Mainland tipped to overtake US in use of resources
Jeffrey Tam and agencies
Tuesday, November 14, 2006
China will soon overtake the United States as the largest consumer of the world's resources as rising oil prices and a slowing housing market continues to dampen the US economy, a report by the Pacific Economic Cooperation Council said.
"As the US economy slows down, China will step in and be an alternate source of demand," the council said Monday. "The Chinese economy should continue recording double-digit growth in 2006 and next year."
The mainland's gross domestic product totalled US$2.26 trillion (HK$17.63 trillion) last year, up 9.9 percent over the previous year.
For the past 25 years, the mainland's economy has sustained average annual growth of 9.5 percent.
"As foreign investments continue to pour into China, the size of its economy will continue to expand," said Kent Yau Ho-yin, deputy head of research at Core Pacific-Yamaichi.
"We expect China's economy to grow by 9.4 percent next year. Vietnam is the only country so far which could match the brisk pace of China's growth."
Since last year, the mainland has surpassed the United States in consumption of major world resources, including food, energy, industrial commodities, and steel. For example, the amount of meat consumed in the mainland last year totalled about 65 million tonnes, far exceeding the 40 million tonnes consumed in the United States.
However, China still lags behind the United States in oil consumption.
A slowing US economy in turn will hurt the rest of Asia as American demand for goods produced in the region is due to weaken.
"A slowdown in 2007 has been widely anticipated and is largely due to faltering demand in the United States and the effect of monetary tightening around the world," the council said.
It forecasts regional growth of 5 percent this year, slowing to 4.3 percent next year. A potential currency crisis, a widening wealth gap and the long- term risks of bird flu are among the factors hindering economic growth in Asia, PECC said.
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