use of energy and love affair with coal and oil?
Slugcatcher will watch with enormous interest to see who in the green movement is first to tackle China on its surging energy demand and the impact it is having on energy prices, not to mention global warming.
Perhaps someone will raise the China energy question shortly after the same mob tackles China on human rights?
Was that a pig flying past the Slug’s window?