hi John,
fwiw, According to Marc Faber's latest work, the United states consumes about 22 million barrels of oil today vs a per capita consumption of around 4.5 million bpd for China...that equates to about 5 times
(just to clarify my earlier statement on US per capita energy consumption exceeding China's by 14-fold, that is based on total MMBTUs per capita, which figure i read was 355 MMBTU in the US and 25 MMBTU in China. so i was talking about total energy, not just oil, and i was also speaking of per capita figures...)
it sounds like you are looking at last November's issue of GBD. Faber also notes there that he expects Asian demand to double over the next decade to 35-45 mmbpd, which would still be less than Latin America on a per capita basis. he goes on to say that this will change oil geopolitics with Asia as the largest oil demand bloc. Faber concludes, in his bold: A doubling of oil demand in Asia will inevitably lead to significantly higher oil prices in the second half of this decade, when total oil production in the world is expected to peak out.
i totally agree with Faber's conclusion regarding upward oil-price pressure, but my point is that the high prices must eventually affect growth, since growth is dependent on energy. as to when peak oil occurs, it may have already occurred in 2000 according to some petroleum geologists closely monitoring the situation. see, e.g., "Will 2000 Turn Out to be the Peak, Followed by Wildly Oscillating Oil Prices?"
peakoil.net
and i also am in general agreement with Faber and Rogers w/r/t the idea that China will become an increasingly powerful force economically, geopolitically, yada yada as the century progresses. Rogers can even call it the "Century of China" if it makes him feel good.
however, when you look at the dominance of the British in the 19th Century, or the US in the 20th, you see countries that were clear world leaders in military strength, industrial infrastructure, resource consumption, per capita GDP, etc. in other words, these were countries that could exploit the world's resources for economic advancement better than other countries.
by such a collection of measures, i find it very hard to believe China will get anywhere close to such dominance in the 21st Century. their key "advantage" compared to the West is not that they have better infrastructure and are set up to better exploit resources, but rather that they have what seems to be an unending supply of very cheap labor, and they also lack the environmental regulations which increase manufacturing costs in the West. kind of like selling the environmental future down the river, but tell that to the Minister of Labor or whoever with his 100 million unemployed and he'll say, just get me some jobs.
naturally they will move upscale somewhat, but doing so will require ever more exploitation of resources, for which they will be competing with the West to consume. whereas Britain and the US benefitted from cheap energy during their go-go years, China has a headwind here.
worse yet, its very growth will increase the velocity of this headwind--for itself and for others (of course, it would increase even if China weren't growing and we in the West have exploited far more resources than China will ever get a chance to before the end of Hydrocarbon Man, but that's another story).
let's consider a thought experiment. say (very charitably!) China grows 7% faster than the US for the next two decades. it would eclipse US GDP around 2011, with US per capita GDP around 4.5 times China’s vs. some 8x today. China GDP would be double US GDP around 2021, with US per capita GDP still 2.5x greater than China’s. this seems like a wildly bullish assumption for even China fans, as at some point we would expect the law of large numbers to catch up with China vis-à-vis the growth rate.
but in any case, assume this happens. what is the oil backdrop? we double China’s oil consumption twice—to about 20 million bpd. that is another 15 million bpd on top of current oil demand of some 77 mmbpd. even as oil is peaking right around now at less than 80 mmbpd. and we haven’t even added in the rest of Asia, or the possibility that demand will grow in other areas of the world.
thus while China may overcome all sorts of human errors, just as we did with our internecine conflicts in the 19th century and world wars in the 20th, it is another thing to deal with an exogenous shock. just look at what the Black Plague did to the economy/population of Europe for centuries on end (Faber had a good piece on that as well). and we have seen that a tiny little bug called SARS, which no one even dreamt of a year ago, has been quite annoying in China. and the worse may be yet to come if it turns out to be a seasonal thing.
similarly, i would put the event known as peak oil in the category of exogenous shock, as far as economies are concerned. thus i think the heady growth figures needed to catapult China onto the stage of true world domination will turn out to be fictional--way too expensive to grow at those rates in an era of eventually, what, $20, $30, $50 for a gallon of gasoline...
you may have heard the tech cliché—you can have something fast, cheap, and quick, but not all three at the same time. likewise, it seems to me the world can have oil, or growth, but not both at the same time, going forward.
i have no doubt that the Chinese people are just as hardworking and enterprising as Jim Rogers believes, and i agree with him that Americans are fat and lazy, along with the rest of the West. but i just don't see how the world's resources can support the kind of economic growth needed to make a nation of 1.3 billion currently skinny, hardworking people as fat and lazy as their Western counterparts. |
